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Technology Stocks : Ericsson overlook? -- Ignore unavailable to you. Want to Upgrade?

To: Jim Oravetz who wrote (4970)	3/21/2002 12:34:44 PM
From: Jim Oravetz	Read Replies (2) \| Respond to of 5390

Wireless Technologies Battle It Out in Japan By ROBERT A. GUTH Staff Reporter of THE WALL STREET JOURNAL TOKYO -- After years of trying to hammer out a single global standard for mobile-phone technology, the telecommunications industry has admitted defeat. Two rival technologies will go head-to-head, and the battle will play out first in Japan, between archrivals NTT DoCoMo Inc. and KDDI Corp. On April 1, KDDI, Japan's No. 2 telecom provider, will roll out a technology called CDMA 2000 1X that will boost the performance of KDDI's wireless network, allowing it to offer faster access to data than it can now. The upgrade could help KDDI challenge DoCoMo, Japan's giant mobile carrier and operator of the world's largest wireless Internet service. At stake are more than the spoils of Japan's mobile-phone market. The face-off will help set the stage for how so-called third-generation, or 3G, technology is rolled out around the world. The odds are against KDDI, but if it can execute its strategy flawlessly, it stands a chance of disrupting the future of a technology that was a decade in the making and for which European operators have poured $100 billion into new wireless spectrums. The result matters to many technology providers around the globe, including Qualcomm Corp. of San Diego, which provides both camps with basic technology but favors the KDDI version because it doesn't include non-Qualcomm technology. "Japan is the first country in the world where the two kinds of 3G are being introduced," says Ted Matsumoto, president of Qualcomm's Japan unit. "Many operators are wondering which way to go. Now they can make a judgment based on how it turns out." In October, DoCoMo was the first operator in the world to commercialize 3G service, which offers high-speed wireless data transfer, for instance to download music or make video phone calls. DoCoMo's service is based on a technology called W-CDMA, or wideband code-division multiple access, which uses Qualcomm patents as a base but is considered a hybrid of technology from DoCoMo and other companies. The challenger pushed by KDDI, CDMA-2000, has a strong following in South Korea and hopes of gaining acceptance in the Chinese market. In the U.S., Verizon Wireless and Sprint Corp.'s Sprint PCS are also in the CDMA camp. (Verizon Wireless is a joint venture between New York's Verizon Communications Inc. and Britain's Vodafone Group PLC.) The face-off isn't just about the technology to move data faster over wireless networks. It's also about philosophy: The W-CDMA path is expensive and revolutionary while CDMA-2000, its proponents say, is cheap and evolutionary. To roll out DoCoMo-style technology, operators have to build entirely new networks and spend many months tweaking complex software to guard against dropped calls and other glitches. DoCoMo alone is spending some $10 billion to build its network. A W-CDMA handset can cost $200 million to develop. Glitches in its system last year forced DoCoMo to delay its commercial rollout by four months. The network, offering a download speed of up to 384 kilobits per second, isn't compatible with DoCoMo's existing network, so subscribers must buy new handsets, which can run as high as $400. DoCoMo will likely miss its target of having 150,000 subscribers to the new service by the end of March. It currently has about 70,000 subscribers and aims for six million by the end of March 2004. Meanwhile, KDDI next month will make a relatively inexpensive incremental change to its network, boosting its maximum data speed to 144 kilobits per second from 64 kilobits per second now. Eventually KDDI is expected to make another upgrade that Qualcomm says can triple the network's capacity, allowing it to handle even more data traffic. Not only will subscribers be able to use their existing phones on the new network, but the technology will also save KDDI money, says company President Tadashi Onodera. Still, it's an uphill battle. KDDI is loaded with 1.8 trillion yen in debt and has a bad track record in rolling out the innovative services it needs to attract subscribers. KDDI was blindsided last year by a service from smaller rival J-Phone Co. that lets subscribers take and send pictures with their mobile phones. Industry wisdom still favors W-CDMA, because so many companies -- including big equipment makers like Finland's Nokia Corp. and Sweden's Telefon AB L.M. Ericsson -- have committed so much to the technology. Most European operators are expected to adopt W-CDMA, while Asia will likely be a mix of the two technologies. That leaves the last big market: the U.S., where DoCoMo hopes to coax AT&T Wireless Services Inc., in which it owns a 16% stake, to use W-CDMA.