DoCoMo pushes back launch of some 3G services
By Michiyo Nakamoto in Tokyo
Published: September 3 2001 14:35GMT | Last Updated: September 3 2001 14:53GMT
NTT DoCoMo on Monday confirmed its third-generation launch for October but said some of its planned services would be delayed.
Music and video downloading and streaming, two consumer services that had been expected to be highlights of DoCoMo's 3G service, have been pushed back.
Keiji Tachikawa, DoCoMo president, said certain handset functions required for music and video services would not be available by October. He added that the connection time for video streaming services would be "very long - so this is a problem".
While the delays were not seen as a serious setback for DoCoMo, they added to uncertainty about what the killer applications for 3G services would be.
"The question is whether they can encourage people to spend more [on mobile phones] than they do now," said Takayoshi Koike, telecommunications analyst at Societe Generale in Tokyo.
DoCoMo has the task of convincing users that 3G will offer more attractive contents than i-mode, its highly popular mobile internet service, he said.
DoCoMo said 3G handsets could be up to twice as expensive as existing high-end models - or ¥39,000-¥60,000 ($328-$505) - and the basic monthly fee would cost between ¥73,900 and ¥15,000. Data-only prices would be cheaper.
In addition to the basic cost, users would have to pay fees per voice call and per packet for data communications. DoCoMo has introduced a number of payment packages in an effort to reduce the burden.
Mr Koike said unless DoCoMo could convince users of 3G's added-value, its prospects for growth would be limited as the Japanese market will become saturated within two to three years.
On Monday, DoCoMo suffered another sharp downturn in its share price after Morgan Stanley Dean Witter downgraded it to "neutral" from "outperform", citing a slowdown in its growth due to the maturing market. DoCoMo's shares closed more than 5 per cent down at Y1.38m.
Mr Tachikawa said that DoCoMo's plan for its 3G service to break even in three to four years depended on the economic outlook: as the group expects large companies to be the service's main driver in its early stages.
"The direction of the Japanese economy will be very important," he said.
DoCoMo's announcement came as the head of Japan's second-largest telecoms group said there was unlikely to be much consumer demand for 3G services at the rates required to make them a viable business.
For 3G to be a viable business, it would have to command higher prices, said Tadashi Onodera, president of KDDI. "I am not sure whether there will be enough demand for HDR at the prices at which it can be offered," he said. HDR is the 3G standard offering speeds of more than 500kbps that KDDI is considering launching in Japan.
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