WW-32 -- Location-based Services, Picture Mail, and How 3G i-mode Differs

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J@pan Inc Magazine Presents:
W I R E L E S S W A T C H
Commentary on the business of wireless in Japan
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Issue No. 32
Monday, November 12, 2001
Tokyo

INDEX

+++ Viewpoint:
Location-based Services, Picture Mail, and How 3G i-mode Differs

+++ Noteworthy News
- FOMA Expanding
- Number of Subscribers by Carrier (Oct. 31)
- DoCoMo Strikes Deal with Dutch Firm on i-mode License
- NTT DoCoMo Gives i-Mode Specs in English
+++ Events (Advertisement)
+++ Sign of the Times

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+++ Viewpoint: Location-based Services, Picture Mail, and How 3G
i-mode Differs

We picked up several interesting bits of wireless minutiae this
week, and here they are in no particular order.

First, here is a summarized chart of location-based services (LBS)
currently deployed on Japan's wireless Webs. Note that in some
cases, the user has to pay the telecommunications cost to receive
the packets.

System Name Start Operation Subs Cost

J-Sky J-Sky Oct 00 Push/Cell JPY0 Station
J-Sky J-Navi May 00 Pull/Cell JPY0 (+20 per map)

i-mode i-Area Jul 01 Pull/Cell JPY0

EZweb EZ@Navi Jul 00 Pull/Cell JPY210

DoCoMo was late to market with its system after spending too much
time working with Snaptrac to create a GPS-based service (Snaptrac
was bought by Qualcomm, and nothing came of it). Next year, we
should see the first GPS-capable phone.

Next, J-Phone appears to be delighted with @Sha-mail, the picture
mail service that launched with the Sharp camera-phone handset
earlier this summer. The camera has 110,000 pixels, and this should
be up to 300,000 by spring of next year. The service is proving to
be very popular and may be one of the main reasons for J-Phone's
growth in market share (beating out KDDI/EZweb for the No. 2 slot --
see news item below). J-Phone is also working hard to get a video
mail clipping service out early in 2002.

Finally, how will i-mode evolve now that the 3G handsets are out?
For now, there isn't much difference; whatever i-mode services that
exist on 2.5G are also on 3G. By early next year, we'll start to see
some differentiation. There will be picture mail (DoCoMo is
obviously piqued at J-Phone's success with this), "i-motion" video
mail (again, same idea as J-Phone), and the M-Stage Visual and Audio
streaming download services (presently deployed on PHS); i-Appli
Java functionality will be boosted (the maximum downloadable file size
will go from 10 to 30 KB); text mail will go to 5,000 double-byte
characters; and the 3G handsets will offer multiple access modes
(currently, if you receive a voice call while i-moding, the i-mode
session is cut off).

Ironically, NONE of these services actually require 3G to function
(although they will all function much better at 3G's higher speeds).
In fact, most are being optimized for 64 Kbps -- far slower than
FOMA's much-touted theoretical maximum of 384 Kbps.

--Daniel Scuka

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+++ Noteworthy News
(Long URLs may break across two lines.)

--> FOMA Expanding
http://uk.mobile.yahoo.com/011108/198/ceum2.html
Source: Yahoo Mobile UK, November 8

EXTRACT: NTT DoCoMo announced today that its FOMA 3G mobile phone
service will be made available in the southern part of the Kanto
region surrounding Tokyo and Yokohama beginning December 1. The FOMA
service area will expand to virtually every major city in Japan by
spring 2002.

COMMENTARY: The creator of this weekly email magazine lives outside
Tokyo just beyond the Yokohama area, so it looks like my wife and I
will be waiting until next year to sign up for a FOMA phone. But
when we do, there is no doubt what the killer app will be:
videoconferencing. We've tried it during the trials, and again at
NTT DoCoMo's Tokyo showroom -- and it really works. The first use?
Probably using the rotating camera so my wife can hold up the phone
and **show** me where she is when we're trying to meet up in Tokyo
for a night out. Anyone who's ever lived here can attest to the
complexity of trying to set a specific rendezvous point outside,
say, the East exit of Shinjuku station. With the video phones, I can
just call her, get her to slowly pan around where she's standing,
and be able to see right away where she is.

--> Number of Subscribers by Carrier (Oct. 31)
http://www.tca.or.jp/eng/daisu/yymm/0110matu.html
Source: Telecommunications Carriers Association

EXTRACT: The October month-ending numbers are out. There were
65,918,400 mobile users in Japan, of which 46,181,900 used one or
more of the mobile Internet services. i-mode claimed 28,638,000
users, while EZweb and J-Sky claimed 8,724,400 and 8,819,500,
respectively (the remainder use one of the smaller mobile Net
services -- including Astel's Dot-I and DDI Pocket's H" Link, Feel
H", and H" In services). There were 5,684,700 PHS subscribers, down
13,800 from the previous month. For the first time, DoCoMo reported
its W-CDMA network subscriber count, which came in at 11,000, rising
from zero on Oct. 1 (the first day that the phones were offered to
the public).

