WW-86 -- Intercarrier TV Calls and Other J-Phone 3G Musings

Wireless Watch Japan Mail Magazine
Commentary on the Business of Wireless in Japan
Issue No. 86, Tokyo, Monday, January 27, 2003
Subscribe for free: http://www.wirelesswatchjapan.com

today's lead sponsor is:


Coming January 29...

KPN The Netherlands CEO van de Heijkant on i-mode in Europe: latest
subscriber figs, "handsets are key," and why the two-year delay?

"We Rip the Faceplate Off Japan's Wireless Industry"

in this issue
++viewpoint: Intercarrier TV Calls and Other J-Phone 3G Musings

++wireless notes: Check out the English DoCoMo Net i-mode Site
Evil Side Effects of Too Much Keitai Use

++noteworthy news:
--> DoCoMo To Limit Photo Downloads
--> DoCoMo Eyes European Expansion
--> Sony Group to launch MVNO in Japan
--> Wider Wireless LAN Access Expected

++overlooked data: DoCoMo IR Secrets
J-Phone Goes English!

++sign of the times: Over-exposed Schoolgirl Victim of High-tech

++events (ads): Accelerating the Nanotechnology Revolution: Zyvex's
Market-Driven Strategies

++subscriber statistics, corrections, credits, administrivia

viewpoint: Intercarrier TV Calls and Other J-Phone 3G Musings

After a somewhat extended holiday break, Wireless Watch Japan is back! Happy New
Year to everyone, and all of us here at WWJ (OK - both of us here at WWJ) are
looking forward to another great year of mobile Internet craziness in Japan.

It took a little longer than expected to get back in gear after the holidays -
not the least due to a major site rebuild. Please take a look at
WirelessWatchJapan.com if you haven't already done so and have a scroll through
the newly renovated video archives. WWJ video producer and all-round tech guru
Lawrence Cosh-Ishii has done an amazing job making the site easier to browse,
and there's also a search feature. Thanks, Lawrence! On the other hand, your
humble correspondent is still working on making the mail archives fully
accessible. ;-(

Now on to today's Viewpoint...

I swapped some mail with Matthew Nicholson from J-Phone PR just before the
holidays, and he provided some good information on Java, 3G handset specs, and
the carrier's 3G roll-out.

I had mentioned in a story distributed via JCNN that it was "rare" for J-Phone
to disclose Java figures - specifically, subscribers. NTT DoCoMo, for example,
post their numbers on their English site, but I hadn't seen similar postings on
J-Phone's (or on KDDI's for that matter).

Matthew wrote to say, however, that the company has been releasing the data via
their monthly fact sheet, and added that distribution, so far, hasn't included
journalists. "None of the journalists, except you, seems to care about Java for
some reason!" He has since kindly included me in their distribution list, and I
hope to provide regular updates via this newsletter.

I also mentioned in December that one WWJ subscriber, Mark Singer, had written
to point out that the specs listed on Nokia's site for what appears to be the
same handset as the Nokia model that J-Phone is using for 3G in Japan (the 6650)
includes Bluetooth support, while J-Phone's version does not.

Nicholson confirmed what Singer suspected - Bluetooth is indeed missing from
J-Phone's model. "Bluetooth was not included because approval from the Bluetooth
SIG was not received in time for release; thus a decision was made to go ahead
without it," he wrote.

While this seems to be a valid legal and licensing excuse, I think it would have
been a nice boost to J-Phone 3G to offer Bluetooth - particularly since none of
the handsets can access the J-Sky wireless Web or send Internet email. You can
get Bluetooth, for example, on KDDI's Sony C413 - a 2G cdmaOne 64-kbps model -
while DoCoMo offer a couple of PHS Bluetooth models.

This lack of wireless Web access seems most glaring, and last Friday I asked him
why. Nicholson pointed to J-Phone's 3G marketing target as a significant reason:
"For now the main thrust is corporate customers and travellers, [which] we
realize [is] not a mass-market proposition," he said over coffee at the
Starbucks in the lobby of the J-Phone HQ building in Kamiyacho.

He explained that the carrier wanted to focus on international roaming, and that
J-Phone's chief service development officer, Kyoichiro Kouri, wanted to make
sure that the network was stable. "It's not a full-blown marketing campaign now.
For Japanese customers, this [roaming] is a very new proposition," he added. The
TCA reported earlier this month that J-Phone had sold 1,200 3G subscriptions as
of December 31, 2002 - this number includes sales of handsets that can be used
here and of the Motorola V66 - a tri-band GSM handset that is sold by J-Phone
for use outside Japan.

