=====================================================================
J@pan Inc Magazine Presents:
W I R E L E S S W A T C H
Commentary on the Business of Wireless in Japan
=====================================================================
Issue No. 59
Monday, June 3, 2002
Tokyo
INDEX
+++ Viewpoint: Headlines We'd Like to See (with apologies to Orson
Welles)
+++ Noteworthy News
--> KDDI Teams up with SK Telecom on Photo Exchange
--> J-Phone's Toned Down 3G Strategy in Question
--> Will 3G Make Money?
--> NTT DoCoMo to Conduct Trial of Multipoint Video Conferencing
with FOMA
--> Vodafone Sheds Teeny-Bopper Image in Japan to Lure DoCoMo Users
--> DoCoMo Pulls FOMA out of Starring Role
--> T9 Text Input Software Installed in NECs MOVA N504i
+++ Events (Advertisements)
Carriers World Japan 2002
Tokyo, Japan, 10-11 July
+++ Sign of the Times
The flood of junk mail and unsolicited, automated
single-ring-and-hang-up solicitation calls ("one-giri")
sweeping through Japan's cellular market has raised the
mobile annoyance factor to unprecedented heights.
+++ Subscriber Statistics, Corrections, Credits, Administrivia
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=====================================================================
+++ Viewpoint: Headlines We'd Like to See (with apologies to Orson
Welles)
--> Major Japanese Carrier Launches World-Leading Wireless Internet
Service Overseas
Source: All major global news services
Dateline: Near future
EXTRACT: Using a developed-in-Japan handset from Toshiba and offering
integrated high-speed mail, Web content, and voice services, KDDI
Corp. -- one of Japan's leading cellular carriers -- today officially
launched its first overseas wireless Internet service in partnership
with Thai CDMA carrier Tawan. The new service, under the
'EZwebGlobal' brand name, is based on KDDI's best-in-the-world WAP
2.0 wireless Internet system, known in Japan as 'EZweb.'
The launch marks the first time that any carrier other than NTT
DoCoMo has been able to export a successful wireless Internet
technology platform and business model, and is expected to be a major
boost to Tawan's mobile data revenues. Similarly, KDDI is expected to
profit from licensing fees earned from providing technology know-how,
content (particularly ringtones and graphics), micro-billing
assistance and business-model consulting. The new revenue stream
comes at a time when the Japanese carrier is saddled with significant
debts and can only help boost the bottom line -- as well as corporate
prestige.
Handsets are initially being provided by Toshiba, a major CDMA
handset maker and KDDI supplier that hopes to profit -- like all
other Japanese makers -- from expanding its product lines into
until-now inaccessible overseas markets. Other Japanese CDMA terminal
makers are expected to offer handsets within a few weeks. Tawan and
KDDI also said they intend to announce "soon" deployment in Thailand
of developed-in-Japan GPS, streaming video, Java and BREW services on
EZwebGlobal, allowing Thai and Japanese subscribers to seamlessly
access data, mail, Java applications and GPS-based location services
whether sitting on a beach in Phuket or strolling down the Ginza, and
providing a much-needed boost to Japanese content, application and
service providers.
COMMENTARY: This is a brilliant idea and represents a significant
poke in the eye for DoCoMo! Both KDDI and Tawan use the CDMA standard
developed by Qualcomm in the US. Although there are roaming
agreements for voice calling among CDMA carriers in Japan, Thailand,
Korea, Hawaii, the rest of the US, Canada and elsewhere, until now,
no one has figured out a way to export KDDI's highly profitable EZweb
WAP-based wireless Internet system, leaving all the glory to DoCoMo
and its relatively unsophisticated cHTML-based i-mode system.
We think the new Thai service is a great idea, and represents a major
boost to Qualcomm, CDMA and the BREW platform. We're also impressed
with the way KDDI has solved the business and operational problems
that have in the past hindered this sort of bold, innovative move.
Senior managers have long complained about the lack of any sort of
roaming agreement for packet communications, that achieving data
roaming is difficult, billing systems are different, and that service
level quality varies between countries. Clearly, KDDI decided to
tackle these for what they are: business and operational problems
that, given sufficient will and resources, can be solved. The result?
