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Competition of 3G Services in Japan
Tatsushiro Shukunami
Institute for Media and Communications Research
Keio University, Japan
Outline of presentation
• Overview of Mobile Market in Japan
• 3G Market in Japan
• What do customers want?
• Who will win?
Overview of Mobile Market
Mobile/Internet Penetration in Japan
• Mobile Subscriber– > 80 million
• Mobile Internet Penetration– > 70 million
– High growth but almost saturated
-10
10
30
50
70
90
1998 1999 2000 2001 2002 2003 -10
10
30
50
70
90
Mobile Phone Mobile Internet
Source: TCA
(Million)
Market Share by Subscriber
• #1:DoCoMo• #2:KDDI
– au
– Tu-Ka
• #3:Vodafone• DoCoMo’s do
minance is gradually eroding
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
DoCoMo au Vodafone Tu-Ka
Source: TCA
(Thousand)
Growth Rate of Subscribers• Average growth rate came down from 50% to 8%
• Highest Growth: DoCoMoTu-Ka Vodafoneau
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
1997 1998 1999 2000 2001 2002 2003 2004 -10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
DoCoMo au Vodafone Tu-Ka Anerage
Source: TCA
Annual Subscriber Increment• DoCoMo
– Advantages on coverage and relianility in the early stages
– i-mode added new market power since 1999
• Vodafone – Advantage by photo ma
il in 2001 and 2002
• au– 3G and Aplications such
as Ringsong, and Walk Navigations lifted au in 2003 and 2004
-1000
0
1000
2000
3000
4000
5000
6000
7000
8000
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
DoCoMo au Vodafone Tu-Ka
Source: TCA
(Thousand)
3G competition
What is 3G?
Source: ITU
Technical Specifications of 3G• au’s EV-DO has the highest maximum speed.
Carrier Technology Nickname Date Max Speed
DoCoMo WCDMA FOMA October2001 384Kbps
HSDPA ? 2005 14.4Mbps
au cdma2000 1x cdma 2000 1x April 2002 144Kbps
EV-DO WIN November 2003
2.4Mbps
Vodafone WCDMA VGS December 2002
384Kbps
Source: DoCoMo, KDDI, Vodafone
3G subscribers
• au has been dominant in 3G market.
• DoCoMo has been trying to catch up.
• Vodafone is far behind.
0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
2001_12 2002_6 2002_12 2003_6 2003_12 2004_6
DoCoMo au/KDDI Vodafone
Source: TCA
Penetration of 3G
• Penetration of 3G is more than 20% in average
• More than 80% in au
• About 10% in DoCoMo
• About 1% in Vodafone 0%
20%
40%
60%
80%
100%
2001_12 2002.6 2002_12 2003.6 2003_12 2004.6
DoCoMo au/KDDI Vodafone Average
Source: TCA
Voice/Data use of KDDI subscribers• Data usage increased 2.5 times during the past 3 years,
while Voice usage decreased 13%.
150
160
170
180
190
200
Min
ute
0
100
200
300
400
500
Voice MOU Pcket/Day
Source: KDDI
Comparison of 3G StrategiesDoCoMo KDDI Advantage
Phone Service Coverage
Not as good as 2G yet As good as 2G KDDI
Data Service Coverage
Not as good as 2G yet At least 64Kbps, Max 2.4Mbps
KDDI
New Handsets 2G and 3G Only 3G KDDI
Key Services Video Phone
Video Mail
Video Download
Video Game
Ringsong
GPS
Original Video Program
KDDI’s self-complete functions may be accepted easily.
Data Charge Discount Plan only for 3G
Flat-rate access only for expensive monthly plan
Discount Plan for both 2G and 3G
Flat-rate access only for EV-DO
DoCoMo’s 2G customers are not happy on data charge.
What do customers want?
3G service menu
• Network– Video Phone
– Video Mail
– Video Clip
– Walk Navigation/ GPS
– Ringsong
– Network Video Game
• Standalone– Photo Camera
– Video Camera
– Radio Receiver
– Analogue TV Receiver
– File Viewer
– IC Card
– Digital TV Receiver(2005)
Penetration of high end functions
Function Web/
Photo Mail
Video Mail
Java GPS Ringsong
DoCoMo 41.7 25.6 ? 24.8 ? ?
au 14.5 13.1 11.4 4.6 9 11.2
Vodafone 13 12.1 3.2 8 ? ?
(million)
Source: ITmedia
Mobile Content Market
• Market size reached nealy $300 milion.
• Music and video are about 50%.
0500
100015002000250030003500
2001 2002 2003 2004
100 m
illion y
en
video music game character
Source: DCAJ
Most Popular Aplications• Camera and photo mail has become as popular as web access.
• Regular e-mail is as popular as phone call.
0 20 40 60 80 100
%
Video Phone
Video Mail
Location Info
Video Camera
Soft Download
Photo Mail
Web Access
Camera
Phone
Source: MRI
Who will win?
Lessons in the past few years
• Customers want convenience and value. High speed is not the first priority.
• Service coverage problem still bars DoCoMo’s migration strategy.
• Creative, easy-to-understand, and self-complete services are accepted first.
• Full music download has great potential, as Ringsong and iPod has proved.
• DoCoMo– Technology
– Reliability
– Handsets
• au– Creative Ser
vice
– Low Price
– Good sense
• Vodafone– International
Corporate Image
0 20 40 60 80
Technology
Handsets Lineup
Latest Functions
Low Price
Contents Variety
Easy to use
Good Sense
Reliablity
International
Promising
Creative Service
Score
DoCoMo au vodafone
Customers expectation• Flat rate pricing may change business model and handset requirements.• More download of music and game needs more storage in handsets.
0 20 40 60 80
News
Free MusicDownloadPhoto Mail
Free GameDownloadE-mail
Video Mail
Source: MRI
Issues on 3G Business• Identification of killer applications for 3G• Sustainability of WiFi and new entries• New business model for content provider
– Rich content suitable for flat-rate
• Flat-rate for “full” internet access– Handsets, PDA, and PC
• Handsets Improvement– Weight, size, battery, and price– Standalone functions such as Digital TV reception
• Service Coverage– Domestic and Global
