DoCoMo: Easy Cell

Foreign cellcos are racing to ally with DoCoMo. Perhaps they should look more closely under the flip-case.
by Daniel Scuka

Having conquered its domestic market, mobile carrier NTT DoCoMo is expanding overseas. In recent months, the cash-flush company has announced tie-ups with AOL Japan, Yahoo, Palm Computing KK, and several US, UK, and Asian telcos. Two European efforts -- DoCoMo Europe (UK) Limited and DoCoMo Communications Laboratories Europe (in Germany) -- aim to develop new business in the European market, while the AOL collaboration has global implications. But with international expansion comes unfettered international competition -- something DoCoMo hasn't faced before. Is the company the wireless wonder it's made up to be, or a spoiled child in for a dose of cold, hard reality?

DoCoMo's parent, NTT, Japan's former monopoly telco, has long been mollycoddled by Japanese bureaucrats, and no NTT Group company has ever really had to compete domestically on its merits, especially pricing. The giant telco has tremendous industry sway -- DoCoMo, not the equipment makers, sets the specifications for i-mode handsets. Nor did DoCoMo have to bid for its wireless spectrum -- it was simply granted to it under a government revenue-sharing scheme because of NTT's stature; thus the company didn't have to start life off buried in debt, as did most of its peers around the world.

DoCoMo has never faced customers outside its compliant domestic base. One of the big reasons Japanese customers are so eager for DoCoMo's convenient mobile Net offerings is because parent company NTT makes it so difficult and expensive to get online from home. (Could all this have been planned any better?) DoCoMo also enjoys the NTT brand name, which helps it land contracts with other big brands, like Sakura Bank. Such advantages don't -- and won't -- exist overseas.

Total control is another thing that won't exist overseas. "The main thing that hits me," says Paul Eijkemans, mobile commerce editor of the Wireless Journal in Holland, "is how DoCoMo controls the entire customer experience." Design and sale of the handsets, types of calling plans and rate structure, billing and service options, number and type of official content providers -- it's all controlled by DoCoMo. The strangeness of this becomes apparent once you step outside Japan: try picturing France Telecom dictating handset designs to Sweden-based Ericcson.

Despite having never been globally weather tested, though, i-mode's success is empowering DoCoMo to forge strategic alliances around the world. This is made all the more remarkable by the fact that the technology behind i-mode could be easily replicated by any big carrier. International partners seeking out DoCoMo are apparently interested in the "expertise" it's developed with i-mode. In a word, consulting. Can you imagine DoCoMo consulting its new partners? Based on our success with i-mode, we suggest that you have an overprotective government, a compliant customer base, and no real competitors. That's what worked for us.

Ironically, as global operators move into third-generation offerings, any thought of implementing i-mode's simple technology will likely be abandoned in favor of WAP. i-mode will seem even more anemic with the introduction of new technologies like Bluetooth, Java, streaming audio and video, and enhanced security. Carriers worldwide will have to compete based on WAP's open standards. And with 3G and WAP, cellular operators everywhere -- including DoCoMo in Japan -- face becoming largely irrelevant, serving merely as "bit pipes," while third-party service providers (security, compression, streaming, m-com) become far more significant.

In the end, it may be more important to know not "how" DoCoMo did it, but "that" it did it. The "how" can be found in innumerable articles on the subject, and there's really no need for foreign players to partner with DoCoMo to acquire it. What's more significant is the "that." Know ye that by having a protective government, by sensibly dismissing the not-quite-ready WAP standard, by not having to bid competitively for spectrum, by having the leverage of a huge brand name, by having a compliant domestic customer base, and by devising a clever business model, DoCoMo has created for itself a chance to become the world's biggest name in wireless.

And "that" is all you need to know.

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