U.S. wireless industry eyeing Japan's I-Mode success

With wireless Internet usage in the US falling short of analyst projections, many industry officials are eyeing the wildly successful I-Mode wireless Internet service rolled out two years ago by NTT DoCoMo in Japan.

In a speech at the Cellular Telecommunications & Internet Association's conference this week, Takeshi Natsuno, executive director of the gateway business department at NTT DoCoMo, said I-Mode now has 21 million active subscribers, each paying an average of US$20 per month.

I-Mode's success has been scrutinized by Americans partly because NTT DoCoMo recently bought 15 percent of ATT Wireless Group. The two companies have formed a subsidiary in the US to focus on streaming media content that can be delivered wirelessly to handsets sometime in 2003 over far faster connections than now possible, ATT Wireless Chief Technology Officer Rod Nelson said yesterday.

While streaming audio and video might seem important only to technophiles who play games, AT&T and NTT DoCoMo officials claimed that rich sound, color graphics and even streaming video will eventually matter to workers in large US businesses.

Salespeople on the road, for example, could use streaming media to offer new sales pitches during important sales calls, Nelson said. And workers could use the service to gain access to graphically-rich corporate intranets.

"This will add value to the corporate environment, but the service can't be priced too high for IT managers to accept," Nelson said. Working with AT&T and NTT DoCoMo to roll out US wireless services over faster bandwidth connections will be Compaq Computer and Siebel Systems , AT&T Wireless announced.

AT&T hasn't said how much of I-Mode's look and its business and technology underpinnings will transfer to the US But Natsuno, one of the the service's creators, said I-Mode's value is important to both business users and consumers.

"E-mail is important to both," he said. "When you get e-mail from your boss, you answer it right away. But when you get e-mail from your wife, you also answer it right away."

Analysts pointed to I-Mode features and social and environmental factors that fueled its success. In Japan, for example, wired Internet connections are harder to find, slowing the growth of that nation's Web-based home PC market while making wireless communications a more viable alternative. In America, where wired Internet connections are more readily available, there has been less call for wireless Internet access, said analyst Andrew Seybold, publisher of Wireless Outlook.

But Seybold said he believes the biggest factor in I-Mode's success has been the extensive network coverage. Although there are many gaps in wireless service in the US, such gaps are rare in Japan and Europe, he said.

I-Mode has been derided by some Americans as favoring entertainment delivered over flashy color screens, including daily cartoon figures that users pay about $1 per month to receive. Some critics have said Americans might not want a service apparently aimed at a younger crowd.

Natsuno countered that view, saying all ages and cultures will be interested in the service. He said such cartoons are just one of many features offered by I-Mode. Contrary to some preconceptions, he said, the majority of I-Mode's users are older: Just 7 percent are teenagers, while 33 percent are in their 20s, 31 percent are in their 30s and 29 percent of users are over 40.

In response to views that Japanese users have different tastes than Americans, Natsuno said, "The Japanese are not a separate species."

Seybold and Iain Gillott, an analyst and founder of iGillott Research in Austin, Texas, said they disagreed. "There are huge differences in the cultures," said Seybold. Gillott added: "And I'm not sure we can bring I-Mode over here."

What is likely to carry over from Japan is the heavy use of packet-based billing, said Alan Reiter, an analyst at Wireless Internet & Mobile Computing in Chevy Chase, Md. Under that billing model, users are charged by the number of packets they receive over their phones, a process designed to help lower costs.

I-Mode has also helped its own cause by sharing revenues with the developers of the services it provides, such as mapping, train information, weather and stock prices, Seybold said. (When NTT DoCoMo runs a service on its phones, it charges a 9 percent commission for doing so.) "If we don't make it profitable for wireless developers to do their work, the wireless data service in the US will not succeed," Seybold said.

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