Amidst the gloom and doom - 3G is shining, see DoCoMo Japan

And most stories relating to mobile are far more bright than those of the general economy. A particularly bright spot is mobile data and its rising star is 3G. Funny to think that as little as three years ago there were still pundits who talked of the failure of 3G..

So lets look at the annual report form the world's first 3G commercial launch mobile operator (carrier) ie NTT DoCoMo in Japan. They launched October 1, 2001. Today, over 89% of DoCoMo's subscribers have migrated to 3G (good news). The proportional contribution of mobile data services on the 3G service on DoCoMo rather than their 2G subscribers - is an amazing 44% today (very good news). This shift in use is not at the expense of voice calls, as voice calls on 3G are also marginally more than voice services on 2G (very very good news). Ad what kind of money are we looking at? The data services revenues of NTT DoCoMo's 3G customers, on an average, are 26.50 US dollars per month (wow, truly magnificent news)- yes, 306 dollars per year per 3G subscriber (not per active user, per all 3G subscribers). Note in many Western countries 26 dollars is near the TOTAL average monthly spend of subscribers including voice. In Japan they get that much BEYOND voice.

This level of mobile data service revenues are today sustainable in Japan, the second largest economy on the planet. If we project that usage level to the Industrialized World, it would mean that data services on only 3G networks, in only the Industrialized Countries, would generate approx 300 billion dollars of data services revenues in mobile. This in approx 5 years from now when the world has caught up wtih Japan's lead in 3G. And that is before we add voice call revenue (double that) and that is obvbiously before we add the 3 billion more users of the developing world...

This is a healthy industry. Oh, and by the way, how much is much? NTT DoCoMo has 48 million subscribers in Japan. They made 44.8 billion dollars of total revenues last year, of which 14.7 billion dollars were data services revenues. The company is incredibly profitable with a 37% EBITDA margin.

Comments

[Gibson Tang]

1 reason I can think of for Docomo's 3G success was that even with their old 2G and 2.5G network. They already have an open system where they made it very easy for developers to build apps for their system. So, with the rollout of the 3G network, the consumers are willing to pay more since that they know that there is already a huge market of apps from Docomo. After all, if there is no app, why bother paying for 3G? For the other 3G networks outside of Japan, I think that this is the reason that they are not taking off right now.

[Romi Parmar]

Gibson Tang: Spot on - that's why when Tomi writes about the business case for 3G it's all about the services!

Thankfully the iPhone App store has woken the world up to the potential and 3G Services are coming...

[Gibson Tang]

Thanks for the compliment, Romi. Microsoft had this mantra years ago and Apple followed suit with the App Store and went 1 level up by making it easier for consumers to find and download apps without much hassle. But now that the App Store is booming and Apple's famous lack of transparency with regards to iPhone app approvals is actually making me switching over from iPhone development to Android development. At least with the Android Market, I do not need to wait 1 month for my app(which was how long Apple took to review my game) to appear in the store.

[Tomi Ahonen]

Hi Gibson and Romi

Good points both of you, but I think Gibson you are misunderstanding me, and very severely.

I am 100% CERTAIN that the NTT DoCoMo model is succeeding in OTHER 3G markets, not like you say "why bother to pay for 3G, for the other 3G networks outside of Japan.. this is the reason they are not taking off right now."

You are totally wrong, Gibson. Please do observe the statistics from all countries that were among the first to launch 3G commercially and competitively. South Korea is at over 80% national migration to true full 3G and have been at 100% migration to 3G if using the lesser definition as used by the Americans (the so-called Qualcomm definition of 3G). Singapore, Taiwan are at over 50% migration; Italy, Austria and the UK are well past 40% migration to 3G. The pattern is solid and matches almost quarter-for-quarter the 3G pattern from Japan.

The services, apps and data migration rate is dependent on two major factors - pricing of bulk data rates and domestic adoption of SMS. In high SMS markets the proportion of premium data usage lags that of Japan and South Korea but the total migration to data services is roughly on par. The big accelerator in every market was the pricing plan of unlimited (or actually bundle pricing with high caps to monthly volume).

Now, I am not disputing the observation that data apps are a great booster to 3G - but it is not the killer app. The killer app to 3G is as we now know and can see from all advanced 3G markets - social networking services on mobile.

I do agree with you that services and apps in general, and the specific developer-friendly pricing pioneered by NTT DoCoMo with i-Mode and copied by their Japanese rivals KDDI and Softbank (ex Vodafone KK ex J-Phone) and copied by South koreans, Taiwanese etc - is a big key to getting lots of apps and services, and that in turn gives a boost to users finding utility in mobile in 3G. But it is not the necessary bit. The killer app is social networking services on mobile, as we've now heard top managements say from T-Mobile to Vodafone to Nokia.

So please don't misunderstand me. I don't mean NTT DoComo's 3G success is an isolated example in a sea of failure of 3G; it is to me clearly - I feel all evidence points to it from all 3G markets - a trend-setter that other 3G markets follow in lock-step. South Korea will be at Japanese levels later this year. Taiwan and Singapore in about 18 months. Italy and Austria will be the first Euroepan countries who will hit these levels in about 2.5 years, absolutely the evidence is there...

Thanks for writing

Tomi Ahonen :-)

[hediyelik eşya]

Thank You..

[Web development lucknow]

Thanks.