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Asia's Mixed 3G Blessings

Light Reading
LR Mobile News Analysis
Light Reading
1/29/2004

The market for 3G services in Asia/Pacific has received both a silver lining and a cloud this week, with positive rumblings from NTT DoCoMo Inc.'s (NYSE: DCM) 3G subscriber base offset by reports of consumer apathy towards Hutchison 3G HK Ltd.'s long-awaited launch.

DoCoMo today revealed that its 3G FOMA (Freedom Of Mobile Multimedia Access... should be FOMMA, no?) service finally appears to be taking off. After nearly two-and-a-half years of sluggish growth, the carrier has hit the two million subscriber mark, two months ahead of earlier forecasts (see FOMA Subs Top 2M).

FOMA is based on Wideband-Code Division Multiple Access technology -- the air interface specified as the Universal Mobile Telecommunications Standard (UMTS) for 3G. It can theoretically crank up cellular data transfer rates to a maximum of 2 Mbit/s [ed. note: if you're standing so close to the base-station trial site that the radiation curls the bottom of your red flares].

That putative milestone is of particular note, as it represents a doubling in numbers over the last four months, a fact the carrier attributes to increased choice of handsets and greater regional network coverage (see FOMA Subs Top 1M).

DoCoMo has also placed particular emphasis on in-building wireless networks, and plans to beef up signals in subway stations and underground shopping malls with an additional 1,600 LM Ericsson (Nasdaq: ERICY) base stations by the end of March.

“It shows they have made steps to up their game,” comments IDC senior analyst Paolo Pescatore. “They have almost been a victim of their own success, as everyone is so comfortable with the original i-mode service [see I-mode Subs Surpass 40M]. But DoCoMo have now started to concentrate on working closely with their partners, especially the handset manufacturers, in order to give users a reason to upgrade from i-mode to 3G."

Such success is in line with the carrier’s forecasted spending on 3G equipment. According to a recent Unstrung Insider report, DoCoMo expects to spend approximately $3,431 million on 3G equipment in the current financial year (47 percent of total capex), compared with 3G spending of $3,082 million in the previous year (40 percent of capex) (see Christmas Capex Cheer?).

On a down note, the launch of Hutchison’s 3G service in Hong Kong this week appears to have been something of a damp squib, following reports that the sale of handsets in the region has been met with consumer indifference (see 3 HK Unveils 3G).

The lackluster response is a painful reminder of earlier Hutchison 3G launches in Italy and the U.K., each of which missed its initial subscriber target by a huge shortfall (see Hutch's Subscriber U-Turn).

Earlier this month, Singapore’s largest carrier, Singapore Telecommunications Ltd. (SingTel), was forced to delay its 3G consumer trial due to a lack of compatible handsets. A new launch date is yet to be announced.

— Justin Springham, Senior Editor, Europe, Unstrung

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