WW-33 -- i-mode on 3G: The Same as i-mode on 2G (so far)

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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
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Issue No. 33
Monday, November 19, 2001
Tokyo

INDEX

+++ Viewpoint: i-mode on 3G: The Same as i-mode on 2G (so far)
+++ Noteworthy News
- Mobile Phone Firms Tout New Services
- KDDI is Gaining on DoCoMo
- DoCoMo Rolls Out Wireless Multimedia

+++ Events (Advertisement)
+++ Sign of the Times

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+++ Viewpoint: i-mode on 3G: The Same as i-mode on 2G (so far)

Now that DoCoMo's 3G network is up and running, the question is,
"What can it be used for?" No doubt, the planners at DoCoMo are
spending late nights trying to figure out the answer to this
question. Similarly, with cdma2000 1X (offering 144 Kbps) due to
roll-out on KDDI's network next April, the competition is also
undoubtedly busting their brains thinking up new (paying)
applications for all that bandwidth.

As a point of comparison, GSM operators in Europe and the US who
overlay GPRS data-capable systems on top of their voice networks (and
many are, with roll-out due between now and mid-2002) can expect to
obtain anywhere from 28 to 40 (or so) Kbps. This speed, while
perfectly adequate for creating successful wireless Web services
(DoCoMo started i-mode at 9.6 Kbps), is much slower than those
offered by FOMA and cdma2000 1X, so the service planners at these
carriers must be going to bed much earlier than their counterparts in
Japan. ;-)

But for Japan, the question is now highly relevant. Keep in mind the
fact that so far, i-mode on 3G has been precisely the same as i-mode
on 2G -- except that those tiny Web pages come flying down the
pipeline much faster. There have been no high-speed-optimized or
bandwidth-hungry services deployed on FOMA. This will change when Big
D launches the i-motion video clip service (see third item below),
but even then, new 3G i-mode services will be optimized for **64 Kbps
** (the speed of FOMA's circuit-switched, time-based fee mode) and
not the much-ballyhooed 384 Kbps -- because it's still very expensive
to download a video clip via the 384-Kbps packet-switched,
packet-based fee mode.

But rest assured that the carriers are looking closely at new
services that will leverage 3G's high-speed capability. Specifically,
carriers in Japan are looking at positioning, advertising,
e-commerce, music, telemetry, messaging, groupware/sales force
automation (SFA), and telematics, among others. The services that get
rolled out first will be the ones that generate revenue first, so in
this respect DoCoMo's launch of i-motion on FOMA (at 64 Kbps) and the
continued strong push behind the PHS-based M-Stage Visual and Audio
services can be seen as trial runs for future deployments of similar
multimedia services (at full, 384 Kbps, speed) on FOMA.

In fact, we think it's fair to assume that the 3G FOMA network is
nothing more than a technology trial and test bed -- at least until
the network covers substantial portions of the nation and subscriber
numbers ramp up. But in the meantime, audio and video services
created by content providers will serve as models for what eventually
will be available nationwide at high speed.

--Daniel Scuka

P.S. For a peek at operator and content provider strategy in the age
of high bandwidth, drop by the Mobile Content Forum's annual assembly
and special seminar to be held in Tokyo tomorrow, November 20, at the
Westin Hotel. Representatives from i-mode, EZweb, J-Sky, DDI Pocket,
the ministry, and the MCF will make presentations. For more info and
to register, access: http://www.mobilecontentforum.org.

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+++ Noteworthy News
(Long URLs may break across two lines.)

--> Mobile Phone Firms Tout New Services
http://www.asahi.com/english/business/K2001111400420.html
Source: Asahi Shimbun, November 14

EXTRACT: Handset makers and service providers are touting new
high-tech features to stimulate consumer interest in their wares.
Among the most high-profile developments are phones that make use of
the satellite-based global positioning systems (GPS). The first to
make it to market with a GPS-enabled handset will be Au, the mobile
phone firm affiliated with KDDI. KDDI plans to launch two GPS-enabled
handsets: Hitachi's C3001H and Kyocera's C3002K.

COMMENTARY: Location-based services (LBS) are already big
money-makers on Japan's wireless Webs. J-Phone's J-Navi system
actually warns the user that the map that is about to be displayed
will cost JPY20 -- partly so as to prevent people from over-using the
highly convenient map database system. J-Phone also operates a
push-based area information system (see WW No. 32 for more details on
each carriers' LBS).

