From Deseret News archives:

The face of the cell phone user is changing

Published: Monday, June 6, 2005 9:42 a.m. MDT
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"This has had a significant impact on our business," said Masao Nakamura, the chief executive of DoCoMo, referring to flat-rate high-speed data plans, which are unlikely to disappear. "Our hope is to get back to a growth trend within three years, or at least halt the down trend" by introducing new video services and the like to recoup lost revenue.

Coming up with the right pricing plan is just one challenge for American carriers introducing similar 3G services. DoCoMo and its rivals, Au from KDDI and Vodafone Japan, have learned the hard way that networks have to be extensive and reliable, handsets plentiful and affordable and services practical and easy to use.

"The U.S. carriers have watched what has gone on overseas very closely," said Roger Entner, vice president at Ovum, a telecommunications consultancy. "They have to be careful because customers have been burned once or twice with the promises of 3G."

Of course, U.S. carriers have the luxury of learning from mistakes the Japanese have made, particularly when it comes to designing attractive and reasonably priced handsets. A bigger hurdle is persuading Americans to use their phones to write e-mail messages, surf the Web and hold videoconferences.

Sprint's wireless group, for instance, gets just 9.8 percent of its total revenue from data services, the highest percentage among cellular carriers in the United States. DoCoMo, by contrast, receives almost 26 percent of its revenues from data services.

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"The American and European carriers are trying to answer the 3G question and the data question at the same time," said Makio Inui, who follows Japanese phone companies for UBS Securities in Tokyo. "Japanese carriers had already solved the data question" because their customers were heavy data service users before 3G was introduced.

Even so, Japanese consumers have only flocked to 3G phones in the last year. It took DoCoMo, the market leader, about two years to attract its first million 3G subscribers — twice as long as expected — because the first advanced handsets were bulky and had weak batteries and few original features. DoCoMo's third-generation network coverage was also spotty. Vodafone has also stumbled with its service because it introduced handsets that were not tailored enough to meet the needs of Japan's finicky consumers.

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