BUSINESSWEEK ONLINE : DECEMBER 25, 2000 ISSUE
INTERNATIONAL -- INT'L BUSINESS

Ground Zero in the Wireless Wars: Asia (int'l edition)


In the 1990s, Europe was the capital of the wireless universe. Home to the world's top mobile-phone market, the Continent was expected to be first to launch the wireless Internet. Not any more. Over the past year, the action has shifted to Asia.

Much of the credit belongs to NTT DoCoMo Inc. Japan's largest cellular operator beat its European rivals out of the starting gate with i-mode, a mobile Internet access service that, while slow, is a cinch to use. Now, DoCoMo is positioned to lead the move into third-generation wireless communications that promises to deliver high-speed multimedia to phones and other devices. Next May, DoCoMo will roll out a 3G system, known as wideband CDMA (W-CDMA) in the Tokyo area. Other Asian mobile operators from Seoul to Singapore are close behind.

All the signs point to an explosion in new wireless services in Asia. In the next few months, the region will overtake Europe as the world's largest mobile market, with more than 170 million users. Asia's new cell-phone users tend to be youthful, with a penchant for the latest electronic innovations.

Many can't wait to try out such sophisticated applications as sending short video clips, which will be made possible with 3G. ''This kind of user experience is crucial if one hopes to develop a successful business,'' says DoCoMo's Takeshi Natsuno, who designed the i-mode portal.

HEAVY DEBT. The promise of an Asian gold rush is attracting all the major handset, equipment, and network makers--from Ericsson to Lucent Technologies to Alcatel. Each is signing fat contracts. Japan, Hong Kong, and possibly Singapore expect to introduce high-speed services next year, followed by South Korea and perhaps China in 2002. Most Asian operators likely will adopt W-CDMA, but China could go with its own 3G variant, TD-SCDMA.

It won't be smooth sailing. Although many Asian operators will pay less than European firms for their 3G licenses, they are still burdened by debt from other projects and fret about the cost of building new wireless networks. Deregulation will foster foreign competition. Already, Vodafone AirTouch PLC is beefing up in Japan's mobile market. But none of this will halt the blazing growth of the region's cellular market or the shift to 3G. For now, this wireless decade belongs to Asia.

By Irene M. Kunii in Hong Kong

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