NTT DoCoMo Strategy 'Flawed,' Analysts Say
Story Filed: Monday, November 27, 2000 5:54 PM EST
Nov. 27, 2000 (CT Wireless, Vol. 4, No. 227 via COMTEX) -- Rather than entering the U.S. market by taking over a
company, Japanese super carrier NTT DoCoMo [NTT] may just ease its way into the country's wireless competition with a
15 percent to 20 percent minority-stake purchase in AT&T Wireless [AWE] it is expected to make this week.
Neither carrier will confirm the move, but the announcement is expected any day, according to several reports.
The easy way isn't always the best way, however. The Japanese carrier's wining-and-dining scheme to win the hearts of U.S. consumers via the soon-to-be- independent wireless unit of AT&T [T] is great for AT&T Wireless, but a waste of time and money for NTT DoCoMo, said Andrew Cole, a telecom consultant for Adventis Worldwide.
"DoCoMo is continuing to pursue a fairly flawed strategy purchasing minority stakes in parts of the world," Cole said. "We think it's great news for the people being invested in; it helps pay down debt and creates connectivity into DoCoMo, which is a powerhouse in 3G wireless."
NTT DoCoMo's investment would help AT&T Wireless take on larger U.S. mobile carriers like Verizon Wireless and
Cingular Wireless, but the Japanese company would have little interest in competing in the U.S. market unless it purchased a controlling interest in AT&T Wireless or another carrier, Cole added.
"You should take influence from a majority stake or really don't bother," Cole said. "Unless it's a stepping stone to acquiring AT&T Wireless, it's a weak strategy. DoCoMo has been pursuing this strategy for some time."
NTT DoCoMo's wireless Web offering, called i-mode, operates with compressed HTML rather than the wireless markup language used by wireless application protocol (WAP)-based mobile Web networks. The Japanese carrier, Cole said, wants
to extend the influence of its i-mode technology.
"They believe that by taking this investment in these companies they can influence them to go with the DoCoMo server," he said. "They firmly believe that WAP is not the answer and want to influence carriers.
Elizabeth Harr Bricksin, vice president of international operations for telecom market consultancy the Strategis Group, agreed that NTT DoCoMo's planned investment would raise the profile of AT&T Wireless.
"I think it's important in that light and it's also important because the world of wireless Internet is so precarious," Bricksin said. "Any good news for [AT&T Wireless] is excellent news to the market."
NTT DoCoMo's U.S. Interest Not New
NTT DoCoMo's appetite for the U.S. market surfaced earlier this year in partnerships with U.S. technology players. Most
recently, DoCoMo and America Online [AOL] announced plans to collaborate on launching AOL Japan and to produce
other content for NTT DoCoMo's i-mode service, which has more than 13 million subscribers.
NTT DoCoMo also has been building a stake in European markets. In August this year it acquired 15 percent of Dutch
telecom service provider Royal KPN's [KPN] KPN Mobile division under an agreement to pursue third-generation spectrum licenses in Europe.
While the purchase of a minority stake won't have a huge impact on AT&T Wireless's bottom line, it may give NTT
DoCoMo leverage to deploy wideband CDMA in U.S. markets. W-CDMA is the 3G infrastructure standard NTT DoCoMo will use for its network in Japan, but W-CDMA's use in the United States is likely to trail the cdma2000 3G standard.
In Japan, NTT DoCoMo has 55 percent market share with 27.1 million subscribers. NTT DoCoMo, which is a spin-off of Nippon Telephone and Telegraph [NTT] with shares traded on the Tokyo market under the 9437 symbol, is admired by much of the industry for its ability to offer i-mode service for fees equal to what most U.S. wireless subscribers pay for voice services.
When it comes to implementing Japanese tactics and gadgets in the U.S. market, though, analysts note that because of
different demographics, success isn't a guarantee.
"In the U.S., operators are going to be challenged by the fact that users are used to a fixed Internet experience," Briksin said.
Speculation about NTT DoCoMo's investment in AT&T Wireless didn't please investors today. AT&T Wireless shares were
down 3.15 percent to $19.19 in trading before 4 p.m. EST.
Marisa Torrieri
Copyright © 2000, CT Wireless, all rights reserved.
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