With more of a whimper than a bang, NTT DoCoMo began the world's first fully commercial third-generation (3G) cellular service Monday morning in Tokyo. The low-profile launch, which came with no ceremonies or events, reflects DoCoMo's caution regarding the service until it feels confident about the range of content and terminals that it can offer.
The service, known as Foma, is available immediately in the Tokyo metropolis and nearby city of Yokohama. By December, DoCoMo plans to launch in the heavily populated Osaka-Kyoto-Kobe region of west Japan and the central Japanese city of Nagoya. Service will spread to the rest of the nation, beginning in major cities, from the second quarter of 2002, according to the carrier's schedule.
Based on the W-CDMA (Wideband Code Division Multiple Access) system, the new service has a theoretical maximum data transfer speed of 384K bps (bits per second) -- 26 times the highest-speed cellular service DoCoMo offers today and six times that of the fastest service offered by DoCoMo's competitors. The high-speed service is packet-based, which means users pay according to the amount of data sent and received, and will form the basis of a faster version of the I-mode wireless Internet service. The service will also be available for users with PC-Card data modems.
A second data service, circuit-switched 64K bps, is also available and will be used by the much-hyped mobile videoconferencing service. DoCoMo opted to put this service on a circuit-switched service because it will offer a time-based charge, which is similar, though more expensive, than regular telephone calls.
DoCoMo has signed up 10 companies to make handsets although only two have products ready for Monday's launch. Products available include a standard terminal, the N2001 manufactured by NEC Corp., similar to current handsets; a video-phone handset, the P2101V manufactured by Matsushita Communication Industrial Co. Ltd., and a PC-Card data modem terminal, the P2401 from Matsushita. The company shipped 20,000 of the basic terminal and several thousand each of the other two models to retailers for Monday's launch, said Keiji Tachikawa, president and CEO of NTT DoCoMo, last week.
Compared to current handsets, the new telephones command a price premium. At a DoCoMo shop in central Tokyo, which began selling the handsets on Monday morning, the N2001 standard terminal costs 42,800 yen (US$358) , the P2101V video type carries a 62,800 yen price tag and the P2401 data card costs 22,800 yen. The latest second-generation (2G) I-mode handsets generally sell for between 20,000 yen and 30,000 yen when first launched.
Despite the hefty price tag, Tachikawa believes the company can meet its subscriber goal. "We are confident we can get 150,000 this year," he said referring to the current fiscal year that ends on the last day of March 2002. "We expect the standard terminal will sell best but, for corporate users, the data card will be popular."
Telecommunications operators around the world are expected to closely watch the service to see if it lives up to expectations and whether they have a chance of making back the vast sums of money many shelled out for 3G licenses in early 2000.
Since that time, the image of 3G services has lost its shine as companies, which have seen their stock prices plummet over the past year, begin to balk at the cost of establishing the new networks and start to re-evaluate whether people really need mobile videoconferencing. NTT DoCoMo too has seen its stock price fall, down by more than one-third since the beginning of 2000, but the company, which was an early drum beater for 3G, has not let its confidence slip, despite stumbling along the way.
The company was running at full speed towards the May launch date when, in February of this year, a series of high-profile glitches with handsets for the company's new Java-based service sent a jolt through the company. Basking in the spotlight of world attention because of its success with the I-mode wireless Internet service and aggressive 3G launch plans, the glitches proved to DoCoMo that it was not infallible.
A more cautious air fell on the company and, as the 3G launch date loomed, DoCoMo began to realize that all of the pieces needed to launch the service might not be in place in time. With just two weeks to go before the launch of the service, the company decided to take a more cautious approach and start the service as a controlled test.
On May 30, the planned launch date, the test began and the first of a hand-picked group of 5,000 users began receiving their handsets. It proved to be the right move -- test users had numerous complaints early on, including dropped calls, the inability to make calls within the service area and handset battery life of less than a day.
The test period provided some breathing room for DoCoMo and the handset makers to iron bugs out of their systems. By the beginning of September, engineers had identified 448 problems associated with the network although all had been resolved by Monday's launch, said Norio Hasegawa, a spokesman for NTT DoCoMo.
However, problems with the video-on-demand service remain. While videoconferencing is available immediately, the video-on-demand service that was offered during the trial period has been pulled from the launch menu to give the company and handset makers more time to iron out the bugs.
A trouble-free launch and successful take-up of the service is important for DoCoMo, which is starting to see slower growth. "The cellular phone market is growing at a pace faster than we expected but, unfortunately, I-mode is not driving the business as much as last year so the pace of growth has slowed down somewhat," said Tachikawa.
The company is looking to Foma to take up the slack and, if all goes well, lead an increase in subscriber revenues.
"Foma provides a faster service so naturally we expect that there will be more use than on the conventional 2G service," Tachikawa said. "Our current ARPU (average revenue per user) is about 8,000 yen per month, but Foma users are expected to have an ARPU of more than 10,000 yen."
Over the next few months, as the technology gets into the hands of more and more users and content developers begin to learn what they can do with the service, operators around the world will be anxiously looking on too.