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mmO2 will create yet another version of European i-mode
DoCoMo creates i-mode service-oriented open payment platform
Mobile Music - Japan's reality is Europe's future
Cosmote targets 100,000 i-mode subscribers by end-2004
2G unplugged in 2012 to save costs - DoCoMo
IN BRIEF: Mitsubishi 3-button mobile password system
1. mmO2 will create yet another version of European i-mode
When mmO2 announces its alliance with DoCoMo, aside from the resolution of the German market with KPN/E-Plus, the most interesting part will be to examine "what type of i-mode" they will be implementing.
For example, Spain's Telefonica Moviles has not branded the service as i-mode, choosing instead to wrap it into its e-mocion mobile data service, which also uses the competing WAP standard. The service is seeing good take-up among customers.
There is little doubt that mmO2 is contemplating how to integrate i-mode into its O2 Active suite, and how the branding, content, and payment models can be blended.
Telefonica's e-mocion branding decision still irritates DoCoMo, as does the extensive pay-per-event content billing.
After all, DoCoMo has derided other carriers for their pay-per-event models, especially Vodafone in Japan, and it promotes the monthly subscription model as a key value proposition of the i-mode model. A key value proposition for carriers that is, since DoCoMo has witnessed that 60 to 70% of monthly subscribers forget to unsubscribe when they are inactive.
But O2 is already successful with its own branding and portal. Surveys have found O2 to be the operator providing the most amount of support to third-party content developers. O2 Active, developed with BEA and HP and launched in June 2003, is claimed to be the most successful mobile internet portal in Europe:
"We take great pride in the portal. We have more content than any other WAP portal in Europe," said Christina Szirmai, head of customer experience and usability at mmO2.
O2 Active has been tailored for each market it serves (Germany, Ireland and the UK) to reflect differences in language, usage patterns, societal norms, and consumer preferences. And in fact O2 Active probably provided a combination of icons and color schemes to present users with a unique online experience that was more robust and interactive than i-mode was in June 2003.
A new version of O2 Active service installs the O2 Active menu on the handset, rather than making it available over a browser. The content on the handset downloads automatically to the handset and is updated automatically, which means that customers are able to access the content without waiting for downloading.
As a result O2 gets a disproportionate share of the WAP downloads (8.8bn in the first seven months of 2004 in the UK in total), and has more than 1m subscribers to O2 Active.
Contrast this with Telstra's position where their Mobile Loop portal strategy and implementation had failed. They were desperately seeking alternatives, when i-mode walked through the door as a potential saviour.
mmO2 is in a strong negotiating position, with growth in its markets and profitability, and a successful mobile internet strategy, and major alliances with companies like Intel in place.
To add to its headache DoCoMo needs mmO2 more than mmO2 needs DoCoMo. The three O2 networks would increase the potential European subscriber base for i-mode by about 22 million. To date, i-mode has only about 3 million subscribers in Europe. Even a small percentage of O2 converts would considerably boost that number.
DoCoMo must get access to the UK market as a priority. That explains why DoCoMo is prepared to pressure their early partner KPN into giving up the German market to mmO2.
It also means that i-mode will be integrated into O2's branding and technology and billing models and not the other way around.
Watch for the launch of "O2 Active's i-mode", run through the WAP portal, and with pay-per-service as the dominant billing method - every point an anathema to DoCoMo.
This raises Tom Hume's point of what is mmO2 actually getting from i-mode?
The answer is in the transition to 3G, that is consulting advice, and the more advanced products in the roadmap, e.g. Felica, and finally despite the success of O2 Active mmO2 does need to raise the level of subscriptions well beyond the 7% of subscribers that it is sitting at today. i-mode may give them that kick forward.
The point is this: mmO2's adaptation of i-mode, irrespective of the spin put on it by DoCoMo, will further confuse and dilute the international strategic intent and i-mode "model".
It's not a particularly difficult task to derive an effective strategic intent and strategy for international i-mode. DoCoMo has more than its fair share of clever people. It has the means but it lacks the will. Therefore this is probably down to corporate politics.
Perhaps mmO2 should sell its international business consulting skills to DoCoMo? That's not a silly suggestion!
(Why is the company sometimes called mmO2 and other times O2? mmO2 is the parent company that operates in a number of countries (UK, Ireland, etc). Its operating units in these countries are called O2.)
- for more, see this outstanding analysis of some of DoCoMo's current intentions and issues at The Register, by Wireless Watch.
2. DoCoMo creates i-mode service-oriented open payment platform
Right under the radar at the Nov 17 FOMA 901i Series launch, silently sitting away from the idols and the glitter of the handsets, was a remarkably lowkey announcement from DoCoMo that will change the mobile payment landscape.
The payment platform "プラットフォーム課金" or what could be called "the i-mode payment system for third-party platforms" is a challenger to all existing billing platforms for all i-mode customers.
