michael, perspec. on CDMAOne sales in Japan: Japanese cdmaOne numbers prove disappointing...
(Feb. 99 issue Mobilecomms)
Subscriber numbers for Japanese operator DDI Cellular's cdmaOne service have proved disappointing following the costly launch of the service on 14 July 1998.
The first to roll out such a network in Japan, DDI had only 56,000 customers at December 1998. This is a poor figure in a market with more than 30 per cent mobile penetration and 42 million users.
"One can't exactly say the start has been a success," DDI partner IDO's general manager, corporate planning, Shunsuke Oyama, frankly admits. DDI's predicament is one which will be familiar to many cdmaOne operators worldwide – handset problems. In a market where new handset models are introduced every three months, DDI's – all dual mode TACS/cdmaOne – have not measured up to those utilising its digital competitor, NTT DoCoMo's PDC. Alongside the compact 70 gram PDC phones, the 95-120 gram dual mode phones look as bulky as the original Motorola brick now looks to GSM users.
There also have been technical problems. Of the three initial models on the market, Panasonic, Toshiba and Kyocera, the first two – those with chipsets from Qualcomm – had to be recalled due to a fault in their power dissipation control. DDI's catalogue advertised the phones as having a standby time of 60-65 hours, already a poor showing next to PDC's standby times of up to 200 hours, but in reality the battery lasted only 20 hours. The problem may be in the complexities of dual mode chipset design, yet handsets from Kyocera with dual mode chips supplied by DSPC had no problems.
"It's kind of ironic," says Makio Inui, telecoms analyst with Salomon Smith Barney Japan. "[Panasonic and Toshiba] thought they'd be on the safe side if they stuck to the original source."
DDI and IDO have set themselves the near impossible task of combating the rising market share of dominant NTT DoCoMo and have been counting on the new technology to do the trick. It was hoped that the superior voice quality promised by cdmaOne would win customers away from DoCoMo, whose network is already suffering from saturation.
The underwhelming debut of cdmaOne may prove, says Inui, that "call quality is not the killer application". Or it may simply prove that Japanese users prefer small phones with long lived batteries. In any case, it looks as if DDI has made a mistake in not waiting for a joint launch with IDO.
Gradual conversion of DDI's TACS base stations is under way in Kansai, Kyushu and Okinawa, although the carrier declines to reveal what percentage of these are fully converted to cdmaOne. It has postponed its full advertising push until a further upgrade is negotiated with Qualcomm. This may not be before Q2 1999 when IDO will launch in Tokyo and Nagoya, and the two carriers can advertise a nationwide service.
The size of the handsets may no longer be a problem as IDO, with a much smaller analogue base to worry about, is skipping the dual mode phase and will only offer single mode cdmaOne phones.
But the two operators have a window of just three years to make it count. By then DoCoMo will have launched its third generation WCDMA network. DDI/IDO's narrow band cdmaOne services will not even have reached payback by then.
IDO's Oyama admits: "If we don't make it with cdmaOne, we're not going to win with PDC." DDI's vice-president Tadashi Onodera concurs: "If we lose after going this far, there's nothing more we can do."
Japanese mobile operators DDI and IDO are convinced that a compromise between the two 3G standards, cdma2000 and WCDMA, will be reached.
This is despite the MPT's decision to submit only one proposal for IMT 2000 technology to the ITU.
Unlike DoCoMo, which plans to rush into 3G, perhaps precipitously, by 2001 the cdmaOne carriers are happy to wait. "We're in no hurry for 3G. In fact, we would almost prefer 3G as late as possible," says IDO's general manager, corporate planning, Shunsuke Oyama.
Having invested in an entirely new second generation network, the two carriers are naturally placing their eggs in the cdmaOne basket, but they insist there should be a single world standard. "If Qualcomm doesn't allow the release of its IPR," says DDI's vice-president Tadashi Onodera, "then WCDMA will not be standardised." Onodera maintains that at some point in the future a way will be found to merge the two proposals. "The differences between them, the chip rate for example, is very small." Japan's IMT 2000 Study Group has found solutions to all other issues of difference between the two, reports standards body Arib.
DDI and partner IDO will be the first cdmaOne operators to launch data transmission rates of 64kbps, by the end of 1999. Like GSM, PDC offers a rate of only 9.6kbps, which Onodera says "will be enough for a while".
The 64kbps rate will be fast enough to permit mobile internet services, which DDI and IDO will promote for user friendly applications in the consumer market in conjunction with DDI's wireline internet services. There is growing concern that NTT DoCoMo will begin rolling out its third generation network before the technology is ready for multimedia applications. "If DoCoMo wants to introduce WCDMA in 2001, that's OK for them, but in such a case there will be discrepancies between the European and DoCoMo specifications," says Onodera.
Having already sacrificed backward compatibility with PDC by compromising with Europe to achieve a retrospective convergence, DoCoMo would then have to change its infrastructure and terminals to match. This would be very expensive.
Although all carriers in Japan are rushing to formulate their 3G plans to keep up with DoCoMo, they may not be in such a hurry to launch services. "We're in no hurry for 3G, but I wouldn't say that to the MPT, because I want more spectrum and I want a licence," says Onodera. "For technical purposes, we will be ready to launch in 2001, but for business purposes, we won't decide when we'll begin commercialisation."
Susie Helme
mobilecomms.com
DoCoMo as y'all know is the one to beat in Japan. |
