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Asian Markets Give Initial Test to Third-Generation Phones

Posted on: Friday, 13 June 2003, 06:00 CDT

Jun. 12--New technologies are often marketed in Asia before their launch in Britain or France. Third-generation (3G) phones, which made their debut in Britain only last March, are a case in point.

Mobiles sporting high-speed internet access and video capability have been tempting Japanese consumers for almost two years and, after a sluggish start, are beginning to be a big hit. Handsets have become more sophisticated and cheaper while the service's reach has improved.

NTT DoCoMo, Japan's dominant mobiles firm, says it expects to sign up more than a million 3G customers for its Freedom of Mobile Multimedia Access -- Foma -- service this year and six million by 2005. Rival Japanese telecoms company KDDI already has more than seven million 3G users and targets 12.7 million by next year. A recent survey from consultancy IDC Japan foresaw 69 million 3G users countrywide within four years.

"This business year, the expansion of Foma will be our top priority," says DoCoMo president Keiji Tachikawa.

Unlike KDDI's service, Foma attracts considerable industry attention in Europe as it uses the same wideband technology that British and other operators paid billions for licences to use at the height of the dot com boom.

Some of the players in Japan are the same as those promoting 3G in parts of Europe. DoCoMo holds a 20 percent share in 3 UK, the 3G venture controlled by Hong Kong conglomerate Hutchison Whampoa. Vodafone owns Japan's J-Phone.

"DoCoMo could have close to a million 3G subscribers this year if it pushes hard to get more handset models out," says Connie Tsu at consultancy Pyramid Research. "We see annual growth rate for Foma averaging around 40 percent over the next five years."

It has not always been such a promising picture, however. The launch of Foma -- regarded as the global advent of commercial 3G services -- was first delayed by several months to October 2001, and then received a lukewarm response.

Analysts say poor coverage -- initially just 20 percent of the country -- and inferior, costly handsets combined to put off many potential customers. Shorter stand-by battery life for early 3G phone models compared with existing 2G phones was a big problem, they add.

But as coverage was extended to more than 90 percent of Japan and handset technology improved, take-up has soared.

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UKpound preceding a numeral refers to the United Kingdom's pound sterling. (c) 2003, Evening Standard, London. Distributed by Knight Ridder/Tribune Business News.

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