TOKYO-NTT DoCoMo’s iMode Internet service is winning attention around the world as the first success case for mobile Internet.
Since the carrier launched the service in February 1999, it has attracted more than 2.8 million users. Subscribers are expected to reach 4 million by March and 10 million by February 2001.
In addition, iMode has challenged the belief that while Internet business is “in,” it is not making money. About half of current iMode users subscribe to at least one content service that charges fees. At least two of the 242 content providers for iMode reportedly are earning more than 10 million yen (US$96,000) a month.
Industry observers say the iMode service is successful because the carrier isn’t the only company that benefits from the offering; content providers, vendors and users also profit from the way NTT DoCoMo provides the service.
Different from other similar mobile Internet services, NTT DoCoMo collects content subscription fees from iMode users instead of content providers. Content providers want to sell their content but hesitate because handling the billing is a large and expensive burden. By paying NTT DoCoMo to do the billing, these content providers can concentrate on what they do best-providing content-and still get earnings.
Another benefit to content providers is that there is virtually no way to duplicate digital data distributed to cellular terminals. Since digital data, in general, can be copied easily, protecting the copyright on digital data has been a crucial issue for content providers. With iMode, however, providers do not need to worry about such illegal activity.
This service is highly secure because iMode content services are provided only to registered users and because iMode terminals do not offer a duplication function, according to Takumi Suzuki, public relations officer for NTT DoCoMo.
In addition, because iMode services are provided using compact Hyper Text Markup Language (HTML), a simplified version of regular HTML (the language widely used for Web pages), providers easily can provide their Internet content to iMode. Therefore, the number of Web sites that offer iMode content has been increasing rapidly. NTT DoCoMo estimates there are 2,306 such Web sites.
Successful services today
With subscriber growth higher than expected, many content providers have rushed to enter the market. Two of the most successful content services are related to providing music and still images.
Giga Networks is now providing services that let users download for 100 yen per month (US$1) so-called chakumero, which are short melodies users can select to have played instead of a traditional ringing sound to indicate incoming calls.
Bandai, a leading toy company in Japan, is providing services called charappa, also priced at 100 yen per month. Subscribers to the charappa service receive from the company every day an image of a different cartoon character.
Both services are winning popularity. Bandai has more than 400,000 total subscribers, and Giga Networks has added more than 100,000 total subscribers.
However, when cellular terminals become more advanced, content providers must in turn meet this availability with more advanced e-commerce services.
NTT DoCoMo currently plans to launch IMT-2000 services based on W-CDMA in second-quarter 2001. Then cell phones will become multimedia terminals, and content providers can provide more complicated software.
In January, NTT DoCoMo purchased KDD’s wireless facilities for US$170 million to help cope with network congestion because of iMode’s popularity.
Challenges
One hurdle for terminal manufacturers to overcome in the meantime is the weight, size and cost demands likely from users for the new units. Market watchers say that if manufacturers want to sell their cellular terminals in Japan, they must weigh less than 70 grams, be no more than 70 cubic centimeters and cost less than 20,000 yen (US$193).
If a cellular terminal costs more than 20,000 yen, manufacturers will not be able to sell many, even if they are equipped with highly sophisticated functions. So vendors must add new functions while following strict limitations.
If the telephony functions and data functions are separated into two devices, manufacturers could cope with such strict requirements. However, Takeshi Natsuno, media director for NTT DoCoMo, said only avid game players or business people would be willing to have separate devices for voice and data.
Needless to say, some manufacturers plan to offer terminals specialized with voice and data functions, although how they compete against regular cellular terminals remains to be seen.
Another hurdle for mobile Internet is limited communications speed. At the moment, iMode service is being provided at a data transmission speed of 9.6 kilobits per second (kbps).
But this problem will be solved when DoCoMo launches IMT-2000 services. DoCoMo will offer its W-CDMA-based services at 386 kbps initially, with speeds up to 2 Megabits per second (Mbps) later.
Other market entrants
Encouraged by the great success of iMode, other carriers also are entering the mobile Internet market.
J-Phone Group launched its J-Sky Services in December using Mobile Markup Language (MML). Initially with services limited to Tokyo, Nagoya and Osaka areas, the group is planning to expand nationwide soon.
Tu-Ka Group also started providing Internet services called EZweb, and DDI and IDO began offering 64 kbps packet data service, called Packet One, nationwide in January.
