BUSINESSWEEK ONLINE : JANUARY 17, 2000 ISSUE
INTERNATIONAL -- ASIAN COVER STORY "It Could Obviate the Need for Cable" (int'l edition) Wireless guru Seiji Sanda talks about why DoCoMo's technology will revolutionize information delivery The whole wireless world is watching NTT DoCoMo's experiment with continuous, mobile access to the Internet. Irene Kunii, Business Week's Tokyo technology correspondent, enlisted wireless guru Seiji Sanda to help analyze this trend. Sanda is founder and CEO of Japan Communications Inc., Japan's first reseller of cellular-phone services for the corporate market. In earlier incarnations, Sanda helped set up Motorola's wireless operation in Japan, and also ran Apple Computer's Japan operations. Here are edited excerpts of their conversation: Q: What do you think of i-mode? A: This is the world's first mobile Internet service. We're really talking about e-mail and short-text messages. When you want to do something new in marketing, you lay out a service that matches the technology. You had short-text messages in commercial application already, such as the portable terminals that companies like Federal Express use. What's happening now is that it's becoming a part of day-to-day life. The second step will be to enrich the content, offering full-motion video; followed by the third step, to transmission speed of 2 to 3 megabits per second. These two steps will be fulfilled by 3G [third-generation services]. Q: Some Americans have been critical, saying that 9.6 kilobits per second is too slow. A: They're only thinking in terms of speed. And [9.6 kilobits] is not strictly accurate. I-mode offers compression features as well, so you get sufficient speed. It's not bad for what you're receiving, which are short e-mails and simple graphics. People now are at the stage where they'll settle for convenience over quality. Q: Is it just a fad, or is this the beginning of an important trend? A: Japanese are very open and gadget-oriented. But a fad can't grow at this pace for very long. We're already at the Tamagotchi [digital pet] stage. It started out as a fad, but people realized its value and are sticking with it. I-mode is a success because of the Internet craze that's starting here. Japanese people don't have room for a desktop in their homes, and so they lack Internet access. The handset is the alternative to a computer. But something more important is happening. This i-mode trend shows [that the future of] the Internet in Japan and elsewhere is not going to be in the desktop PC. Nokia and others are encouraging people to do things on small devices. So, this is a movement that will take us beyond the desktop Internet. A lot of the Net action that now takes place on desktops will be transported to mobile phones -- e-biz, entertainment delivery, you name it. There's an immense expectation in the market regarding the convergence of telecom and computing in Japan. It's not going to be the same model as in the U.S., so there will be opportunity for indigenous players. I, too, will be forming alliances and looking for software development people. Q: What can we expect from 3G? A: W-CDMA [wideband-CDMA, a high-speed digital transmission standard] will change the world. It will make it possible to deliver anything deliverable on mobile handsets. Mobile handset technology will be a key factor in truly making mobile handsets into computers. So manufacturers will put more R&D into handsets. In the next five years, you're going to see an amazing number of new products launched. In the short term, Japanese companies will lead the way because of W-CDMA. Right now, there is no strong Japanese handset maker in Europe. They had been held back by NTT DoCoMo, which restricted them from using handset technology [much of it developed in DoCoMo's labs] for GSM and other standards. But that's no longer the case with W-CDMA, because DoCoMo now wants to push this standard internationally. Hutchison of Hong Kong will get the best handsets in the world because of its tie-up with DoCoMo [DoCoMo purchased a 19% stake in the company and will provide it with i-mode and W-CDMA technology]. Think what that will do for its business. W-CDMA is going to be dominant. Qualcomm will be there as well, but it will be late and thus lag behind. Much of the world, led by Europe and Asia, will embrace wideband CDMA.... It's the standard offering the most mature technology and one that will come out en masse in Japan. I predict DoCoMo will have 10 million subscribers [for its W-CDMA service, which will probably come bundled with a new i-mode] the first year it comes out. That's more than enough for manufacturers to start investing in the technology. You've got to have a subscriber base, and that's what DoCoMo promises. Q: But DoCoMo is taking such a docile approach toward global expansion. How will it make money without taking over other operators? A: DoCoMo has a large subscriber base in Japan, which already has nearly 50 million cell-phone users. That's a big market that will provide DoCoMo with a sound business. It will also become more influential by investing in operators around Asia. It's not in it for the capital gains. It wants to make sure that its [3G] technology gets adopted in China and elsewhere. Q: What does this mean for the U.S.? A: It could obviate the need for cable TV. If the wireless Internet and data transmission catch on, it will make companies like TCI, which is buying cable TV companies, obsolete. But I think the U.S. will remain behind in mobile. That's because the industry has invested, I'd say in the range of $1 trillion, in laying cable to the home. So it will fight wireless to the home. Look at what AT&T is doing, spending a lot to invest in cable. They won't be welcoming an advanced wireless system with open arms. It's a horrible situation in the U.S., and it's the direct result of too much deregulation. I tell Japanese government officials and politicians: Don't do to the Posts & Telecommunications Ministry what the U.S. did to the FCC [the Federal Communications Commission]. America will be close to the Third World in mobile. Even Mexico and South America will probably migrate to 3G. There's an advantage in being late, because they can skip over all these existing standards to 3G. It's the same in Asia and Africa, in countries that couldn't afford to lay down wire. The advantage of 3G is that it doesn't require a great deal of bandwidth. You can get more out of this technology so that the same amount of bandwidth gives many more people wireless access. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Amazing DoCoMo (int'l edition) ASIAN COVER IMAGE: DoCoMo TABLE: Why Japanese Are Mad for i-mode PHOTO: DoCoMo's i-mode Phone CHART: DoCoMo's Unearthly Flight...And a Share Price to Match Staking a Claim in Japan's Net Gold Rush (int'l edition) ONLINE ORIGINAL: What's It All About: An i-mode Primer (int'l edition) ONLINE ORIGINAL: DoCoMo's Keichi Tachikawa on i-mode and Beyond (int'l edition) ONLINE ORIGINAL: ``It Could Obviate the Need for Cable'' (int'l edition) INTERACT E-Mail to Business Week Online

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