A Handy Way To Phone Home: PHS

In July, personal communications in Tokyo took a giant step forward, as personal handyphone system (PHS) services were inaugurated. PHS offers cheap and convenient calling, and high-speed digital wireless transmission -- but its applicability to business use remains in doubt.

by R.A. Lemos

Personal communications -- a concept that includes pagers, cellular phones, and personal digital assistants (PDAs) -- is taking Japan by storm. That storm promises to become a typhoon as the new personal handyphone system (PHS) services gain a foothold among the general public. Personal communication services hold the promise of constructing a worldwide person-to-person network that is not dependent on physical location. While the US is still trying to develop its own standard (the personal communications system, or PCS), Japan has jump-started its effort and -- even before the market has pronounced judgment -- is pushing PHS as a pan-Asian standard.

On January 31, 1995, the Ministry of Posts and Telecommunications (MPT) issued 21 Type-I licenses to PHS carriers across Japan, essentially deciding by bureaucratic fiat the future structure of the nation's personal communications market. The MPT has divided the country into nine regions, and authorized three companies in each region to provide PHS services to the general public. Both the DDI Pocket Telephone group and NTT Personal Communications Network group started services in the Tokyo and Hokkaido regions on July 1 (the government-approved starting date), while the ASTEL group will start three months later, on October 1.

Personal providers

The personal handyphone system was originally developed by NTT, the Japanese telecommunications giant, so it is hardly surprising that the company was the first to plan for implementing PHS. After much discussion in 1994 about the best organization and marketing strategy, NTT established the NTT Personal Communications Network group of companies to provide PHS services throughout Japan. In the Tokyo area, PHS service is to be provided by NTT Personal Chuo Co. The relationship with NTT puts the subsidiary in good stead; for example, it will most likely mean that access to NTT's ISDN network (which is the only network currently capable of connecting the base stations of each service provider) will come much more cheaply. Though NTT might deny this, the spring dispute over the pricing of leased lines is indicative of the kinds of tactics the giant uses in the domestic market.

The other company scheduled to start service in Tokyo in July is DDI Tokyo Pocket Telephone. While lacking the head start of developer NTT, this subsidiary of DDI (the long-distance new common carrier) has made good progress, even surpassing NTT Personal Chuo in some areas. DDI tested PHS in Tokyo in April 1994 and, based upon the trial's success, established the DDI Pocket Telephone group in November 1994.

In an attempt to free itself as much as possible from NTT's influence, the DDI Pocket Telephone group has procured much of its base station technology from US companies. This separate development path has created an alternative standard for PHS transceivers and base stations -- a standard that transmits at higher power, which increases signal coverage and penetration but sacrifices handset battery lifetime. DDI Tokyo Pocket Telephone is betting that the larger resulting initial coverage will offset the advantages of NTT Personal Chuo's connections.

The most comprehensive initial coverage, though, is planned by the ASTEL group for its October launch of services. (The name is an acronym based on the company's "Advanced Style of Telecommunications" logo.) With the late scheduled starting date, one might assume that the ASTEL group had been late in developing PHS, yet the group was formed in September 1994 (originally under the name of Telewalker) by a consortium of companies as a competitor to NTT. ASTEL backers include Tokyo Electric (and its subsidiary TTNet) and Japan Railways East (and its subsidiary Japan Telecom). These companies are vital because they give ASTEL access to power poles and railway stations -- two prime locations for PHS base stations. Eventually, 100 or so companies are expected to invest in ASTEL.

While ASTEL will not launch services until October, three months after the NTT and DDI subsidiaries, the company is expected to have the largest service area. In the long run, the delay may turn out to have little effect. According to Shigeki Kusaka, an ASTEL assistant manager, "the three month delay will not be so important, as it will take at least that long for the technology to become accepted."

Bigger is not better

The roots of PHS spring from the digital cellular phone concept, with the main difference being the choice of portability over power. The personal handyphone attempts to fulfill several requirements. By answering consumer demand for a smaller phone unit that will last longer on battery power, and in expectation of the eventual take-off of the wireless data market, the PHS developers chose to create a low-power, high-bandwidth system. When the idea was on the drawing board, several industry specifications were taken into account, as well as the need to reduce the high costs associated with digital cellular base stations.

