Personal Handyphone System technology has stormed the Japanese market, sending cellular service costs plunging. But while PHS is less expensive than cellular, in some ways it is less proficient.
At home, the PHS handset works as a digital cordless phone, at the office it offers mobility via a wireless private branch exchange connection and outdoors, it operates from a number of minicell base stations, using 2.7 volts in the 1.9 GHz range. The base stations can be installed most anywhere.
Though a PHS handset can operate in a number of cells within a large area, users cannot roam. In fact, the network is not capable of handoffs, so callers outdoors who are in mid-conversation must stay in one area and remain relatively still while talking. A base station’s coverage spans to a maximum of about 2,000 feet.
Nonetheless, PHS is enabling inexpensive communications in a country where densely populated areas make cellular communications difficult.
Three consortia are licensed by Japan’s Ministry of Posts and Telecommunications to provide service: DDI Pocket Phone, a division of long-distance operator DDI Corp.; Astel group and NTT Personal Communications Network, a division of Nippon Telegraph and Telephone Corp. NTT provides basic phone service in Japan. NTT Mobile Communications Network Inc. is a cellular operator. NTT Personal (the PHS affiliate) is 76 percent owned by NTT, while Cable & Wireless plc, Marubeni Corp. and Itochu Corp. each hold a 5 percent stake, and Japanese banks collectively hold about 9 percent. DDI has a cellular affiliate as well, comprised of various consortia, noted an Economic and Management Consultants International Inc. spokesperson.
The ministry had suggested PHS providers charge between 35 cents and 60 cents for a three-minute call, compared with cellular rates which, prior to PHS’ deployment, averaged between 40 cents and $2 per minute. NTT Personal plans to charge about 47 cents for a three-minute PHS phone call and $32 per month for service.
DDI Pocket Phone and Astel have reached agreements with NTT Personal on charges for access to NTT’s network and infrastructure, necessary to operate their PHS systems. The ministry is overseeing the agreement to ensure fair play.
NTT Mobile, the NTT cellular affiliate, slashed prices in April an average of 20 percent. Other cellular companies, including Tuka Cellular Tokyo Inc., Tokyo Digital Telephone Co. and Nippon Idou Tsushin Corp. are following suit. The companies filed applications with the ministry to cut their rates from 10 percent to 52 percent.
A caveat to the PHS implementation process is discord that has developed around a 1992 trade agreement which, according to some U.S. and European companies, entitles domestic and foreign suppliers equal opportunity to sell PHS gear. However, sources report NTT has bought phones from Japanese manufacturers only and has refused foreign equipment it believes doesn’t meet Japanese standards.
DDI has purchased components from San Diego-based Pacific Communication Sciences Inc., a Cirrus Logic company. PCSI supplies digital and RF semiconductors to Kyocera Corp., which makes the chip set available to a consortium of Japanese handset manufacturers.
Forecasts on PHS growth vary. Japan’s ministry expects 38 million people will be using PHS by 2010 while other sources anticipate much slower penetration.
EMCI reported last month the Asia-Pacific region is the largest potential cellular market in the world. At year-end 1994, EMCI said the region served 10.7 million cellular subscribers. By 2000, the cellular subscriber base will reach 78 million, the firm predicted.
