Communications and Information network Association of Japan

September 1, 2003

New Technology in the Telecommunications Services in

Japan

9TH WEF

Diagram- 2Subscribers to Japan’s Cellular Phones

Source: Telecommunications Carriers Association (TCA)

41.546.3

51.155.7

60.965.4

69.172.1

75.777.8

7.5

19.7

34.6

44.9

51.9

57.1

62.565.2

0

10

20

30

40

50

60

70

80

90

'99.3 '99.9 '00.3 '00.9 '01.3 '01.9 '02.3 '02.9 '03.3 '03.7

(mill

ion

subs

crib

ers)

Cellular PhonesIP users

Diagram- 3

i-mode Business Model i-mode success factors

ContentsProvider

NTT DoCoMo i-mode users

Information Charges

　 Packet Communication Charges

Info

rmati

on C

harg

es

Comm

issio

n fee

(9%

of In

form

ation

char

ges)

Information

Use of packet network enables inexpensive always-on access.

Use of Internet standards:TCP/IP and HTML subset

Attractive handsets.

Build a WIN-WIN relationship with content providers.

Outline of i-mode

Diagram- 4

Growth of Contents Business of i-mode

Growth of contents business Breakdown of packets used

0

1,000

2,000

3,000

1999 2000 20010

200

400

600

800

1,000

No. of i-mode ICPs

No. of i-mode menu sites

Total information charges for premium contents

(100 mil yen)

Left axis

Right axis

Web access 85%

Mail15%

DatabaseDatabase

TransactionTransaction

InformationInformation

EntertainmentEntertainment

Diagram- 5

FY2000

(00/4-01/3)

FY2001

(01/4-02/3)

　 FY2002

(02/4-03/3) 2002/2001

Sales revenue (a)

US$

34,812M 38,828M 40,076M 103.2%

Packet revenue (b)

US$

2,937M 5,968M 7,386M 123.8%

(b)/(a) 8.4% 15.4% 18.4%

ARPU (Total)

(US$)

　 Voice

　 i-mode

72.1

64.8

7.4

70.6

57.8

12.8

67.7

53.1

14.6

95 .8%

91.8%

113.6%

1$=120\

NTT DoCoMo Revenue/ARPU Analysis (consolidated, US. accounting based)

NTT DoCoMo Revenue/ARPU Analysis (consolidated, US. accounting based)

ARPU: Average Revenue Per Unit

Diagram- 6Commercialization Plan of 3G ServicesCommercialization Plan of 3G Services

W-C

DM

Acdm

a2000

NTT DoCoMo

J-Phone

KDDI au

2001 2002 2003

May DecOct

Introductory service

Tokyo Area

Mar

Osaka, Nagoya

95% 97% & more

PostponedTokyo Area

Summer

Aug

Osaka, Nagoya

800MHz

2GHz

CDMA2000 1X

Dec

90%

Dec

Postponed

spring

1X EV-DO

CDMA2000 1XTokyo Area

Population Coverage

95%

87 % Other major cities

Autumn

Autumn

(659K)

(66K)

(9,156K)

Carriers No. of 3G subscribers

as of July, 2003

(152K, end of 2002)

Diagram- 7Elements Leading to Widespread Popularity of DoCoMo’s 3G

Initial launch Dec. 2002 Mar. 2003 Fall 2003 Spring 2004

Tokyo area only 87% 91% 95% over 97%

3G’s high-speed data transmission function is its true worth

3G’s high-speed data transmission function is its true worth

1. Expansion of service area (% of population covered)

2. Explosive popularity of camera-equipped cellular phonesTwo-thirds of cell phones shipped within Japan are camera-

equipped models.Capacity of digital camera function has moved into mega-pixel

range, and clarity of LCD screen has increased.110 to 310 thousand pixels in 2002

1 million pixels in spring 20032 million pixels in fall 2003

Background

Popularity of mailing high-quality still images and long video images via e-mail.

Diagram- 8Improvement of 3G Handsets Performance

2002 2003.01- 2003 Autumn

Latest 2G (PDC) Model

Weight 150g 120-130g 100g or less 100-110g

Size 204cc 110cc 100cc or less

90cc

Dynamic Standby time

55 hours 180 hours 300 hours or more

400 hours or more

Continuous talk time 90 min 130 min 130 min 140 min

Camera features X 100,000-300,000 pixels

1M pixels or more

1M pixels or more

Packet Transmission Speed (Max.)