They've achieved a major coup, shown that they've got more than
enough mettle to match DoCoMo, and have set the stage for early
deployment of EZweb and the wireless Internet to other CDMA markets,
including Asia and North America. Bravo KDDI! In after-hours trading,
KDDI's share price climbed over 10 percent while DoCoMo's and
Vodafone's both dropped by some 15 points.
--Daniel Scuka
daniel@japaninc.com
NB: Today's Viewpoint is, obviously, fiction, and -- sadly -- will
remain so for sometime. Also, the use of brand names, trademarks and
other registered names in no way implies that they are not protected
under applicable copyright law. Thanks for the idea to Professor Jeff
Funk of Kobe University who, late last week, asked a senior KDDI
manager why the carrier hadn't considered launching EZweb elsewhere
in Asia -- particularly in markets frequented by Japanese tourists
and businesspeople. The answer, sadly, was predictable (and the gist
appears in the final paragraph above). Note that there are also CDMA
systems in Indonesia and the Philippines -- more fertile ground for a
KDDI expansion!
As for citing Toshiba as a potential handset supplier in such a deal,
that may not be fiction for long! Last week, Toshiba announced a
major capital restrengthening of its partnership with US-based
Audiovox, one of the US's leading CDMA terminal suppliers. It's not
too much of a stretch to see them pushing into other markets in the
near future; like all Japanese handset makers, they have to in order
to survive. Oh, and Toshiba's CDMA handsets, by the way, are superb,
if the currently available-in-Japan cdmaOne models are anything to go
by.
PS. Access the link below for more on Orson Welles' famous radio
broadcast
http://history1900s.about.com/library/weekly/aa072701a.htm
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=====================================================================
+++ Noteworthy News
(Long URLs may break across two lines so copy to your browser.)
--> KDDI Teams up with SK Telecom on Photo Exchange
http://www.3gnewsroom.com/3g_news/may_02/news_2223.shtml
Source: 3G Newsroom, May 27
EXTRACT: South Korea's SK Telecom confirmed Monday that the company
has partnered with Japan's KDDI to start a new 3G service Tuesday in
which their mobile phone subscribers will be able to exchange still
photo images. No other details were immediately available. SK
Telecom, South Korea's largest wireless carrier, said it will issue
later Monday a press release regarding the service.
COMMENTARY: If KDDI can work with the Koreans for roaming data
services, there is no reason why they can't do the same in Thailand,
the Philippines, and elsewhere (see Viewpoint above).
--> J-Phone's Toned Down 3G Strategy in Question
http://www.forbes.com/newswire/2002/05/31/rtr618348.html
Source: Reuters on Forbes.com, May 31
EXTRACT: Given Japanese consumers' cool response to pricey,
over-hyped 3G wireless services, Vodafone subsidiary J-Phone might be
wise to save cash and tone down its 3G plans. Analysts say the
limited, makeshift 3G service that Japan's third-largest mobile operator
plans to launch in December could be too little, too late,
and it may never achieve its ambition of becoming Japan's wireless
leader. J-Phone's parent and Vodafone subsidiary Japan Telecom
announced heavy losses for last business year, and the mobile
operator says it will build a temporary 3G network, instead of a
full-scale network, using micro base stations.
These stations are smaller and cheaper than regular 3G base stations
but function in the same way, building networks to transmit data at a
speed of 384 Kbps.
(This article is a MUST READ in the original).
COMMENTARY: Perhaps they can save some money by building smaller,
less robust 3G bases now, and then take advantage of economies of
scale when the rest of the Vodafone group rolls out 3G in 2003-04. On
the other hand, maybe they're setting themselves up for a double-bill
fall when they have to shell out more cash to upgrade from 3G lite to
3G in a year's time. No matter how it's sliced, it's a tough call --
and there is no hint of a dual mode PDC/W-CDMA handset on the horizon
(which, unfortunately, is one of the few developments that could
really save their rear). Is it just us, or is J-Phone -- with its
massively successful Sha Mail and Movie Sha Mail handsets, its highly
developed youth brand image, and its newly upgraded 2G 28.8-Kbps PDC
network -- not one of the best arguments going to actually hold off
on 3G deployment until (a) 2G is fully amortized and (b) W-CDMA
infrastructure becomes cheaper (as it inevitably will)?
