Global Insight Perspective | |
Significance | NTT DoCoMo and Hutchison Telecom will launch i-mode mobile internet services in Hong Kong and Macau exclusively. |
Implications | Through the deal, DoCoMo is further expanding the global market presence of its i-mode platform. Hutchison aims to strengthen its leading position in Hong Kong's 3G market through enhanced content and data offerings. |
Outlook | With 3G deployment still at an early stage, operators in Hong Kong see significant room for further growth. However, competition is increasing - particularly since PCCW re-entered the mobile foray last year, bringing a serious threat to existing players like Hutchison and CSL. |
NTT DoCoMo and Hutchison Telecom Hong Kong, a subsidiary of Hutchison Telecom International Limited (HTIL), jointly announced today that they had formed a strategic partnership to bring i-mode services to Hong Kong and Macau. DoCoMo will provide the technology, know-how and marketing expertise, enabling Hutchison to offer i-mode via its territory-wide networks. In addition, the parties have also agreed within the scope of this long-term partnership to jointly consider the application of ‘contactless’ IC card technology services, widely known as wallet-phone in Japan, on i-mode enabled handsets in Hong Kong and Macau.
With the signing of this agreement, there will be 16 i-mode operators in 24 countries and areas around the world. In addition to DoCoMo in Japan, they include: KPN Mobile (the Netherlands), BASE (Belgium), E-plus Mobilfunk (Germany), Far EasTone (Taiwan), Bouygues Telecom (France), Telefónica Móviles España (Spain), Wind (Italy), CosmOTE (Greece), Telstra (Australia), Cellcom (Israel), O2 (United Kingdom and Ireland), Mobile TeleSystems (Russia), and StarHub (Singapore). Also, Smart Communications (Philippines) is currently preparing to launch the service.
Outlook and Implications
Success of i-mode Platform: Despite results in growing its 3G customer base, DoCoMo has experienced continued ARPU erosion that has been driven primarily by voice ARPU decline (see Japan: 26 January 2006: Mobile Metrics - Asia Leads the Way in the Global 3G Market). Given the intense price competition in the voice space, rapid 3G uptake in itself is not enough to simulate ARPU growth. Therefore, the operator has been committed to developing advanced value-added services, in the hope of lifting ARPU/revenue levels. DoCoMo's i-mode mobile internet platform has been popular in Japan. As of 31 March 2006, the operator had 46.4 million i-mode subscribers, equating to 90.6% of its total customer base. i-mode customers on its 3G network accounted for 49.5% of the total i-mode customer base, compared to 25.9% a year earlier. In addition, the operator has reported sequential increases in i-mode as a proportion of service revenues/ARPU. ARPU generated from i-mode services accounted for approximately 28.6% of total ARPU from mobile services in the quarter ending March. with its success in the domestic market, DoCoMo has licensed its i-mode platform to 15 operators, establishing a greater presence in global markets.
Hutchison to Leverage DoCoMo Expertise: With its alliance with DoCoMo, Hutchison will now further strengthen its leading position within Hong Kong's 3G market through enhanced data offerings. Official figures show that there were 772,990 3G subscribers out of a total of 8.64 million mobile users in Hong Kong at end-February 2006, indicating significant room for further growth on the 3G front. Being the first to launch 3G services in the territory, Hutchison has acquired more than 500,000 3G customers since its service debut in January 2004, accounting for more than half of the 3G market. However, the operator is facing increasing competition from its rivals, particularly PCCW, which re-entered the mobile market following its acquisition of mobile operator Sunday. Under the new PCCW Mobile brand, the operator in January 2006 launched a six-month trial of its 3G service and acquired 110,000 users within a few months (see Hong Kong SAR: 11 January 2006: PCCW Launches '3G Try First' Free Trial). The operator is yet to announce how it will bill for the service after the trial period ends. It remains to be seen whether the billing plan will remain competitive enough to retain existing customers. In response to PCCW's 3G trial, Hutchison did not conduct further price cuts, but instead announced that it would shift its focus from price to content and service quality to remain competitive.