384kbps 384kbps 384kbps 28.8kbps

Video phone X O O X

Actual Price US$400 or more

US$250 TBD US$250 or less

Diagram- 9

2002 2003

Use of mobile Internet services 76.1% 94.5%

Use of camera-equipped cellular phones 21.6% 41.5%

Subscribers interests in 3G 16.8% 40.5%

Use of Cellular Phones (based on study by CIAJ)Use of Cellular Phones (based on study by CIAJ)

Expectations for 3G

(multiple answers possible)

High-speed data transmission 60.1%

Exchange mail with images 59.9%

Possible to use abroad 58.1%

Map information 47.4%

Study conducted from March through April, 2003 on 600 people (of both sexes and covering every generation)

Diagram- 10

1. Higher transmission speed

2. Complete conversion to IP of cellular phone networks

DoCoMo’s Transition Schedule From 3.0G to 3.5G

Now

384kbps

Voice:　 circuit switching network

Data: packet switching network

Now

end of 2004

14.4Mbps max

(provide HSDPA functions)

2005 or later

ALL IP networks

Greatly reduce construction and operating costs for adjustments to

increase in data traffic

Diagram- 11Diagram of 4G (Systems Beyond IMT-2000)

Compiled by ITU-R (based on Japanese proposal)

Seamless interconnectivity where users don’t notice transition from one network/system to another.Local networks using wireless LAN, Bluetooth, etc.

Expansion resulting from Systems Beyond IMT-2000 (4G)

(3.5G)IMT-2000Enhanced

expansion

wireless LAN, Bluetoogh

4G systemcellular type

high-speed wireless access

IMT-2000(3G)

On-site, Campus/Medium-speedPublic wireless LAN

User environment

Indoors/Walking

1M 10M 100M 1G Data speed（ bit/sec.）

Wide-area mobility/High-speed

4G will encompass existing communication systems such as 3G and wireless LAN

Terrestrial digital broadcasting/BS digital broadcasting

Diagram- 12Subscribers to Japan’s Broadband Services

71

651

2,379

4,223

7,023

8,257

463784

1,151

2,224

26 115 305 458

30.2

1,4561,800

2,069

32 92 216

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

'99.3 '99.9 '00.3 '00.9 '01.3 '01.9 '02.3 '02.9 '03.3 '03.6

thos

and

subs

crib

ers

（）

ADSLCATVFTTH

Source: Ministry of Public Management, Home Affairs, Posts and Telecommunications

Diagram- 13

Current state of servicesMaximum speed

in 2 or 3 years　(Mbps)

Maximum speed(Mbps)

Typical monthly charge (US$)

ADSL 8-12 => 24-26 30

CATV 8 => 30 46 100

FTTH 100 50 1,000

Mobile

2.5G 0.03

3G 0.384 14.4

4G

(proposal to ITU)

100 (around 2010)

Higher Speeds and Price Wars Among Internet Access ServicesHigher Speeds and Price Wars Among Internet Access Services

Diagram- 14

2,900 3,100 2,9562,073

1,950 1,950 2,028

2,5403,081

6,993

4,477

7,176

5,979

2,453

0

2000

4000

6000

8000

10000

4,850 5,050 4,9844,613

1.5M 1.5M8M 8M 768k 768k512k 500k 512k1.5M

（ Yen/month）

International Tariff Comparison of Always-on ADSL Services

Upper Part:ISP access fee Lower Part:communications fee

Source: Ministry of Public Management, Home Affairs, Posts and Telecommunications

(Max speed of downlink)

Diagram- 15

Features of IPv6

Virtually unlimited number of addressesIPv4: Total 4.3B 　　　 IPv6:3.4X1028 per capita.

Hierarchical AddressingEfficient network administration

Security function is standardAuthentication in EC etc., secured traffic

Framework for QoS guarantee (flow label):Stream data (voice, video)

Easy configuration by Plug&PlayIP enabled information appliance

Multicasting is standardone-to-many, conversion of broadcasting and communications

Interconnection with Mobile NetworkSeamless interworking between fixed network and mobile network via MobileIP