Interesting analysis of J-Phone's decision to delay 3G....
nni.nikkei.co.jp
Wednesday, March 7, 2001
ANALYSIS: J-Phone To Delay Launch Of 3G Cell Phone Service
TOKYO (Nikkei)--The J-Phone firms, which operate under the wing of Japan Telecom Co. (9434), will postpone the planned launch of next-generation, or 3G, cell phone service from December to June 2002. Delays in developing the equipment, which will adopt the latest version of an international standard for multimedia cell phones, is behind the move.
At a news conference on Tuesday, Japan Telecom President Haruo Murakami said the Japan Telecom group will curb investment in 3G cell phones because it attaches importance to the profit margins of 3G service.
The J-Phone firms will put off the launch of 3G service in the Tokyo area to June 2002 and in the Tokai and Osaka regions to October 2002. Scheduled starts in other areas remain unchanged -- October 2002.
The main reason for the delay is the latest update of the W-CDMA (wide-band code division multiple access) technology standard, which has been adopted by the J-Phone group, NTT DoCoMo Inc. (9437) and European telecommunications carriers.
The J-Phone group initially planned to use the version updated last September, but it was updated again in December. The newest version, which can utilize multimedia, is expected to be adopted by European firms. Unfortunately, the September and December versions are incompatible.
The stance of the Japan Telecom/J-Phone alliance toward the launch of the 3G service has changed since the end of last year, when it was learned that the two versions are incompatible. Doubts also began to be voiced overseas about the profitability of 3G service due to huge business license fees and capital costs. It is no wonder that the J-Phone group, whose shareholders include Vodafone Group Plc of the U.K., should pay attention to profit margins.
There is another reason for the delay. Ericsson, the world's largest maker of cell phone infrastructure, will initially be the exclusive supplier of 3G telecom equipment in the Tokyo, Tokai and Kansai areas. By providing J-Phone and European telecom carriers with the same version of the equipment, it will be able to lower prices by some 10-20%.
In contrast to J-Phone, NTT DoCoMo will do its utmost to start 3G service in May. It is widely expected in Europe, however, that the launch will be delayed since European cell phone operators have been putting off the start of service. Perhaps in response to such rumors, NTT DoCoMo President Keiji Tachikawa said in Cannes, France, on Feb. 21 that service will definitely start in late May as scheduled.
Since NTT DoCoMo will likely adopt a technology version that predates the December upgrade, there remains a question of compatibility. But NTT DoCoMo is expected to replace its first series of terminals with new ones once it judges the latest version to be more advantageous, said industry insiders.
NTT DoCoMo, armed with strong technology and great financial power, and the J-Phone group, which attaches importance to efficiency, will try to make the most of their respective strengths in the 3G market.
(The Nikkei Industrial Daily Wednesday edition) |
