DoCoMo Doubles Up

Minor relief for NTT DoCoMo Inc.'s (NYSE: DCM) 3G users -- from July 1 they will have national coverage via one number, but will need to use a 2G PDC i-mode phone to receive calls outside the few areas currently covered by W-CDMA cells. DoCoMo is calling this its "dual network service" (see DoCoMo Launches Dual Network).

Under the system, all FOMA subscribers have to do is dial 1540 using the 2G phone, enter their 4-digit FOMA identity number and wait for a pre-recorded message to confirm that both phones have the same number. Easy!

This is DoCoMo's latest effort to coax consumers onto the struggling FOMA service, this time by countering one of the major problems with the 3G service -- the fact that it doesn't yet work in most places in Japan (see Japan's 3G Needs a Kick Start). To date, FOMA subscribers wanting to make calls outside Tokyo, Osaka, or Nagoya have had to use an i-mode handset on a separate account and number -- a bit ironic, given that FOMA stands for Freedom Of Mobile Multimedia Access [ed. note: then shouldn't it be FOMMA?].

So is this "dual network" the first shot of tonic for fumbling FOMA? Officially, DoCoMo thinks so. "Users of the FOMA network will thus be assured of nationwide access to mobile phone services, including i-mode, as well as nationwide use of a single phone number, thanks to the PDC (800Mhz) network's wider service area," trumpets the company's press release.

What's more, DoCoMo will not charge users twice for the luxury, assuring subscribers that the PDC phone can be placed under the FOMA service contract.

DoCoMo believes this chance to carry two phones will be a temptation too tough to resist. "We believe this dual network service will help customers migrate from PDC to FOMA because this service is only available for FOMA subscribers," says DoCoMo spokeswoman Miki Nakajima McCants [ed. note: a surefire contender for June's Name of the Month award].

However, DoCoMo is reluctant to predict what kind of impact this offer will have on Japan's public. "We do not have any estimated FOMA subscribers number just because of this dual network service," adds Miki Nakajima McCants.

Unstrung is also keen to know what will happen when someone calls a FOMA user's number when they are within a 3G cell: Do both phones ring at the same time? We await a response on that issue.

Reaction to the news from industry watchers has been one of stifled yawns. "This is not news to the market. [DoCoMo] suggested it would do this at its financials -- now at least it is official," says Nathan Ramler, telecom analyst with UBS Warburg in Tokyo. Ramler says he has already factored the move into his estimates that FOMA will hit about 990,000 subscribers by next March.

"It's a stopgap measure in part of an awkward strategy to try to get around the coverage problem, and we think the interest will be pretty limited. Why would you want to subscribe to FOMA when you still have to carry two phones?" asks Ramler.

Still, DoCoMo is touting the move as cheap as well as convenient. The ¥300 (US$2.42) monthly dual service fee gets chopped by ¥100 if the customer also signs up for voicemail service when making the application, and the PDC payments are buried in the FOMA plan. Among other blandishments, the company is waiving the ¥1,000 ($10.50) signup fee up to August 31.

"It's a step forward to a certain extent, but it still seems a bother to users to ask them to pay an extra ¥1,300, and you still have to switch phones," says Naomi Iida, associate telecom analyst at WestLB Securities Pacific Ltd.'s Tokyo office.

Ramler calls the move a cheap and cheerful way for DoCoMo to upgrade the patchy service. "It's a small cost to DoCoMo for an improved service to the customer, involving some tinkering around with the software."

The real network upgrade will come when vendors such as NEC Corp. (Nasdaq: NIPNY), Matsushita Communication Industrial Co. Ltd., and Mitsubishi Electric & Electronics USA Inc. meld PDC and W-CDMA chipsets into dual-mode terminals, according to analysts. DoCoMo is hazy on when these phones will be out, but the inside word is next January or February, just before FOMA reaches near-national coverage.

— Paul Kallender, special to Unstrung
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