The primary difference between PHS and the digital cellular standard is in the transmission power of the base stations and handsets. A digital cellular phone outputs between 1 and 5 watts of power; the NTT-standard personal handyphone outputs just 10 to 20 milliwatts. This lower power level results in phones that last considerably longer (5 hours of use or 300 hours of standby for the PHS, versus 2 hours of use or just 8 hours of standby for cellular phones), and it enables both the phones and the base stations to be much more compact.

A drawback of the lower operating power level is the smaller radius that a PHS base station can cover: only 100 to 500 meters, versus at least 1500 meters for cellular base stations. The extra power of cellular systems also improves penetration of the signals into buildings; PHS may require an extra base station inside some buildings. Another disadvantage for the user is that the personal handyphone is not really a "mobile" phone. While the PHS infrastructure can handle a person walking from one cell (the area covered by a base station) to another, the system cannot track users who move too quickly (faster than 10 km/hr) between cells, such as persons traveling in a car or train.

On the cost side, the combination of the relatively simple electronics needed to handle switching for this sort of roaming and the system's lower power requirements make the components of the phone units and base stations much simpler than those needed by the cellular system. On average, PHS base stations cost six times less per subscriber covered; so, even though each base station covers fewer people, the system is still much more cost-effective. This is an important consideration, because in the end, service providers are going to be measured by how quickly they can cover populated areas, and how low they can peg their rates.

Distributing the load

Because individual base stations have a small footprint and weak penetration into buildings, proper placement of base stations is an important factor in building the infrastructure. Covering all of Tokyo is, for now, unrealistic, because eliminating shadowing effects (interference by buildings, causing dead zones that lack service connections) would require an exceedingly high density of base stations. For the providers, a vital part of distributing base stations is deciding which parts of the city merit the redundancy needed to eliminate such dead zones.

NTT Personal Chuo has a decided advantage in this regard. "NTT Personal Chuo benefits from access to NTT's public-phone traffic records," notes ASTEL's Kusaka. "Places where people often use public phones are important to cover [with base stations], as those are the places where PHS truly becomes 'handy'." With an estimated 30,000 base stations in place at the start of July, NTT Personal Chuo will have the most comprehensive initial coverage (though it will actually cover a smaller geographical area overall than DDI).

In addition to knowing in what parts of the city to concentrate coverage, the NTT group benefits from a large selection of locations to which base stations can be affixed (as does the ASTEL group). Most base stations will need to be on the tops of buildings for widest coverage, but in areas where shadowing is a problem, locations closer to the ground become important. The NTT group can use the public phone booths or telephone poles for this purpose; the ASTEL group, which includes JR East and regional power companies, can use power poles and railway station buildings.

This obviously puts the DDI Pocket Telephone group at a disadvantage. As Junichi Takahashi, administrative manager of DDI Tokyo Pocket Telephone Co. observes, "With a lack of locations, DDI Pocket Telephone, more than anything else, needed more powerful base stations." By choosing to increase the system power, the DDI company is able to cover a larger area with fewer base stations -- which means paying rent on fewer locations. In July, DDI Tokyo Pocket Telephone is expected to have 7,000 base stations in place.

DDI Pocket Telephone's strategy of fewer base stations makes the possibility of dead spaces near buildings more likely. Yet the larger coverage radius of its US base-station technology (300 to 500 meters, versus 200 meters or less for NTT Personal and ASTEL's technology) will allow DDI Pocket Telephone to grab a head start in the coming race by making the company's service area significantly larger (at least until ASTEL enters the race in October).

Until service actually starts, no one can know how many holes will appear in each provider's coverage, or over how much of the city each provider's service area will extend. ASTEL's Kusaka admits that, "Most likely, up to 500 meters from a railway station will be covered. Beyond that, it depends on the section of the city. For instance, Shinjuku or Shibuya will most likely be covered entirely."

The wireless information future

The likelihood of spotty coverage has convinced some industry experts that the personal handyphone system will never be a serious business tool. There are several facets of the technology, though, that may convince many users PHS is worth the possible inconvenient interruptions in service.

