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Dateline Japan

Dateline Japan

One night recently, Masanori Ishii picked up his i-mode phone to read e-mail from his contacts in Houston, only to be told the service was unavailable. "It was the third time that week this had happened to me, so I knew the problem would be solved in a couple of hours," Mr Ishii said. "I can read the same e-mail on my PC, so it's not such a problem even if i-mode fails me." For most users of i-mode, the world's most successful mobile Internet service to date, this lack of access may be just a temporary nuisance. But for the service operator, NTT DoCoMo, Japan's dominant mobile phone operator, it comes just as the company is set to embark on an ambitious global expansion. i-mode is being closely watched by the world's leading telecommunications operators, which look to it as an indicator of the potential for next-generation mobile phones. These will offer features similar to i-mode's, but will provide even more advanced Internet and data transmission services, such as video and music. The success of i-mode in Japan, where more than 14 million people had signed up for the service by the end of October 2000, has raised expectations for third-generation services, which will be rolled out in Japan in 2001 and in Europe in 2003.

With good reason: 675 companies already offer Internet services on i-mode ranging from games to news and banking. And there are an additional 30,000 "voluntary" or unofficial sites. The latest fad among young people is to swap photos of each other using their i-mode phones. But to DoCoMo's misfortune, doubts about the reliability of i-mode - it has suffered a number of glitches - have emerged as it prepares to introduce the service in Europe through KPN Mobile, its European partner. Furthermore, sceptics ask whether i-mode will be as widely accepted in the West where a higher proportion of people have personal computers than in Japan. i-mode's technical teething problems raise questions about the wider implications for third-generation services. Of particular importance is whether they're merely the result of the unexpectedly rapid increase in subscriber numbers or whether they point to a more fundamental flaw in any service that tries to bring the Internet to mobile phones.

There's no doubt that i-mode has been a victim of its own success. The speed at which it has spread caught DoCoMo off guard. The company was so overwhelmed by the number of people wanting the service that earlier this year it was forced to curb new subscriptions for a month. But the company has also had to restrict usage by allowing users to connect only once every two or three times they attempt to use i-mode services, conceded Yoshihiro Yoshioka, senior vice president and executive manager of the network division. This points to a problem facing all mobile operators offering data transmission: data takes up large portions of bandwidth, which is limited by technology and and by government-determined availability. In Japan, heavy use of sophisticated data services would make voice calls in a two-kilometer radius impossible, says Makio Inui, industry analyst at Nikko Salomon Smith Barney in Tokyo. Mr Yoshioka admits there have been bugs in the system and problems in integrating the application and operating software. But he says DoCoMo has dealt with these glitches, and they should not recur. "It is not a fundamental problem," he says. Critics may cast doubts on the service as a result of its teething problems, but the expertise DoCoMo is gaining through its xperience with i-mode is giving it an even greater advantage over the competition, claims Kiyoyuki Tsujimura, head of DoCoMo's global business department. "This is a bitter lesson for DoCoMo, but rather than a stumbling block, we consider it a step forward in the realization of 3G," he says. With i-mode the company is gaining expertise in the running of a mobile Internet service, including how to manage billing and system crashes for a mass market. This is invaluable experience that can be applied to 3G, Tsujimura points out.

As for those who question whether i-mode will take off in markets with high PC penetration, DoCoMo doesn't expect mobile Internet services to replace those offered on PCs but to complement them. "i-mode will be for niche-time use," Tsujimura says. Its popularity in Japan has shown that people want to be able to send e-mail and access the Internet even when they're not sitting in front of their PC, he says.

That may be so. But DoCoMo's challenge is to repeat its success in unfamiliar markets where users may not be as tolerant as Ishii. If it fails, its sophisticated expertise will be of little value outside Japan.

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