NTT DoCoMo: 3G catching on

Third-generation mobile phone use is starting to surge in Japan as the network coverage and phone quality improves, an executive from Japan's top mobile phone service provider says.

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Stephen Shankland
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NEW YORK--Third-generation mobile phone use has begun to surge in Japan as the network coverage and phone quality improves, an executive from Japan's top mobile phone service provider said Friday.

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NTT DoCoMo launched the "3G" high-speed communications technology in 2001, but adoption was initially slow, Nobuharu Ono, chief executive of NTT DoCoMo USA, said during his keynote speech at the CeBit America trade show here. But the service "started to explode...at the beginning of this year," Ono said.

The 50,000 Japanese 3G subscribers in January 2002 grew to 150,000 in January 2003, he said, but by the end of May that number swelled to 350,000.

"The main problems were fixed this year," Ono said. "Coverage reached 91 percent as of March 2003. Battery life became more than 200 hours. And price and weight (of 3G handsets) are almost comparable to 2G (second generation) handsets."

3G can use all the momentum it can get. Mobile phone network operators spent enormous amounts of money buying tracts of the radio wave spectrum for 3G services that have arrived later and worked slower than hoped. In the meantime, the 802.11 "Wi-Fi" wireless networking technology has caught on, even with mobile phone companies such as AT&T Wireless and Verizon.

NTT DoCoMo has been signing partnerships across the world in order to spread its 3G technology and I-mode services. To bring its mobile phone technology and services to the United States, the company took a 16 percent stake in AT&T Wireless, which has pledged to bring 3G service to San Francisco, Seattle, Dallas and San Diego by the end of December 2004.

3G networks can transfer data at 384 kilobits per second, Ono said--about 40 times faster than the 2G rate. That speed will improve video transfers for educational and business telecommunication. It will also help those who communicate remotely through sign language. The new SO505i phone built by Sony costs about $200 to $250, he said.

NTT DoCoMo charges less for 3G services, because the network and phone equipment costs have dropped. Voice calls cost 44 cents per minute with 2G networks but just 26 cents with 3G. A thousand packets of data cost $2.53 with 2G but just 17 cents with 3G, he said.

It takes patience to build a new network. In Japan, it will take three years before NTT DoCoMo's 3G service will be profitable and five years before it will have made enough money to pay for the installation costs, Ono said at a news conference after his speech.

And soon, the company will have to do it again. "We think 4G--we have not decided--maybe will be available in seven years--about 2010," Ono said.

NTT DoCoMo has been showing off several 3G phones at CeBit. The company and AT&T also have a demonstration center in New York with a 3G base station that lets people try actual 3G phone services.

In Japan, NTT DoCoMo offers numerous I-mode services. The most popular is e-mail, which accounts for 50 percent of I-mode usage. About 27 percent of the usage is for tapping into third-party services, while the remaining 23 percent involves use of services built into the I-menu service NTT DoCoMo offers.

The I-mode service was launched in 1999; there now are about 70,000 I-mode content sites available. The company is launching new services that let users send and receive photos, videos and music. The phones can be used to make online credit card purchases without transmitting credit card information. And a spinoff called C-mode lets people buy products from vending machines by slipping their phones into a slot.

"At the beginning, even NTT DoCoMo's top management was skeptical about the potential of I-mode, especially because of small black-and-white screens and a transmission rate of 9.6 kilobits per second," Ono said. That skepticism has evaporated: "I-mode has created $7 billion in new revenue for NTT DoCoMo," he said.