No Heat Yet for FOMA

Executives at NTT DoCoMo Inc. (NYSE: DCM) are banking on a new lineup of terminals due out this autumn to boost the subscriber levels for the company's 3G service, FOMA.

So says Shoji Suto, executive manager in DoCoMo's FOMA marketing planning department, in an exclusive interview with Unstrung (see Cracking the FOMA Whip). Next year will be big for DoCoMo's 3G, he says: "With the upcoming terminals we will make lots of improvements. We have a very high expectation about the models we will launch in the autumn. And next year we will start international roaming terminals, so I believe next year will be a turning point for us and for our 3G service."

And Suto is relaxed about his company's failure to hit its FOMA subscriber targets so far. "I personally didn't feel any hype or heat in the market when we introduced 2G or i-mode or FOMA. It takes at least one or two years for any service to take off." He goes on to cite the relatively short battery life of current FOMA handsets as a significant issue for users, along with the current limited coverage and high price for the phones. All of these will improve, he tells Unstrung, with battery life increasing from 55 hours to 150 hours, though the handsets will still be relatively expensive compared with other mobile terminals.

"In the short term we might adopt the strategy of reducing terminal prices to boost customer acquisition," says Suto. "But on a long-term basis we will always want to make sure that 3G is positioned above 2G."

Next spring will see the launch of further new terminals, the main difference being that "even the standard type will have a video camera, and the high end will have live video function for TV conferencing."

Of DoCoMo's main domestic rivals, he contends that KDDI Corp. is cannibalizing its own 2G subscriber base for its CDMA 1x service and is not seeing any benefit in increased average revenue per user (ARPU), while J-Phone Co. Ltd. is about to go through the 3G rollout pains that DoCoMo has already overcome. "All of the DoCoMo people who were involved with our trial service are now feeling very sorry for the J-Phone team," says Suto [ed. note: and, of course, not a hint of sarcasm].

Suto does, however, have praise for J-Phone's ability to capitalize on DoCoMo's growing pains. "I highly rate J-Phone's marketing. They are really quite good at finding our weakest points." He adds that true head-to-head competition for 3G customers with the Vodafone-owned carrier will likely occur next year.

Other topics raised in the interview include DoCoMo's plans for WCDMA/WLAN integration and the benefits of the FOMA service to corporate customers.

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