Market Demand for Third Generation Mobile Telecommunications Service
By Hajime Yamada (GLOCOM)
In early May of 2002, the Telecommunications Carriers Association published statistics on the number of mobile telephone subscribers as of the end of April. Statistics of this kind have been referenced in this series several times, and the latest ones also provide us with interesting information.
The table below shows the change in the number of subscribers for each carrier from March to April.
| Carriers | April 30, 2002 | March 31, 2002 | Net Increase |
| NTT DoCoMo | 41,056,000 | 40,783,000 | 273,000 |
| au of KDDI | 16,306,100 | 16,105,600 | 200,500 |
| J-PHONE | 12,405,400 | 12,232,000 | 173,400 |
The table above tells us that NTT DoCoMo, Inc. was outpaced by the other two carriers, "au" of KDDI CORPORATION and J-PHONE, Co., Ltd., during this period. The market share of the total number of subscribers of NTT DoCoMo is 59%, but DoCoMo collected only 42% of the new subscribers in this month. It can be speculated that something unusual is taking place in the market.
The next table consists of the number of subscribers of Internet service.
| Providers | April 30, 2002 | March 31, 2002 | Net Increase |
| NTT DoCoMo | 32,156,000 | 32,638,000 | 482,000 |
| "au" | 9,638,800 | 9,976,400 | 337,600 |
| J-PHONE | 10,130,300 | 10,356,000 | 225,700 |
As was the case of the total number of subscribers, NTT DoCoMo, who has acquired about 62% of the total subscribers of Internet service so far, gained only about 46% of the new subscribers during this period.
What is the cause of the slump of NTT DoCoMo? I have reported in this series that J-PHONE was making remarkable progress because of Sha-Mail. Then what is the reason for the increase of "au?"
It is because demand for Third Generation (3G) Telecommunications Service is concentrated with "au." NTT DoCoMo started 3G services utilizing Wideband Code Division Multiple Access (W-CDMA) technology for the service areas in and around Tokyo in October of 2001. The service areas have been extended to Nagoya and Osaka districts at the end of the year, and further developed to cover all the major cities in Japan since April 1st, 2002. However, subscribers of the new services have been increasing only slowly. The table below shows the situation. According to the table, the number of subscribers NTT DoCoMo had acquired for the seven months was a little more than one hundred thousand, or no more than 15 thousand per month. The tendency has not changed after the service areas were extended to the major cities throughout Japan.
| Systems | April 30, 2002 | March 31, 2002 | Net Increase |
| W-CDMA | 105,500 | 89,400 | 16,100 |
| cdmaOne-1x | 334,100 | 0 | 334,100 |
The table above also includes the number of subscribers of the 3G services provided by "au." "au" enhanced some functions of cdmaOne, one of the 2G services "au" has been providing, and started 1x as 3G services throughout Japan simultaneously on April 1st, 2002. What cdmaOne-1x utilizes is merely an enhanced form of 2G technology, and its specs are lower than that of the W-CDMA used by NTT DoCoMo. However, cdmaOne-1x gained more than 300 thousand subscribers in a month. That was how the mobile telephone market changed in April of 2002.
The 3G system of NTT DoCoMo has higher speed of data transmission. However, the consumers valued service functions provided by "au" rather than data transmission speed. For example, mobile terminals of "au" have Global Positioning System (GPS). Users can specify their location on the map, and transmit it to another user as well. Digital cameras are also attached to certain models, and users can use them just like with Sha-Mail. It is likely that these functions are valued by users and thus resulted in the increase of subscribers. In other words, users are attracted to the added functions such as GPS and digital cameras rather than data transmission, the basic function of 3G services.
Prices are also different. As for "au," the market price of the model A3011SA, a typical one with GPS, is around 15,000 yen. Even A3012CA, one with GPS and a digital camera, sells for less than 20,000 yen. In contrast, any model of W-CDMA of NTT DoCoMo is quite expensive, costing between 30,000 and 50,000 yen.
In response to the circumstances that 3G services are evaluated in the market by added functions rather than data transmission speed, and also because Sha-Mail of J-PHONE, a 2G service equipped with digital camera has been popular, "au" announced the postponement of its inauguration of cdma2000, a genuine 3G service, until the fall of 2003.
So far, the Japanese mobile telephone market has been led by NTT DoCoMo. However, the situation of the market changed in the last month. We need to watch closely whether this trend continues, or whether NTT DoCoMo regains its strength.
|
