Let the games begin:
Its NTT DoCoMo, the 600 pound summo wreatler VS little KDDI, the 10 pound rabbit. Whatever can be boughe, NTT has bought--even NOK's loyalty. Its WCDMA VS 1X and maybe a little 1X EVDO. A surprise awaits us around every corner.
10 Apr 2002, 07:36 PM EDT
Msg. 622 of 623
Commentary 4Mobility - All Eyes On Japan
By Andrew M. Seybold
9 April 2002
All Eyes On Japan
I just got back from attending the soft launch of KDDI's CDMA2000 1x network upgrade
in Tokyo. I say it was a soft launch because there wasnt much fanfare no fireworks or
blitz of media ads. However, on April 1, 2002, you could walk into a store and purchase
any one of five color-screen handsets for between $80 and $120 U.S. and become a user
of the 3G network.
Japan is the first country in the world where two flavors of 3G technology are up and
running. In October of last year, NTT DoCoMo, the largest of the three Japanese wireless
operators, turned on its WCDMA system (called FOMA) and now KDDI has turned on its
CDMA2000 1x network. J-Phone, the third carrier, is the smallest but is controlled by
Vodafone and it, too, will roll out its own WCDMA system later this year. In the
meantime, we will be able to watch what happens between NTT DoCoMo and KDDI.
KDDIs network upgrade is from cdmaOne, which is the IS-95B version of that technology
that already supports 64 Kbps of packet data, to CDMA2000 1x with peak data speeds of
144 Kbps. At the time of the launch, the CDMA2000 1x service covers 33 municipalities
and 477 regional communities as compared to NTT DoCoMos FOMA coverage of only
Tokyo. Both operators promise additional coverage, with KDDI stating that it will be
providing CDMA2000 1x coverage to more than 85% of the Japanese population by the
end of the year more than double what NTT DoCoMo has committed to.
NTT DoCoMo is the gorilla on the block with more than 40 million customers nationwide
while KDDI is a distant number two with about 15 million customers, 10.5 million of
which are already cdmaOne users. J-Phone has about 12 million subscribers at the
moment and is trying its best to catch up to and pass KDDI for the number two spot.
This may be more difficult to accomplish now that KDDI has lunched its 3G services.
The Battle Begins
NTT DoCoMo has considerably more resources at its beck and call than either KDDI or
J-Phone, but since October it has only been able to convince about 50,000 customers to
give WCDMA a try. Part of the problem has to do with its limited coverage and lack of a
dual-mode phone. (When customers are out of the FOMA coverage area they need a
second, PDC-capable phone.) The handsets are larger than those available on the PDC,
PHS and cdmaOne systems, they are about twice as expensive and their battery life is
poor.
Over the next 12 to 18 months, NTT DoCoMo and J-Phones WCDMA services will mature,
device size and battery life will improve and prices will fall. At present, KDDI has a
window of opportunity if it can effectively market its network and terminals. At the
launch, KDDI introduced 5 new phones for its CDMA2000 1x system, all of which have
color screens, one sports 64,000 colors, one sports a built-in camera and one is equipped
with GPS for location-based services. All of these phones were introduced at low prices.
KDDI fired another shot across FOMAs bow by pricing its data services at about 30% less.
KDDI will support Java so that the non-sanctioned i-mode sites can be made available
over its network, and it will support BREW applications as well. Its existing EZWeb
services are now based on WAP 2.0, and its EZmovie service that provides video clips to
phones will also be available. Since CDMA2000 1x is fully backwards compatible, when
customers are out of CDMA2000 1x coverage they will still have voice and 64 Kbps
packet-data services.
The Numbers
While NTT DoCoMo is working on improving its WCDMA services, getting its handsets
down to a reasonable size and cost and building out more coverage, KDDI has an
opportunity to steal some of its customers. To date, the WCDMA system has not
attracted a large number of users. As of the end of February, the published number of
FOMA users is just over 55,000, well under the NTT DoCoMo estimation of 150,000 and
far below the 6-plus million CDMA2000 1x users in Korea. KDDI, for its part, is betting
that it can grow its CDMA2000 1x installed base to over 7 million by the end of its first
year of operation. With its aggressive data pricing and its buy down of really cool color
phones, I believe that KDDI can meet its goal.
The real battle for customers begins when and if NTT DoCoMo and J-Phone obtain parity
with KDDIs offerings, devices and prices. However, if KDDI rolls out CDMA2000 1x EV-DO
which provides data speeds of 2.4 Mbps, which is beyond the capabilities of WCDMA
and/or QChat, the new Qualcomm/Nextel/Motorola two-way radio feature for
CDMA2000 1x that will be available early next year, it will continue to have an advantage
for at least the next two to three years. This doesnt guarantee a winning hand,
however, since the might of both NTT DoCoMo and Vodafone will be squarely behind
their WCDMA offerings.
KDDI must use this year wisely to capture additional market share. One stumbling block
for KDDI is the fact that Japan, like the U.S., does not offer number portability. Existing
NTT DoCoMo and J-Phone customers may be hesitant to change services and lose their
existing phone number. This, and the possibility that the 30 million i-mode users may opt
to upgrade to FOMA instead of changing carriers, could put a damper on the growth of
KDDIs market share. That being said, the Japanese are more inclined to change from
one carrier to another based on new, cool service offerings.
What KDDI Must Do
In order to grow its market share, KDDI must be very aggressive now while it has the
greatest advantage over its competitors. Each month that passes will give NTT DoCoMo
more time to tweak its system and move closer to having more competitive handsets. At
this point its anyones guess as to how aggressive KDDI will be. However, even if
customers arent interested in data services, the prices of the 1x compatible handsets
make them hard to resist.
Can KDDI become the number one wireless provider in Japan? I dont think so, but it
could easily double its installed base of users. The Japanese are gadget freaks
extraordinaire! It will be interesting to watch KDDIs progress.
My bet is that KDDI will do well not because WCDMA doesnt work, but because KDDIs
system is backward compatible, it offers smaller and lighter handsets with good battery
life and it will be able to offer some really great services including the ability to send and
receive images, play interactive games and make use of location-based services.
Courtesy of SI: Message 17308660 |
