Japan Telecom delays 3G launch by seven months - from Financial Times
By Michiyo Nakamoto in Tokyo
Published: March 6 2001 09:24GMT | Last Updated: March 6 2001 12:33GMT
Japan Telecom said on Tuesday it would delay the launch of its
third generation wireless service, adding to growing concerns
that carriers and equipment manufacturers are not yet ready to
provide the advanced mobile services promised by the new
technology.
It said mobile phone subsidiary J-Phone would delay the start of
its 3G services using wide-band CDMA (W-CDMA) technology
to July 2002. It said the delay was due to a change in the
specifications of the international standard. Initially, J-Phone
was scheduled to launch W-CDMA services at the end of this year.
The carrier said its decision also stemmed from a need to spend more time on trials than
previously expected.
Japan Telecom and J-Phone have been in the international spotlight in the past few months
with a series of deals that has left Vodafone poised to become Japan Telecom's biggest
shareholder with a 25 per cent stake. BT owns 20 per cent of Japan Telecom and a similar
stake in J-Phone, while Vodafone controls 26 per cent of the mobile subsidiary.
The decision to delay the 3G launch adds to growing signs that operators that have opted to
deploy W-CDMA technology for their 3G offerings face increasing pressure to re-think
strategies due to the high cost of investment in infrastructure and the complexity of
manufacturing the equipment.
Haruo Murakami, Japan Telecom president, said the company was reviewing its spending
plans for both current generation services and 3G services.
J-Phone, which is having to rebuild its entire infrastructure to deploy W-CDMA technology,
estimates it will have to spend ¥700bn ($5.9bn) in the first three years to build its 3G
network.
Earlier this month, a senior manager of SK Telecom said Korea's largest mobile carrier would
not begin full-scale investment in W-CDMA infrastructure until it recouped investment in 2G
and 2.5G. This is not expected until at least 2003.
A senior Telecom Italia executive has also indicated that a European launch date of 2002 for
W-CDMA was over-optimistic and that 2004 was more realistic.
NTT DoCoMo, Japan's largest mobile phone carrier, which will be the first in the world to
offer W-CDMA 3G services this May, said it had no plans to delay that launch.
However, Kohji Ohboshi, DoCoMo chairman, said on Tuesday that the roll-out of HDR, a
competing 3G technology developed by Qualcomm of the US, could force DoCoMo to re-think
its 3G service's cost structure.
"There is a possibility that Qualcomm's HDR will offer good value. We have to watch HDR
very closely and depending on how that unfolds, we will have to take measures to reduce
our costs," Mr Ohboshi noted.
In contrast to W-CDMA, which requires Japanese carriers to completely rebuild their
infrastructure, HDR offers high speeds on existing CDMA infrastructure.
KDDI, which aims to start offering HDR services at the end of next year, has said it will only
have to invest between 50 per cent and 70 per cent of what W-CDMA carriers will need to
spend to offer high-speed 3G services.
The high cost of investment in W-CDMA will weigh most heavily on J-Phone, the smallest of
the three major wireless carriers with less than 10m subscribers, compared with about 50m
for DoCoMo. Delaying the launch could help it benefit from greater economies of scale,
analysts say.
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