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Euro I-Mode: So Far, So Good

KPN Mobile appears to have got off to a cracking start with its European version of the i-mode service from Japan’s NTT DoCoMo Inc. (NYSE: DCM). It’s achieved its target of getting 50,000 customers in the first six weeks of operation and says user satisfaction levels could hardly be better (see Dutch Dig i-mode).

All the same, it’s too early to tell whether KPN will meet its long-term goal of topping the million-user mark. It hopes to do this “some time in 2003, hopefully before the end of the year," according to KPN Mobile spokesperson Carla van Lomwel.

Right now KPN’s 50,000-plus i-mode users are based in Germany and the Netherlands. Its German operator, E-Plus Mobilfunk GmbH, has more than 40,000 users and has been signing on new customers at a rate of about 16,000 a month since the “always-on” data service went live on March 16. KPN Mobile launched i-mode on its home turf in the Netherlands on April 18 and has just over 10,000 customers already. Its sign-on rate is about 7,000 a month.

If customer signs-ons were to continue in Germany and Holland at that sort of rate -- 23,000 a month or 276,000 a year -- KPN Mobile would fall well short of its million-user target in 2003. However KPN Mobile is also planning to launch an i-mode service in Belgium later this year through its newly branded subsidiary, Base (formerly KPN Orange). There’s also reason to expect uptake to gather pace, rather than fizzle out.

Cristiano Stillati, an analyst at Ovum Ltd., says KPN Mobile's figures are encouraging, especially compared with early adoption figures in Japan. "DoCoMo only had 5,000 i-mode users in its first month, and KPN has just added 16,000 in one month, which is not too bad. Also, the service is not yet available on prepaid. If they can extend the service to the prepaid users, that would be a major boost for subscriber numbers. Also, Europe is still learning about mobile data -- texting is all it really knows about at the moment," he says.

Stillati adds that further launches of i-mode services in Europe would encourage the service developers to create more specific services that would boost uptake and usage. He believes DoCoMo is in talks with Telecom Italia Mobile (TIM) and an unknown Spanish mobile operator concerning future launches.

Several other factors could lead to more steady, gradual growth. Customers need to buy a new handset that, even with subsidies, is a significant single purchase -- €199 (US$189) in the Netherlands and €249 ($237) in Germany. It may be that user numbers will grow as people replace their existing phones, especially in the buildup to Christmas when mobile handset sales rocket.

Another factor holding up new users is the lack of handset choice. NEC Corp. (Nasdaq: NIPNY) is still the only phone maker with sets in the shops in Europe, though Toshiba Corp.'s models are due "at the end of the summer, in August or September," says van Lomwel. And the range of models is certain to grow. "We are in talks with other suppliers but as yet we have no MOUs, so names cannot be disclosed." Late summer also looks like the timeline for the Belgian launch. "Friendly-user tests are under way this month, with the launch later this summer, depending on the outcome of those tests. Like in Germany and the Netherlands, we will not launch the service until we are sure," adds the KPN spokeswoman.

Van Lomwel told Unstrung that, although it was too early to release any average revenue per user (ARPU) figures, KPN Mobile had forecast between €6 and €9 per customer per month. The monthly base charge to access i-mode services is €3, after which users are charged according to the volume of data delivered to their handsets.

The majority of the users are in the targeted age group of 20-35, and the most popular service is a news channel from an established daily Dutch newspaper, De Telegraaf.

KPN Mobile and its subsidiaries may not be alone for long in aping the DoCoMo service. French operator Bouygues Telecom also has i-mode plans, whilst Hutchison 3G UK Ltd. (in which DoCoMo has a 15 percent stake), due to launch in late 2002, is considering offering such a service.

KPN's van Lomwel says further subscriber numbers will be released when milestones are achieved and when KPN announces its quarterly financials. With early penetration rates so low -- just 0.6 percent of the total E-Plus subscriber base and 0.2 percent of the KPN Mobile subscribers having adopted i-mode -- there is plenty of room for growth. The quarterly updates will show whether the always-on mobile data phenomenon that swept Japan can be replicated in Western Europe.

— Ray Le Maistre, European Editor, Unstrung
http://www.unstrung.com
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