There are other interesting points regarding the handsets and marketing. The
Nokia 6650, for example, is not being sold bearing a red Vodafone name; it's
branded as "Nokia" - not as "Vodafone Global Standard" (although when boxed
together with a J-Phone USIM, it is formally sold as the "Vodafone Global
Standard V-NM701").

Further, the "J-Phone" name is absent from all three 3G models. (Will "J-Phone"
disappear in 2003? Watch this space.. .) Moreover, the handsets and the 3G
service aren't being flogged nationwide. He said that "Vodafone Global Standard"
handsets are presently only available at selected outlets - but the carrier will
gradually expand the sales network "over time."

In response to December press reports stating that 3G W-CDMA handsets were in
short supply at retail, Nicholson said, "Currently 3G handsets (the NEC model
only) are available at a total of 45 J-Phone Shops (directly owned shops and
some franchises). Depending on the timing, some have stock and some don't, but
we have basically solved the problem of being completely sold out." He confirmed
that the Nokia and Sanyo models are still "not quite ready" but couldn't give a
firm date when they'd be in the shops. The Motorola V66 is selling for 4,800 yen
online, while the NEC V-N701 is being sold at an open price.

J-Phone are also pleased that their W-CDMA-based videoconferencing feature is
interoperable with NTT DoCoMo's FOMA videophones (J-P W-CDMA is also
3GPP-compliant, as the marketing materials proudly point out). With FOMA
interoperability, there are automatically several tens of thousands of other
videophone owners with whom new J-P subscribers can make "TV calls" (a benefit
not enjoyed by DoCoMo 3G subscribers at the dawn of FOMA).

Another strength may be roaming, which appears to offer significant price and
coverage advantages over the market's only other competitor - KDDI. J-Phone
offers roaming in some 63-odd countries for a 540 yen monthly fee and it costs
140 yen/minute to call back to Japan from the US. KDDI offers service in 7
countries and has no monthly fee, but would charge 330 yen/minute for the same
call. Maybe this will get J-Phone's biz market fired up?

All in all, I give J-Phone's 3G effort so far a mixed rating. Some elements -
GSM-like roaming and 3GPP standards adherence - are strong. This level of
roaming in particular is a new feature for the market, and they face a sales
challenge in figuring out how to sell this to a high-end business crowd -
radically unlike J-Phone's traditional youth target. And they're obviously still
facing issues with handset availability as well as, arguably, onboard feature
sets. Given time, and a lot of late nights at the Atago Green Hills building, I
suspect initial issues will be worked out.

But I think that today, almost 4 years after the invention of i-mode, provision
of wireless Internet is an absolute requirement for success in the Japan market,
and the absence of J-Sky access - both Web and mail - with some ill-defined
"later in 2003" target (as mentioned at the 3G launch press conference) is a
major weakness.

Until this gets sorted out, J-Phone 3G is, I believe, destined to remain
attractive to TV phone fans who don't like FOMA and a niche
business-and-traveller market. Ironically, these appear to be all the users that
J-Phone wants right now. It had better be; until the service provides wireless
Internet, these are all they're likely to get.

-- Daniel Scuka

NOTE: The WWJ schedule has changed! The mail newsletter will now be issued on
Mondays and the video program on Wednesdays. And don't forget to tell your
friends and colleagues about us!

wireless notes

** Check out the English DoCoMo Net i-mode Site
This site lists the latest i-mode subscriber count, offers a bunch of cute
screen savers for download, and provides brief explanations (w/pricing) of many
(maybe all?) DoCoMo mobile services.

** Evil Side Effects of Too Much Keitai Use
Check out the latest Nooper Showcase gallery from last month:

"While attending an art exhibition we saw quite a lot of
people playing with their Keitai instead looking at art.
As per good old Nooper tradition, we couldn't help but
photograph them. Of course, we also know how hard it is
to find photos and clip-art where people actually stare
at a Keitai screen (instead of just holding it to their
ear). So here they are. Enjoy! PS. The last picture is
called: "The evil side effects of too much Keitai use."


noteworthy news

--> DoCoMo To Limit Photo Downloads
Source: Yahoo!, Jan. 20
DoCoMo, i-shot, limits

EXTRACT: NTT DoCoMo will limit the number of downloads of photographs taken by
its "i-shot" camera-equipped cellular phones to 50, starting Feb. 17. The move
is aimed at curbing unsolicited "spam" e-mails having attached photos.