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=====================================================================
--> Will 3G Make Money?
http://www.3g.co.uk/PR/May2002/3452.htm
Source: 3G.co.uk, May 28
EXTRACT: In the new headquarters of Manx Telecom, color-screen 3G
phones made by Japanese electronics giant NEC are being put through
their paces and Manx's computer-equipped van is a regular sight
around the island as it tests connection speeds and new applications.
Manx Telecom, a unit of mmO2, is operating the first 3G phone system
outside of Japan and has given away the 130 handsets to islanders in
a bid to discover exactly how the new system will work and if
consumers find it as essential as mobile operators hope. The good
news is that it does work, and well. In the van, connection speeds
around the island are showing to be about 160 Kbps (easily enough to
watch video) and laptop Internet connection speeds through the phones
compare with the quickest available via cable modems. The bad news is
that the prospect of mobile operators making money from such ventures
looks dubious. With debt-laden telcos now under pressure to conserve
cash, investors have taken the view that the capital investment the
licenses entail has become a burden. Skeptics could point out that
the 5.94 billion UK pounds Vodafone paid for its 3G license is 50
percent more than the current market value of rival license holder
mmO2.
COMMENTARY: The top-secret, killer-app for 3G will be... (Ta Da!)
whatever the top-secret, killer-app has been on 2G. In other words,
don't for a second think that people will change what they do on the
mobile Internet just because the connection speeds go up. Mail,
ringtones and graphics are all plenty profitable on 2G and will be so
on 3G. It may be better to stop asking the question posed in this
news item and simply let carriers build the networks, deploy new
bandwidth (as KDDI and DoCoMo have done here) and then see
what takes off.
--> NTT DoCoMo to Conduct Trial of Multipoint Video Conferencing with
FOMA
http://www.nikkeibp.asiabiztech.com/wcs/leaf?CID=
onair/asabt/cover/187570
Source: Nikkei AsiaBizTech, May 28
EXTRACT: NTT DoCoMo on May 27 set up a group to study the possibility
of commercializing a videoconferencing service using FOMA. The group
is called the consortium of multipoint connection experiment for FOMA
TV Phone. Participants in this field trial include 40 corporations
and organizations that are considering using or offering corporate
videoconferencing systems via cellular phones. Specifically, the
participants are from the manufacturing sector, the construction
industry, TV broadcasting, the event planning sector and others.
COMMENTARY: As we were saying in the commentary above: Build it and
see who comes! Here again, DoCoMo is doing precisely that, although
in a rather thorough (overly thorough?) Japanese technology-company
fashion. This trial will use DoCoMo's multipoint videoconferencing
platform, announced in March. Up to 16 phones can participate in a
conference, and the system uses the 64-Kbps circuit-switched mode
(not the 384-Kbps TCP/IP data mode). Possible applications include
videoconferencing between sales reps, live telecasts of media events,
and "even English conversation lessons." Hey -- you have to build the
network before any of this can happen.
===============================NOTE==================================
The latest issue of J@pan Inc magazine is now available online!
http://www.japaninc.com/contents.php?issueID=37
Subscribers can access our hot-off-the-press features, including:
- Doctor in the House
As ever greater numbers of non-Japanese investors move in to take
over more and more distressed assets, we take a look at exactly who's
got money to spend and why they're directing their efforts eastward.
Are they in for a quick buck or looking to heal an ailing economy?
- Walls Come Tumbling Down in Japanese Banking
Kansai Sawayaka Bank was the first acquisition target for all-
American takeover guru Wilbur Ross when its predecessor foundered in
the aftermath of Japan's 1999 financial 'Big Bang.' KSB's fate has
been seen as anything from foreign interference to an intriguing
experiment. Alex Stewart surveys the lie of the land.
- Ross to the Rescue
The deal-making prowess of Wilbur Ross is known far and wide, but
how has he slashed his way through the notorious Japanese red-tape
jungles? And more importantly, why?
- Open Source Free for All
Why are Japan's mainframe makers, brokerages and other big guns so
interested in open source solutions these days? Sam Joseph takes us
into a geeky world that is getting more attention from moneyed
interests.
