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Multimedia Handsets Finally Arrive

Multimedia Handsets Finally Arrive

NTT DoCoMo, Japan's leading mobile phone operator, plans to start delivering a music service on its wireless PHS (personal handyphone system) network later this month, allowing users to download online music onto their PHS phones.

DoCoMo has set up a new company with Matsushita Communications (the world's fourth largest mobile phone manufacturer, best known for its Panasonic brand), Sony, and Itochu Corporation, one of the largest trading companies in Japan. The new company, Trinotes, will develop and distribute content for the mobile music service. DoCoMo will own a 55% stake in the new company. Matsushita and Sony will each own 20% stakes while Itochu will have a 5% stake.

The Trinotes service will take the transformation of mobile phones into multimedia handsets a step further. Sony already offers a mobile phone that can play back music prerecorded on a smart card, while J-Phone, a competing mobile phone operator, offers mobile phones with embedded cameras. Mobile phones are also being linked to games machines.

The downloading of music, expected to be a key attraction of 3G services, is being introduced on the PHS network, which has faster transmission speeds, at 64 kilobits per second, than Japan's 9.6 kbps mobile phone services. However, PHS has been limited in appeal because of its restricted service area; DoCoMo's PHS service counts only 1.7 million subscribers, compared with 33 million subscribers to its mobile phone service.

The companies have set a conservative forecast for the spread of music downloading. DoCoMo aims to gain just 20,000 subscribers to its service in the first three months of 2001 and expects to take three years for the number to climb to 2 million. In part this is due to the potentially high cost of the long time that it takes to download music. Although music streaming for 30 to 40 seconds will be free, downloading full-length songs could cost as much as Y500 ($4.28) per song and take 10 minutes. The special handsets needed for the service are also expected to be relatively expensive, about Y47,000 ($480).

To ensure that PHS users, who tend to be younger than mobile phone users, don't end up with an enormous bill, DoCoMo has set a financial limit of Y30,000 on the material that can be downloaded.

DoCoMo,which is still 67.1% owned by NTT, the government-controlled former domestic telecoms monopoly, is also planning a New York listing for later in 2001, to help raise DoCoMo's international profile and facilitate overseas investments. But with the disappointing flotation of fellow mobile-phone operator Orange, it may fail to raise the substantial equity funds it has been hoping for to build up its third generation mobile phone services, which are estimated to cost at least Y1,000 billion. In May, DoCoMo will become the first operator in the world to roll out 3G services.


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