COMMENTARY: This is interesting. DoCoMo is the biggest carrier with the most
users, so its spam (meiwaku) mail problem is the biggest too. There are no more
details available, but I wonder how the limit will be implemented. 50 per day?
50 from any one source? The problem, of course, is that the recipient is tempted
to download the image (and incur the packet fees) but then complain to DoCoMo
for the extra cost. The i-shot system sends image attachments via the
circuit-switched voice channel (at 9.6 kbps, I think) and receives images via
the packet-switched channel at 28.8 kbps. This way, subscribers are encouraged
to send more images since they only pay for connect time and not packets.

Starting next month, i-shot mail recipients will be able to reply to incoming
messages simply by selecting the "reply" option; also, they'll be able to choose
whether to include their phone number at the top of a (image mail) message when
sent to another party (by default, phone numbers do not appear). Currently, the
i-shot center email address (photo-server@docomo-camera.ne.jp) appears in the
"from" line of incoming image mail, and to reply, i-shot mail recipients must
input the correct address of the i-shot mail sender (recipients can identify the
i-shot mail sender by the mobile phone number that is shown at the top of the
incoming message). i-shot is a curious mix of SMS-like circuit-switched mail and
more "Internet-ish" packet-switched data mail.


--> DoCoMo Eyes European Expansion
Source: News.com.au, Jan. 6
DoCoMo, Europe, i-mode subscribers

EXTRACT: Japan's top mobile phone operator NTT DoCoMo plans to expand the
European user base of its i-mode five-fold to one million users this year.
DoCoMo will increase the number of i-mode terminal suppliers in Europe from the
existing two Japanese companies to between seven and 10 suppliers, the major
newspaper Yomiuri Shimbun reported. Bouygues Telecom of France started the
service last November, making France the sixth i-mode market following Japan,
Germany, the Netherlands, Taiwan and Belgium. Since its debut in Japan in
February 1999, the i-mode service, which enables users to e-mail, surf the web
and watch video images, has attracted some 36 million users in Japan.

COMMENTARY: Okay: so 2002 wasn't Big D's year. In fact, with
multi-hundred-billion-yen writedowns, FOMA suffering from continued subscriber
disinterest, and i-mode in the US seemingly caught in "sleep-mode," I suspect
senior managers have written-off '02 as the firm's "Anus Horribilis." But
prospects for '03 are much brighter, and Europe in particular holds promise.

By this month, KPN Mobile, E-Plus, and Base should have nabbed 200,000-plus
subscribers, and it looks like the handset fleet is set to increase
significantly. Notably, i-mode's biggest Euro competitor, Vodafone, is doing
well with V live! essentially by copying the i-mode model (don't take it from me
- that's a quote from an AT Kearney consultant who works with DoCoMo and others
in Europe in this week's video program). It's also an open secret that i-mode
will launch on Telefonica Moviles of Spain early this spring (under a different
brand). Will 2003 be the year i-mode kicks 穗e in Europe?

There have also been reports recently that DoCoMo is planning to partner with
"one of the leading four European mobile operators the company expects to be
remaining after a period of consolidation in the next few years." Quoted in the
FT, president Tachikawa said he believes "(in Europe) there can be four
operators at most. Europe has to go through a realignment." Who's next at the
altar? Some say that Italy's TIM is one possible target, but I don't think so;
TIM doesn't need i-mode and it's not the No. 2 or 3 carrier in its market (of
course, that may change if i-mode proves to be a Euro revenue-raker-inner in

NEXT WEEK: Don't miss WWJ's Video interview with KPN Netherlands CEO van den
Heijkant on Jan. 29! He covers all the details on how they're doing and what's
coming up for 2003..


WWJ has Web, email, and video promo slots for a limited number of sponsors

160,800 video minutes/month, 3,560 subscribers in Japan, Europe, and North
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"We Rip the Faceplate Off Japan's Wireless Industry"


--> Sony Group to launch MVNO in Japan
Source: PHS MoU Group, Jan. 2
Sony, PHS, MVNO, data

EXTRACT: Sony Communication Network (SCN), a subsidiary of Sony Corporation,
will launch PHS packet services and wireless local area network (WLAN) services
in February, the firm announced. According to SCN, the Sony firm will launch a
flat-rate PHS service as a mobile virtual network operator (MVNO) using DDI
Pocket's PHS networks in Japan. The monthly rate for its 128-kilobits-per-second
(kbps) service will be 8,500 yen, while its 32-kbps service will cost 5,300 yen.
The WLAN service will be provided in cooperation with NTT Communications Corp,
an NTT Group company.