Subscribe at: http://www.japaninc.com/mag/subs.html
=====================================================================
--> Vodafone Sheds Teeny-Bopper Image in Japan to Lure DoCoMo Users
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&
s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=
ad_right1_topfin&bt=ad_position1_topfin&middle=ad_frame2_topfin&s=
APPGOBBY1Vm9kYWZv
Source: Bloomberg, May 27
EXTRACT: A Japanese executive holds back tears as he watches his
infant son take his first step -- all by watching a video on the
screen of his mobile phone. Vodafone Group's latest ads in Japan
feature clean-cut, young professionals exchanging video clips using
handsets with built-in cameras. Gone is Norika Fujiwara, the
model-actress whose appeal helped make the product of Vodafone's
J-Phone a hit among the country's teenagers. The campaign is a sign
that Europe's largest wireless phone company is courting the
traditional customers of Japan market leader NTT DoCoMo as it tries
to boost the No. 3 operator's 17-percent market share. Advertising
executives say the image shift won't be easy. "Trendy young girls,
easy to use, cost effective" are words that sum up J-Phone's image,
said Gary Nevin, a Tokyo-based brand consultant at FutureBrand Inc.,
a unit of Interpublic Group. "Repositioning the brand is going to be
seriously difficult."
COMMENTARY: As we mentioned above, it may not be wise for J-Phone to
rebrand themselves as a serious business/corporate service provider
when they don't have a 3G network. Stick with what you know, J-Phone,
and keep raking in the revenues from 2G while DoCoMo and KDDI trip
all over themselves to launch 3G.
Of course, the problem is that J-Phone added 9 percent **fewer** new
users year on year last month -- and J-Phone subscribers don't
spend as much as i-moders or EZwebers. ("According to figures
released in November, J-Phone's subscribers spend about 7,900 yen a
month on phone services, compared with more than 8,000 yen for its
rivals.") So what if Movie Sha Mail and Sha Mail (targeting younger
females) are wearing thin (as well as costing a king's ransom for
handset subsidies). If so, there are other services that can be
rolled out on 28.8-Kbps PDC that can and will appeal to older males.
What about creating a fantasy sports game service using rich graphics
(think Flash) that allow dream teams to be played against each other
across the network?
--> DoCoMo Pulls FOMA out of Starring Role
http://www.asahi.com/english/business/K2002052800484.html
Source: Asahi Shimbun, May 28
EXTRACT: Mobile telecom titan NTT DoCoMo has switched its strategy,
holding off making its FOMA advanced mobile service the lead player
for now, company sources said. Instead, DoCoMo will concentrate on
its present-generation service. Step one of the strategy shift is the
release today of a foldable handset with its own digital camera, to
join its line of 2G hand-held gear. Rivals J-Phone and au already
have such functions, so DoCoMo hopes the consumer response so far
will help bolster sales of its entry.
COMMENTARY: This report is most likely factually true; and the
"company sources" probably really did say that Big D will hold off on
making FOMA the lead player. But there's no going back now, and you
can expect the FOMA sales promotion dept. to be quite active in
figuring out how to commercialize the system's tremendous
capabilities (see news item above on FOMA videoconference trials). We
wouldn't say this was a "switch" in strategy; rather, it's merely a
slowdown.
Ironically, speaking at the Mobile Roundtable organized by the
Hitotsubashi University Institute of Innovation Research, NTT
chairman Kouji Ohboshi said that he'd like to see **more**
competition for Big D. "DoCoMo is a lot more conservative [now]. In
the past, we were smaller, had less than 30 percent market share, and
it was easier [for senior managers] to walk around. Now it's too big,
and I hope Vodafone has good success. It would be good for DoCoMo to
lose a little market share."
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=====================================================================
--> T9 Text Input Software Installed in NECs MOVA N504i
Source: AOL Mobile Company PR Release, May 27
EXTRACT: Tegic Communications, a subsidiary of America Online,
installs Japanese T9 Text Input, text input software for mobile
phones, in the MOVA N504i, the latest mobile phone manufactured by
NEC, which will be released by NTT DoCoMo on May 29. The NEC MOVA
N504i is the first model to be released by DoCoMo to come
pre-installed with T9 Text Input, enabling fast email inputting.
Furthermore, this model is equipped with a 2.2-in. high-definition
display with 1.8 times higher resolution compared to conventional
displays. With its large and clear character and image display
capabilities, the inputting of email messages with T9
Text Input can be performed more easily and efficiently.
COMMENTARY: Ray Tsuchiyama, principal at Tegic Japan, reports that
the N504i models were sold out on Day One (last Friday). He's hopeful
that the T9-equipped models become "a runaway best-seller." While
that remains to be seen, it is interesting to note one more example
of made-in-America technology finding a home on Japan's wireless
webs.