COMMENTARY: There are a few interesting trends behind these numbers.
First, the month-end count of 11,000 3G subscribers implies that
DoCoMo is signing up new subs at the rate of 355 per day. At this
rate, it will take 12 months to reach 129,575 FOMA subscribers;
we bet they'll reach that much sooner.

Also, PHS continues its downward trend. Considering the plethora of
PHS data cards (in PC Card and Compact Flash format) available from
DDI Pocket and DoCoMo (both of which have come out with new models
in the past six months), we're surprised, and we're keen to see if
this downward trend will reverse anytime. One clue comes from
DoCoMo's numbers: That carrier **gained** 6,000 PHS users (it would
be great if the TCA report broke out PHS statistics by data card or
voice handset).

Finally, the Big Switcheroo for the No. 2 spot in wireless Internet
finally occurred. J-Phone's J-Sky subscriber count finally exceeded
KDDI's EZweb user count -- by a modest 95,100, but look for the gap
to continue widening for the foreseeable future.

--> DoCoMo Strikes Deal with Dutch Firm on i-mode License
http://www.japantimes.co.jp/cgi-bin/getarticle.pl5?nb20011108a3.htm
Source: Japan Times, November 8

EXTRACT: NTT DoCoMo said it has reached an accord to license its
popular i-mode technology services to Dutch firm KPN Mobile N.V.
(through parent Koninklijke KPN NV) for 10 years to January 1, 2012.
Under the accord, Koninklijke KPN NV will also sublicense the
technology to wholly owned subsidiaries KPN Mobile The Nederlands
B.V. and KPN Orange Belgium NV/SA, enabling them to launch
i-mode-style mobile Internet services in the Netherlands and
Belgium. The services will be launched as early as the April-June
quarter next year, NTT DoCoMo said. Similar services have been
available in Hong Kong since May 2000.

COMMENTARY: License what!? We've said it before and we'll say it
again: There are no IPR or other patentable technologies that go
with i-mode. The system is a business model, a brand name, and a way
of offering content and services via a large corporate intranet that
happens to be open to other, much larger networks (called the
Internet).

What Big D is really providing is expertise, and given the intense
competition and requirement to start generating mobile data revenues
ASAP, there is no doubt that the i-mode moniker must be attractive
to DoCoMo's smaller European partners. But if they're not going to
launch branded i-mode systems (and none have said they would so
far), what do they want from DoCoMo? We guess it's the planning
know-how, the strong relationship with handset makers and mobile
application developers that DoCoMo has, and the assurance of a big
shoulder to lean on when rolling out mini i-modes gets tough.

By the way, at the end of September, KPN Mobile had 5.21 million
subscribers in the Netherlands and 900,000 in Belgium. DoCoMo had
22,889,000 the month prior to starting i-mode, in February 1999.

--> NTT DoCoMo Gives i-Mode Specs in English
http://www.nikkeibp.asiabiztech.com/wcs/leaf?CID=
onair/asabt/news/153176
Source: Nikkei AsiaBizTech, November 7

EXTRACT: NTT DoCoMo listed on its Web site its i-mode basic
specifications guidelines written in English, with the goal of
accelerating overseas partnerships. NTT DoCoMo's aim is to make
i-mode specifications more accessible to handset makers and service
providers, based on its plans for deploying overseas i-mode service
operations.

COMMENTARY: The guidelines cover protocol stacks, security, user
interfaces, downloading (page size limits, etc.), and messaging,
among other details of how the system works. But many details of the
current i-mode system are based on choices that DoCoMo made in
setting up its own PDC-P network, i-mode server, and handset/browser
environment. Few, if any, of these details would apply to a WAP
gateway serving up WML 2.0-formatted content via a GPRS packet
overlay on a GSM network to an Ericsson, Nokia, or Siemens handset.

+++ Events (Advertisements)

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Venue: Makuhari Messe, Chiba Prefecture, Japan
More than 130 in-depth conference sessions and workshops address
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+++ Sign of the Times

NTT DoCoMo is offering 3G phones to its FOMA users. The only
drawback with the NEC-made phone is that the user manual is close to
a thousand pages long. Japanese users who decide to go 3G with the
new NEC N2001 handset will, according to www.mbl.is, receive a
945-page user manual.

While this may appear ludicrous, it reinforces the fact that Japan's
pocket rockets are fast becoming -- or rather, **have become** --
pocket computers. We detailed several of the FOMA models in WW No.
26, and they are beauts that offer capabilities if not absolute
capacities similar to a desktop PC of just a few years ago. In the
meantime, makers are going to have a tough time getting the user
manual into an accessible, sub-945-page length. Perhaps a
model-by-model Web assistance site? Such a system would offer great
follow-on marketing opportunities.

"The user manual from hell," Wap.com, undated
http://www.wap.com/share/osas/cache/artid551182.html

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STAFF
Written by Daniel Scuka (daniel@japaninc.com)

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