i-mode Goes Continental

Back to Contents of Issue: March 2002

NTT DoCoMo's i-mode service may have garnered 30 million Japanese subscribers, but now that the European launch is finally upon us, how is it likely to fare in the more competitive, yet less connected, EU? Ludovico Ciferri spoke to Mauro Sentinelli, managing director of Telecom Italia Mobile, to get the word straight from the proverbial horse's mouth.
by J@pan Inc Staff In Japan And Germany, And Ludovico Ciferri In Italy
In January 2001, the leviathan NTT DoCoMo reached an agreement with KPN Mobile of the Netherlands and Telecom Italia Mobile (TIM) of Italy to develop its wildly successful business model for the European market. The press release at the time announced: "This will combine NTT DoCoMo's leading technology, skills and experience in wireless data with KPN Mobile and TIM's collective scale, footprint and local market insights to roll-out i-mode-like services on a pan-European basis. "NTT DoCoMo and its European partners plan to provide mobile Internet services based on i-mode in wide areas of Europe through its cooperation with KPN Mobile and TIM, to move ahead before the start of full-scale mobile multimedia services on 3G/UMTS networks." That's no small challenge, given the complexities -- on every level from product marketing to the ins and outs of the mobile standards prevalent outside Japan -- of the European market, but the financial muscle and marketing know-how of Big D are second to none, right? Besides, the carrot at the end of this very long stick is plain to see -- it's right there in DoCoMo's press release: 3G and the vast financial rewards for the winners of the unfolding race to be top telecoms dog in Europe. Mauro Sentinelli shared his outlook on the current situation with Ludovico Ciferri. TIM launched M-Services as a precursor to i-mode -- how important was that in reaching where you are today? M-Services is an innovative multimedia service on GSM and GPRS networks: an example of how the mobile Internet will evolve in Europe, marking the beginning of a 'new wireless business cycle.' M-Services will change society just as i-mode did. In Japan, for instance, mobile phones have become more important tools than watches. The same is already happening in Italy -- these days mobile phones are always within reach, even when relaxing by the beach. This is a business trend of course, but it is first and foremost a sign of social change. What was behind TIM's decision to sign a memorandum of understanding with NTT DoCoMo? The main problem GSM operators faced in the last few years was the lack of standards. There are at least 165 variations on the WAP protocol now. GSM operators, the originators in the 1980s of the GSM standard, left WAP standardization in the 1990s up to manufacturing industries. The GSM business model is based on active cooperation on infrastructures and standards, with competition only in the marketing arena, whereas manufacturers of networks and mobile devices have a very competitive business model. The outcome was a different WAP 'standard' developed by each producer. For example, a Nokia mobile phone can't exchange images with a Motorola one, which in turn can't hook up with an Ericsson and so on. GSM operators, who base their business on standardization, found this situation intolerable. That is why in October 2000 TIM signed a memorandum of understanding with NTT DoCoMo to bring i-mode to Italy, localize it and then export it all around Europe. Our plan was to run the i-mode service on a GPRS terminal, which proved to be almost impossible. Adapting the PDC radio-transmitter of a Japanese i-mode terminal for a GSM/GPRS one is in fact quite complicated, since GSM and GPRS are much more complex. Thus, the project was abandoned. When it came to cooperation between TIM and the GSM World Association on developing M-Services, was the lack of standard still a critical issue? At the beginning of February 2001, during the CEO Round-Table of the GSM World Association (which numbers more than 500 GSM operators), TIM raised the issue of standards and we insisted on the necessity to return to the original GSM spirit. GSM World Association's decision was to put together a task force to start a new wireless business cycle by the end of 2001. During the next plenary meeting, held a few months later in Seattle, the GSM Association unanimously approved this crash program. We at TIM immediately obtained the support of leading mobile operators like Vodafone, Telefonica, France Telecom-Orange, Telia, Deutsche Telekom and others. When did M-Services launch? M-Services was officially unveiled on June 13, 2001, during a press conference in London. Soon after, I personally visited the main handset manufacturing companies around the world (including NEC, Sony and Matsushita in Japan; Samsung in Korea; Nokia in Finland; Ericsson in Sweden; and Motorola in the United States) to obtain their support for the delivery of terminals. Which M-Services are already available and how do they work? The current M-Services are EMS and WAP PUSH. EMS (Enhanced Messaging Service) messages can be composed of words, music or a logo that can be sent or received from any M-Services enabled phone. For example, a birthday greeting showing a picture of a cake while 'Happy Birthday' plays. To understand WAP PUSH, we need to think first about SMS and messaging in general. In Japan, for