IHS Global Insight Perspective | |
Significance | NTT DoCoMo has launched Japan’s first Long-Term Evolution (LTE) service in selected areas. |
Implications | The next-generation service sits at the centre of DoCoMo's long-term strategy, but its initial launch indicates a cautious approach towards service roll-out. |
Outlook | The operator will gradually expand the LTE service as demand warrants. |
NTT DoCoMo, Japan’s largest mobile operator, today launched its next-generation mobile service based on LTE technology, the Nikkei business daily reports. Under the brand “Xi”, the new service boasts data-transfer speeds 5 to 10 times faster than the 3G mobile services currently at the forefront. NTT DoCoMo President Ryuji Yamada said the company aimed for 15 million LTE subscribers in 2014, accounting for 25% of its wireless subscribers.
Outlook and Implications
Cautious Approach: Unlike in 2001, when DoCoMo released “FOMA” as the world's first 3G mobile service, Xi debuts with a limited service range and limited availability of LTE-compatible handsets. The carrier opted for a scaled-down launch, given that the service will initially be available only in parts of the capital Tokyo, Nagoya, and Osaka. DoCoMo plans to invest roughly ?300 billion (US$3.6 billion) in the three years through fiscal 2012 to install LTE substations. The figure is much less than the roughly ?1 trillion the company spent in the three years when it transferred its network from 2G to 3G. Because the LTE-compatible devices can use the 3G network where LTE coverage is not available, DoCoMo has drawn up a strategy that calls for a gradual transition while keeping close watch on demand.
Limited Devices and High Pricing: The limited availability of LTE-compatible devices will also hinder the service uptake at the initial stage. At launch, the only device available to use the service will be a data-communications card for computers. DoCoMo expects LTE-compatible routers and smartphones to come to market in 2011. The pricing of the Xi service is another concern. DoCoMo assumes that 94-99% of subscribers will use no more than 5 Gb a month, and fees will rise up significantly if they exceed that amount after the specially priced two-year initial contract. Japan's Ministry of Communications (MoC), however, calculates that data-communication volumes will increase 200-fold between now and 2017 as high-speed data-transfer technologies like LTE become widely adopted.
Competing Services: DoCoMo’s launch of Japan’s first LTE service comes at a time when other mobile operators are rolling out high-speed services based on the existing wireless technologies. KDDI, through its joint venture UQ Communications, launched the country’s first commercial WiMAX service last year. Softbank, which recently agreed to acquire personal handyphone system (PHS) service provider Willcom, will be looking to develop next-generation PHS services (see Japan: 15 October 2010: Softbank Agrees to Acquire 100% of Willcom). Although KDDI and Softbank are also looking to migrate to LTE eventually, their approaches appear to be more cautious than DoCoMo’s.