1

What can U.S. learn from Japan’s 3G

experience?

Erica Cheng

December 6, 2005

2

Past

3

Three Generations of Cellular Systems

1983-1992 First Generation (1G) Analogue --US dominance (AMPS) a) Mobile voice communications b) No data service 1992- 2001 Second Generation (2G) Digital (circuit-switched networks) --Western Europ

e dominance (GSM) a) Digital voice service b) One-way data transmissions only c) Enhanced calling features (called ID) 2001-2008/10 Third generation (3G) Multimedia (packet switched networks) --a single fl

exible standard (W-CDMA) a) Superior voice quality b) high-speed mobile internet (Up to 2M bit/sec always-on data) c) Broadband data services like video and multimedia d) Enhanced roaming “The sequence of the phases has been similar, but the timing has differed.” (Steinbock,

2003, p.211) New policies—monopoly competition Innovation—proprietary patents openness and standardization Markets—original demand replacements” (Steinbock, 2003, p. 208)

4

Social Necessity of Technologies Transitions in Cellular Industry

The transition from 1G to 2G was primarily motivated by 2G’s

a) more efficient use of radio spectrum b) increasing market demand for wireless telephony. The 3G system came into being due to a) the demand of new features b) more efficient services desired by the highly successful

2G cellular phone markets in the early 1990s. The development of each generation is aimed to provide

higher data rates and additional capabilities, which can be viewed as a kind remediation on the older technology.

5

Timeline of Cellular Systems Development in U.S. and Japan

Systems U.S. Japan

1G 1983

AMPS

1979

NTT

2G 1990s

CDMA, TDMA, GSM, iDEN

1993

DoPa

2.5G 1999

IMode

3G Not yet 2001

FOMA

6

Mobile phones in the U.S. and Japan

7

How U.S. lost industry leadership in wireless communications

Delayed 3G governing policy• 1968~82: Industry wars between FCC, DoJ, AT&T, RCCs, equip

ment manufacturers.

Incompatible wireless standards• Standards debates: market fragmentation: Indecision with standa

rd policies.

A lack of available 3G spectrum • Licensing chaos: the FCC’s cellular licensing begins

Source: Steinbock, p. 220, CTIA

8

Present

9

The Development of mobile market in Japan

10

Noticeable Trends in Japan’s Cellular Market

Mobile networks carry more data traffic than voice traffic

Japan's 3G networks already account for all net new service subscriptions

• Japan 3G subscribers: 39.429m

3G user percentage in total mobile subscribers is about 40% (Updated 11/30/2005)

More than one thousand WiFi public access points are already available around Japan and dual WiFi-cellular devices are already available.

11

What leads to Japan’s 3G success? 3 factors of 3G success in Japan

Network• Good Cellular Network Coverage

Handsets• Wide Variety of Advanced Cell Phones and Appealing Contents• Economical prices of cell phones, encourage yearly upgrades. --cell phone has become a fashion item, rather than a practical technology.

services • No charge for incoming calls, which helps lower basic voice telephony rate

s and drives users to spend this part of expenditure on more data services.• iMODE platform, which settled the ground for 3G data service and has put in

data connectivity throughout Japan. I-Mode service can be viewed as an prime transition from 2G to 3G service, which successfully establish the habit of using cell phones to transmit data in Japan.

12

What is iMode? i-Mode is a mobile internet business system with 45 million user

s and more than 3000 participating companies performing a great variety of mobile business transactions, from email, booking rail and air-tickets to games. I-Mode service includes both a proprietary "walled-garden"-type official menu, mainly used for selling content and games and providing information services, as well as a completely open free access to the internet.

In Japan i-Mode relies of DoCoMo¹s 2G and 3G packet switched DoPa data networks. Business transactions over i-mode are many billion dollards per year, and i-Mode has become an important part of Japan¹s social and commercial infrastructure. i-Mode and competing systems have been completely integrated into the daily life of most Japanese people. (Eurotechnology Japan K.K., What is i-mode? / Encyclopedia-type definition of i-Mode).

13

Existing Problems of Cellular Industry in U.S. Insufficient network coverage: better coverage to metropolitan cities, the coverage

in rural area is sparse and often out of service. Offer only the basic features, such as voice calling

and text-messaging, to their subscribers. The failure for WAP (Wireless Application Protocol)

to receive the universal support it expected, in part due to its lack of an “always on” feature.

high service costs Lack of variety and matching hand-held devices Lack of usable (appealing) content

14

Future

15

Comparison of U.S. and Japan (1/2)

Items U.S. Japan

Population (in millions, 2004)

296 127.69

Population Density (persons per square kilometer, 2001)

30 341

Mobile subscribers

194,479,364 (Jun. 2005)

93,864,500 (Oct.2005)

Penetration Rates

65.5% 72.8%

Source: Statistics Bureau, MIC; United Nations Computer Industry Almanac Inc.

16

Comparison of U.S. and Japan (2/2)

Cellular Network Coverage (Geography & Population Density

Cellular phone usage habits (Commuting)

U.S. Voice traffic

Japan Data traffic

17

Merger of Cellular Operators in U.S.—Intercarrier Compensation on Network Coverage

In 2004, Cingular Wireless’ acquisition of AT&T Wireless and the merger between Sprint and Nextel have concentrated the wireless market into the hands of three players:

Cingular Wireless, Verizon Wireless, and Sprint Nextel

Contributions:• Cost-saving on spectrum/license/infrastructure fees• Rural cellular networks establishment

18

What can U.S. learn from Japan’s 3G experience?

Enhance Network Coverage Selling services rather than selling technolog

y. (Steinbock, 2003, 216) No charge for incoming calls Wide Variety of Advanced Cell Phones and A

ppealing Contents Economical prices of cell phones

19

Bibliography S., Yazbeck. "The US road to 3G: an overview of telecom regulations, carri

er strategies, and the consumer market." Telecommunications. 1 no. ICT 2003. 10th International Conference on, (2003): 25- 32.

Steinbock, Dan. "Globalization of wireless value system: from geographic to strategic advantages." Telecommunications Policy. 27, (2003): 207-235.

Minges, Michael. "Is the Internet mobile? Measurements from the Asia-Pacific region." Telecommunications Policy. 29, (2005): 113-125.

Nurvitadhi, Eriko. “Trends in Mobile Computing: A Study of Mobile Phone Usage in the United States and Japan.” A Thesis submitted to Oregon State University.(2003): 0-71 GLEN DOSS. America’s Race for 3G. Retrieved November 23, 2005, from

http://www.gdoss.com/web_info/3g.pdf. Broadbandreports.com. (2002). Cellphones in Japan. Retrieved November

24, 2005, from http://www.dslreports.com/shownews/14578 Eurotechnology Japan K.K. What is i-mode? / Encyclopedia-type definition

of i-Mode). Retrieved November 24, 2005, from http://www.eurotechnology.com/imode/index.html

20

Questions?