GPS is interesting, because the handset makers have been keen to find
ways to tie new mobile wireless services to their handsets. Until
now, content and service providers have generally ignored the handset
(and onboard browser) since these have merely served as the platform
via which content and services are provided. In other words, there's
been no way for the handset makers to tap into the Web content and
services revenue stream. The new GPS functionality probably won't
change this, but there's no doubt the likes of Hitachi, Sony, and NEC
would love to be able to bill users of their handsets for accessing
onboard features that are tied to a central server. One lawyer at a
large venture-focused law firm here told us recently that at least
one large handset maker had formed a team to specifically look at how
to cultivate such revenues.

--> KDDI is Gaining on DoCoMo
http://uk.mobile.yahoo.com/011114/198/cfg52.html
Source: Yahoo, November 14

EXTRACT: KDDI will launch video transmission (using MPEG4) and GPS
services, and the pricing is absolutely competitive with DoCoMo's.
The services will launch throughout Japan next month as a warm-up to
next year's April roll-out of Au's new next-generation service,
cdma2000 1X. The system is slower than FOMA, but twice as fast as the
existing cdmaOne network. The KDDI 1X phones will operate at 144
Kbps. KDDI president Tadashi Onodera said that the rates were
calculated with FOMA rates in mind and that the X1 handset will cost
no more than half the price of a FOMA handset.

COMMENTARY: The title of this news item is complete garbage; KDDI
will "gain on DoCoMo" when sumo wrestlers take up the tea ceremony.
In other words, DoCoMo and i-mode have a commanding lead and KDDI --
and its three constituent networks (Au's cdmaOne system, DDI Pocket's
PHS system, and Tu-Ka's PDC system) -- is too broke to do anything
about it, despite any minor leads brought about by introducing new
technology.

While the GPS service ("eznavigation") is interesting and probably
useful from Day 1 (see item above), the video download system
("ezmovie") probably won't take off until there are sufficient users
to attract serious content providers -- and that won't happen until
DoCoMo's M-Stage Video service gets going on i-mode (it's already
available on DoCoMo's PHS network -- see item below). This item is a
very good example of why you can't believe all the mindless hype you
read about Japan's wireless Webs. KDDI has also said that it will
roll-out a new EZweb mobile information system infrastructure based
on the WAP 2.0 standard by year end.

--> DoCoMo Rolls Out Wireless Multimedia
http://allnetdevices.com/wireless/news/2001/11/14/docomo_rolls.html
Source: allNetDevices, November 14

EXTRACT: DoCoMo said Wednesday that it is about to start distributing
video and other multimedia over FOMA. The multimedia service, dubbed
i-motion, will become available to 3G customers on November 19. The
company said that 28 content providers initially will offer the
videos, which will be distributed via the i-mode portal. Initially,
the content providers will offer promotional videos and news clips,
still frames with sound showing scenes from popular movies, and music
files. The multimedia service will be included in the basic monthly
fee; the company said it also will start selling a handset on
November 19 that is compatible with i-motion.

COMMENTARY: i-motion is the service that DoCoMo held off from FOMA's
launch due to tech difficulties. Many of the 28 content providers
will come from the existing providers serving M-Stage Visual on PHS
(where the video clips are viewed on a pocket device called the
Eggy). M-Stage Visual has 55 channels offering more than 180
programs, movies and television, music, news, sports, and lifestyle
programming. Content runs from music and video clips to fishing
videos and independent investigative TV programs.

+++ Events (Advertisements)

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November 20 (Tue.) -- November 22 (Thu.), 2001
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----

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December 5-7, 2001 Doral Golf Resort, Miami, FL

Join us for elite, unparalleled access to key industry information,
case studies, and analysis. The Wireless Technology Summit brings
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+++ Sign of the Times

Limiting i-moder's New Year's Mail

NTT DoCoMo will restrict the transmission and reception of email on
January 1 to prevent the system from crashing in view of the massive
number of New Year greetings expected to be transmitted to and from
i-mode mobile phones, company officials said Friday. It will be the
first time for a mobile phone operator to impose a restriction only
on email communications. The restriction will last several hours,
starting from a couple of minutes before 12:00 AM on New Year's Day
and lasting until dawn. The operator's i-mode center will accept
outgoing mail sent from i-mode phones one out of every eight times.
Users whose messages are refused will receive a message saying,
"please wait." NTT DoCoMo made similar restrictions on January 1 this
year and last year. On both occasions, the restriction applied to
both email and telephone calls.

There's no way you could be well into your cups and still be able to
stroke that tiny keyboard and navigate those teensy keys, so we guess
this proves that i-moders are a far more sober lot than EZweb or
J-Sky users. Free advice to all i-mode subscribers: Loosen up! Break
out a bottle of sake and STOP sending so much mail at midnight...

"DoCoMo to Limit Email Greetings on New Year's," Yomiuri Shimbun
November 11
http://www.yomiuri.co.jp/newse/20011117wo11.htm

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STAFF
Written by Daniel Scuka (daniel@japaninc.com)

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