One reason is that the digital nature of PHS, combined with its 30K-bps data transfer speed, makes it ideal for general wireless connectivity. (In comparison, digital cellular phones achieve only 11.2K bps). The combination of PHS's speed plus the package's compactness makes wireless computing within the city not only possible, but easy. With PHS, future business users will not need today's clunky connectors to transmit data through a phone line; instead, wireless internal modems will provide true personal communications.

Interestingly, the providers seem to be downplaying the business aspects of the new technology. ASTEL's Kusaka says, for example, "Two strikes against PHS for business use are the inability to roam between cells faster than a walk and the incomplete coverage. If your business depends upon being contactable, you will surely miss a phone call or two, and that could be a problem."

Providers are already working on value-added services to deal with these handicaps, however. One suggested solution would be central voicemail; a caller unable to contact a PHS user could leave a message that would be replayed when the user returns to a covered area. Another proposed solution would route calls that could not connect with a subscriber to the subscriber's home or office phone (where the call would presumably be taken by an answering machine). Given the apparent ease in solving coverage problems, the providers are probably overestimating the importance of such shortcomings for business users.

A personal paradise

With a government survey of consumers setting the price, and heavy competition between providers, it is obvious that the personal handyphone has been solidly placed to appeal to the individual consumer rather than businesses. The aim of the PHS companies makes more sense when paired with the fact that the PHS groups have various telecommunications companies as members -- many of them cellular service providers who have a stake in the business-side of wireless communications. With the cheaper PHS usage costs, the service providers stress that the "personal" in personal handyphone is aimed at students and housewives.

As wireless communications splits into the mobile, all-pervasive cellular and the inexpensive, compact PHS, the providers believe that the market will divide along technological lines into business and personal segments. It would not be too surprising, however, if subscriber demographics do not fall neatly into such categories; urban (for PHS) and rural (for cellular) segments may prove a more likely split.

Even if PHS does not soon supplant cellular in the metropolitan regions, the movement to personal communications has already gained too much momentum to be stopped. By the turn of the century, the personal handyphone will likely transform Tokyo into a wireless wonderland. The pressure of the competitive pricing of PHS will force the hand of not only cellular providers (like NTT DoCoMo telephone which has lowered its rates three times in eight months in preparation for PHS competition) but also the POST (plain old telephone service) providers like domestic giant NTT. In the end, it is this sort of competition that will make the oft-dreamed concept of personal communications a reality -- at least in Tokyo.ç

Is PHS for you?

Wondering whether to subscribe to PHS or wait for cellular fees to drop? The threat of PHS is sure to force down cellular fees even further, but PHS service offers several attractive features: lower fees, smaller and lighter phone units, and faster data transmission speeds. If you need to talk while on the move, though, digital cellular phones remain the better choice.

The cost of subscribing to a PHS service is lower than analog cellular phone prices and considerably lower than digital phone costs. Currently, a PHS subscription is ¥7,200 to start (though competition will eventually reduce or eliminate this fee). The initial subscription expense is immediately recovered from the cheaper handsets, however. The typical PHS phone unit sells for between ¥30,000 and ¥40,000; cellular phones are over ¥40,000, often as high as ¥80,000. Further, the monthly fee for PHS services (set by the government at ¥2,700) is half or less of the cellular service fee (generally between ¥5,000 and ¥8,000). The disparity widens with use, as cellular phone rates are much higher than PHS rates. (See the graph.)

Cellular phones and PHS handsets don't differ greatly in size, because the earpiece-to-mouthpiece length is an ergonomic limit. The PHS units are lighter, though, and the simpler electronics make PHS modems possible (such units should be making it to market by early fall). This, in a nutshell, is the business-use attraction of PHS: simple, high-speed, digital communications. Rather than plugging a modem into your computer's serial port, PHS enables internal wireless modems (with small external antennas) that will let the metropolitan notebook computer user be connected anywhere, anytime.

Additional services to take advantage of digital communications will become available as use of PHS handsets grows. NTT is currently studying methods of transmitting digital video over low bandwidths with an eye to introducing wireless videophones. NTT and others among the new common carriers are also currently carrying out wireless multimedia trials.

If you're wondering where you can buy a personal handyphone, the answer is: at most consumer electronics stores in the Tokyo area. Each of the providers has its own handsets (most made by OEMs), and when you buy a phone, the sales person will sign you up for the associated service.