Nissan Turns Toward Mobile Consolidation
By Jeremy Scott-Joynt
03-FEB-98
The consolidation driving Japan's wireline carriers has hit the mobile sector, with Nissan Motor and Japan Telecom uniting their mobile phone companies in a challenge to market leaders DDI, Ido Tsushin and NTT DoCoMo.
Nissan's Tu-Ka Phone and Japan Telecom's Digital Phone must work together to survive the transition to third generation mobile services - set to hit Japan in the year 2000 - said Nissan vice president Heiichi Hamaoka.
"Given our expected development costs, Nissan's and Japan Telecom's group have no choice but to join forces," he said.
To date, work on next-generation mobile systems has cost the Nissan group about 150 billion ($1.19 billion). Neither group could continue to sustain that kind of expenditure on its own, said Hamaoka. Both companies are still heavily in debt following intensive build-out of their digital networks.
Tu-Ka currently has 1.6 million digital customers and 2.24 million on its analog system, while Digital has a total customer base of 2.27 million. The nine Nissan-controlled companies, the three Japan Telecom ones and their parent companies will form a single firm sometime this year to promote their 3G activities.
Nissan's move follows months of consolidation between Japan' fixed-line operators, as deregulation begins to bite into the long-settled telecoms market.
Japan Telecom bought up international operator ITJ last year, and is now looking at a tie-up with WorldCom, which plans to enlarge its market position in Japan throughout this year.
At the same time, NTT has begun to look at a possible relationship with IDC, another international operator.
The fixed-line merger mania, acknowledged as inevitable by all the main players, is seen as the result of the need to integrate local, long-distance and international services.
The wireless world also recognizes the potential for integration. But more important is the long shadow cast by 3G. The breakneck growth of the mobile market is eating up existing radio spectrum allocations, and this has led operators, rather than vendors, to push for early introduction of 3G services simply to free up the bandwidth already allotted to it.
But in terms of standards, the 3G scene in Japan is still split between NTT DoCoMo and the alliance of DDI and Ido Tsushin. The former is part of the consortium pushing the W-CDMA air interface, newly adopted - with modifications - by Europe as its 3G mobile standard, with support from Japan Telecom and 17 mobile operators across Asia.
The latter, though, is building new networks based on the US-based IS-95, or CDMAOne, and is looking to follow the upgrade path developing within the CDMA Development Group towards what it calls wideband CDMAOne.
DDI says may adopt W-CDMA cell phone technology
TOKYO, Feb 2 (Reuters) - DDI Corp's (9433.T) honorary chairman Kazuo Inamori said on Monday DDI would be willing to adopt the widely recognised W-CDMA third-generation cellular phone standard if the technology was free.
''We are willing to adopt the W-CDMA standard and are ready to invest in the facilities in 2000 or afterwards provided the technology is open and fair competition is secured,'' Inamori told reporters.
DDI last year began making investments in the CDMA One digital cellular phone standard to compete against the Nippon Telegraph and Telephone Corp (NYSE:NTT - news; NTT) (9432.T) group, which developed the basic structure of W-CDMA.
The massive investment in CDMA One has already squeezed DDI's profit position.
Last week, the European communications industry agreed to adopt the W-CDMA, supported by Scandinavia's Ericsson (LMEb.ST) and Nokia Ab (NOKSa.HE), as the new standard for the third generation of mobile phones and communications by combining it with the TD-CDMA technology, preferred by Germany's Siemens AG (OTC BB:SMAWY - news; SIEG.F) and others. |