COMMENTARY: Users of the service would be offered two options: a monthly flat
rate or 10 yen/minute. SCN and Sony Corporation will launch joint marketing to
promote broadband networks. This will be the second MVNO play using DDI Pocket's
PHS system; Japan Communications Inc. also started services in November 2001
under their "b-mobile" brand. I have no recent info on how they're doing.


--> Wider Wireless LAN Access Expected
Source: The Asahi Shimbun, Jan. 18
WLAN, Ministry, Hot Spot

EXTRACT: The Ministry of Public Management, Home Affairs, Posts and
Telecommunications intends to [encourage] the growth of WLAN "hot spots."
Legislation to amend the Telecommunications Business Law is to be put before the
Diet after it reconvenes Monday, ministry sources said. Present law bars telecom
operators from setting up relays on private property without the consent of the
owner. In disputes, the telecommunications minister can intervene, seek
compromise, and ultimately decide whether such installations are "necessary and
appropriate." Arbitrators have ruled, however, that LAN services are not covered
by the law.

COMMENTARY: The amended legislation appears to be in response to an incident
last year where a venture telecom company - MIS - was barred from installing
WLAN base stations in a Japan Railways station for, it felt, no good reason.
Under the current law, if a WLAN network is deemed to be a "telecommunications
circuit," JR would have been under much more obligation to accede to the
request, and MIS could have appealed to the ministry for arbitration if JR did
refuse. MIS did so anyway, but the arbitration commission ruled that WLANs are
not a "telecom circuits" under the law. Now, the ministry wants to amend the law
to stipulate that wireless LANs are "telecom circuits," and are thus covered by
the consultation and mediation provisions. So it goes in Japan.

See the July 2002 WWJ video interview with MIS: "Real Public Access Wi-Fi"


>> GETI/GLOCOM Platform Joint Seminar
Accelerating the Nanotechnology Revolution: Zyvex's Market-Driven

January 29, 2003 (Wed.) 18:30-20:00
Speaker: Mr. Ted Khoury, Director of Product Development,
Zyvex Corp.
Place: GLOCOM, 6-15-21 Roppongi, Minato-ku, Tokyo

Free of charge. Anyone interested should contact: seminar@getinet.org
or Tel: 070-5580-9122 (about the seminar), or 03-5411-6714 (about
the venue).

overlooked data

** DoCoMo IR Secrets
Check out the latest NTT DoCoMo IR presentation, January 2003. Data include
ARPU, FOMA development plans, and more.

J-Phone Goes English!
The company has put English descriptions for some of their handsets on the Web;
you can also get PDF copies of the user manuals for the bilingual models. The
line-up includes Sharp, Toshiba, and Sanyo. Great reference for tech specs and
how Sha-mail works.

sign of the times

** Over-exposed Schoolgirl Victim of High-tech Bullying
Mainichi Shimbun, Jan. 7
Mobile phones with camera functions have emerged as a new tool for bullying
among high school students, an incident that recently occurred in Osaka
Prefecture suggests. Photos of a girl at an Osaka Prefecture high school
taken with a camera on a portable phone has been transmitted via e-mail to a
massive number of people with a message identifying her by name and
slandering her, officials at the victim's school said. Commentator Keiko
Higuchi underscored the need to teach students the importance of respecting
personal rights of individuals. "It's a kind of bullying through a new
medium. I think the latest finding is just the tip of the iceberg. Teachers
and parents should teach children the importance of respecting individuals'
portrait rights and privacy."

... invented right here in Japan, folks ;-( ...

subscriber statistics, corrections, credits, administrivia

3,397 (via japaninc.com and wwj.com) as of Dec. 20, 2002

WWJ video newsmagazine researched, edited and hosted and email
newsletter researched and written by:
Daniel Scuka (daniel@wirelesswatchjapan.com)
Michael Thuresson (michael@wirelesswatchjapan.com)

WWJ video newsmagazine produced and edited by:
Lawrence Cosh-Ishii (video@wirelesswatchjapan.com)


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