instance, customers send and receive an average of eight messages a day. Given that NTT DoCoMo customers alone number more than 30 million, that adds up to a lot of messages. In Italy, on the other hand, TIM registers an average of 15 million SMSs a day from more than 23 million customers. The rate per user is obviously lower. In Europe, customers are divided into three clusters: 40 percent deemed 'literate,' i.e. able to send and receive SMS; 40 percent 'semiliterate,' able only to receive SMS; and 20 percent 'illiterate,' unable to send messages at all. That's why our attention has been focused on the 'semiliterate' customers. The question was about how to turn them into active customers, able both to read and to write short messages. WAP PUSH represented the solution. It consists of a text message with a link to a Web site where content is located. An example of a WAP PUSH message is that of a football fan who is informed via SMS about a goal scored by his favorite team. The message contains a hyperlink, from which he can download a picture of the goal that can be used like a screensaver on the phone. What new services will be brought out and when? With the second phase of M-Services, planned for summer 2002, we will launch MMS, or the Multimedia Messaging Service. The innovation will not concern technology, rather the quality of service. Today EMS allows the exchange of pictures from one mobile phone to another through a third party server. MMS will instead allow the exchange of images together with text messages from one mobile phone to another. An example of MMS could be a postcard sent via mobile phone instead of via mail. Today it's already possible to swap pictures with mobile phones. Next summer, adding text to these pictures and sending a command to the distribution list of the user's mobile-phone directory will allow virtual postcards to reach all the telephone numbers selected in real time at a low cost. What are the main hardware features necessary for M-Services? M-Services require proper mobile phones, some with changes in software, others in hardware as well. They need, however, a simpler technology than that required by GPRS terminals. The cost of M-Services compatible devices differs according to customers' needs. The cheapest device costs around 100-150 euros [JPY11,000 to JPY17,000]. An average device costs around 250 euros. Top-quality devices like the brand new Ericsson T68, the first handset with a color screen, are well over 400 euros. The need for M-Services-capable handsets will shorten the replacement-time of mobile phones, a figure that decreased from 36 months in 1990 to 18 and then to 12 in the following years. In the last couple of years, replacement time has grown because of the lack of incentive to change handsets. The expectation is that in about three years almost all mobile phones in Italy will be GPRS or GPRS/UTMS capable. It will mean an upsurge in handset upgrades, such as that experienced in Japan. What about pricing structure for M-Services? The cost of an M-Services message is almost the same as an SMS on GSM. From a pricing point of view, M-Services may in fact be considered like a sort of SMS on GPRS. One SMS of about 160 characters on GSM costs about 0.1 euro. A message with 1,000 characters/bytes on GPRS costs about 0.04 euros, so a picture of two or three thousand bytes will cost around 0.1 euros. These messages use different technologies: GSM is based on time online, while GPRS uses a packet-based network that allows providers to send more information at lower prices. That's why it is less expensive to send text messages by GPRS, whereas sending 'emotions' -- a picture for example -- is more expensive. This is progress. A few months after launch, what has been the market response to M-Services? Market response has been beyond our expectations, confirming that a new wireless business cycle has indeed started. From the market point of view, the real breakthrough has been the move to packet-based GPRS. The passage from GPRS to UTMS [the 3G standard] will be just a development towards a faster service. That means that the more successful GPRS and M-Services are, the faster 3G can start. Considering the great success of i-mode, which works at only 9.6 Kbps, compared to the 40 Kbps of GPRS, the success of faster, more advanced services may be rightly forecast. So is M-Services all about educating the market? The multimedia MMS service will allow users to easily send pictures from mobile phone to mobile phone without charge to the recipient. These are services created to fit actual customers' needs. Teenagers in a pizzeria could, for example, take a picture and send it to friends in real time. Another use could be the replacement of postcards. Figures are striking: 90,000 postcards are processed on an average day in a European country like France, Italy or the UK, compared to the 15 million SMSs a day handled in Italy by TIM alone.We could see the evolution of a Yahoo-style photo album service, enabling users to exchange pictures -- that happens now via PC, but it could be done using MMS on a mobile phone. Chances and opportunities for tools for 'sharing emotions' are innumerable. Be it WAP PUSH, EMS, MMS or something else, it's only a technological issue concerning service providers. Customers should have a choice of simple, friendly services. @

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