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** Here's the program lineup for the next two weeks:
June 3 -- WiredPocket is a US-based, mobile software
startup focusing on the enterprise space. That's fine for
over there, but it's just a tiny slice of the primarily
consumer market over here. So why in heck would WP open a
Japan office? And have they really got a chance?
June 10 -- Europe's KPN and E-Plus are proud new parents of
a pair of bouncing baby i-modes. On most counts, DoCoMo's
spawn appear to be a success except, unfortunately, in
profitability and quick penetration. We sit down with Berlin-
based wireless expert Jan Michael Hess to assess whether the
German launch has been a success, and we cover the service model,
the handsets and local media reaction.
We'll post the latest webcast in various streaming formats each
Monday evening, around 17:00 JST.
http://www.video-link.com/wireless/index.asp
=====================================================================
+++ Events (Advertisements)
Carriers World Japan 2002
Tokyo, Japan
10-11 July 2002
With telecom deregulation throwing its doors open to international
players, Japan is experiencing tremendous interest from global
carriers trying to get a foothold in this once monopolized telecom
market. Recognizing the revenue and competitive potential of the
Japan market, CARRIERS WORLD JAPAN 2002 returns, for the third time,
as the only event that addresses the state and dynamics of the
carrier marketplace in Japan.
The event will present road maps to help you navigate your way
confidently against the competitive market challenges of the future.
For more information, visit us at:
http://www.carriersworld.com/carriersworldJapan2002/
---------------------------------------------------------------------
+++ Sign of the Times
Japan Internet Report No. 64 Spring 2002
http://www.jir.net/jir5_02.html
Extract:
The flood of junk mail and unsolicited, automated
single-ring-and-hang-up solicitation calls ("one-giri")
sweeping through Japan's cellular market has raised the
mobile annoyance factor to unprecedented heights.
Of the 900 million messages that go through DoCoMo's
servers each day, 880 million (98 percent) are spam,
according to the company. The problem is that, regardless of
the source of the message, subscriber phones ring (or
vibrate) every time mail arrives. Nearly everyone who owns an
Internet-enabled cellular telephone has been inconvenienced
as a result.
The depth of the problem was underscored by a half-page ad
in the Asahi Shimbun that recently caught my eye. One of the
top carriers was promoting the following three service
benefits:
- Sleep soundly -
"You're less likely to be woken up by spam"
- Regain the thrill every time you get mail -
"Because it's less likely to be spam"
Tim Clark's mail newsletter has hit the spam problem right on the
head! This issue is well worth reading in its entirety, not only for
his coverage of the spam situation ("a test conducted by Net Village
and Digital Street using an i-mode phone with an as-issued e-mail
address found that the handset received 857 spam messages in August
of last year, 2,898 in December last year, 2,945 in January this
year, and 2,578 in February of this year") but also for his insight
and long-timer perspective on the slow maladies killing this once
beautiful country.
((Tim also puts in a very kind -- and, dare we say, accurate -- plug
for Wireless Watch towards the foot of the message. Thanks, Tim!))
=====================================================================
+++ Subscriber Statistics, Corrections, Credits, Administrivia
WIRELESS WATCH EMAIL NEWSLETTER SUBSCRIBERS
2,487 as of June 6, 2002
30-day new subscribers from May 4: 174
WIRELESS WATCH VIDEO
Feb 1-28, 2002: 3,796 streams (908 mins/day); 3.2 views/visitor
Mar 1-30, 2002: 4,621 streams (1,557 mins/day); 1.75 views/visitor
Apr 1-30, 2002: 4,750 streams (1,393 mins/day); 1.54 views/visitor
May 1-31, 2002: 3,769 streams (1,130 mins/day); 1.20 views/visitor
30-day totals from May 1:
/wireless/index.asp 3,201 (visitors)
Avg. length per visit: 11.0 mins
STAFF
Wireless Watch newsletter and Wireless Watch Video Newsletter
researched and hosted by: Daniel Scuka ( daniel@japaninc.com )
Edited by: J@pan Inc editors ( editors@japaninc.com )
Wireless Watch Video Newsletter produced and edited by:
Lawrence Cosh-Ishii ( video@japaninc.com ) in cooperation with
http://www.video-link.com
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