Ebay's PayPal launched an initiative earlier this year to provide APIs and web services for third-party access to its billing system. That is easy to understand. DoCoMo's is not quite so easy because some of the English is a little Japolish still, but the intention is the much same.
Third-party service providers can bill - from their third-party platform - and it will appear on your i-mode telephone account.
The offical investor material for the 901i launch mentioned the service, and its planned start date of "Spring 2005".
Congratulations to engadget who found a reference in an earlier release 27th October) by Sony, in Japanese-only at Keitai Watch refering to the Playstation 2 and billing to i-mode:
ドコモ、PS2やPSPにiモードを使った料金回収代行サービス提供
"Obscured by the news of thePlayStation Portable's surprisingly competitive pricing and decent battery life was the tidbit from NTT DoCoMo that they're opening up their payment platform to companies outside their walled garden of i-mode cellphone sites. Specifically, it looks like they’ll be letting Sony PSP owners download games and other content directly to their new console and pay for it on their cellphone bills."
In fact this Sony announcement is much more bullish than the one at the 901i launch from DoCoMo.
It states the expectation that the new system will spread widely and potentially displace some credit card transactions, and that the upper and lower limits of the acceptable transactions are "in the midst of being examined".
It also notes that the third-party services/software platform provider has to decide the method of certification and authentication and "you can think various methods such as password certification".
- for more information Japanese-only page at DoCoMo.
3. Mobile Music - Japan's reality is Europe's future
In Jan Michael Hess's view, the carrier-centric model for managing the mobile economy is better suited to deliver mobile data services that consumers pay for than the device-centric model - favoured by Nokia - which is still dominant in Europe.
This is a key reason why Japan leads the pack and it is also the main reason why Vodafone adopted the carrier-centric model on a global scale, says Jan Michael.
To make the carrier-centric model work in Europe at least three conditions have to be fulfilled:
- the cost of GSM, GPRS and 3G data traffic has to go down severely
- third parties need to get a bigger share of the end user price (like in Japan where the third party gets between 88 to 91%)
- the carriers have to work in cooperation-competition (price strategy for the mobile internet, communication towards the user, open standards)
or as a less good alternative - there should be only a small number of european carriers
- for more information see the Mobiliser.org newsletter.
4. Cosmote targets 100,000 i-mode subscribers by end-2004
OTE Group Operating Revenues increased by 6.8% in the three months ended September 30, 2004, largely due to the continued strong performance in mobile telephony. Fixed line revenue fell by 8.0% and operating profit by 86.3%. In contrast Cosmote group (mobile) operating revenues for the third quarter of 2004 increased by 20.4%, to reach EUR 449.0m and EBITDA was up 21%.
The overall revenue increase for Cosmote reflected a 17.6% increase in airtime revenues, a 41.5% increase in revenues from monthly service fees and a 20.6% increase in interconnection revenues. Revenues from sales of handsets & accessories, following the launch of i-mode service in early June and the introduction of new handsets, increased by 121.5% to EUR 14.4m in the 3rd quarter.
Data revenues (which include SMS, MMS, and other "soft data" revenues from Value Added Services) represented approximately 11.5% of total telecommunication revenues during the nine months ended September 30, 2004.
Contract customers at the end of the quarter reached 1,610,032 or 39.4% of total while prepaid customers reached 2,481,141 or 60.6% of total. (At the same period, AMC's (Albania) customer base stood at 638,566 most of it consisting of prepaid customers.)
Blended ARPU for the Greek operations rose by 10% to EURO 32.1, up from 29.1 for the same period last year.
In June 2004, following the signing of a partnership agreement with NTT DoCoMo, Cosmote launched i-mode. Since launch, i-mode customer take up "has exceeded initial expectations", as i-mode service activations currently have surpassed 90,000 (i-mode service activations at the end of September 2004 were over 52,000).
Therefore i-mode will represent about 2.5% of the current subscriber base, after 6 months.
On November 3, OTE and Cosmote announced that they had signed a MoU for the transfer of OTE's interests in the parent companies of Globul and CosmoFon to Cosmote. These two companies, which have been managed by Cosmote since January 2003, operate successful mobile telephony services in Bulgaria and F.Y.R. of Macedonia, respectively.
This is important because it gives Cosmote free hand to introduce i-mode as it sees fit into those markets, under its agreement with DoCoMo. The next will certainly be Globul whose customer base grew by 78.9% y-o-y, reaching a total of 1,442,236 at the end of September 2004.
- for more see this UK Regulatory Announcement.
5. 2G unplugged in 2012 to save costs - DoCoMo
DoCoMo said on Friday that it will stop offering 2G ("mova" service) by 2012. The move is in part to cut costs for the firm, even though some 85 percent or 40m current subscribers are on second-generation handsets, company president Masao Nakamura said, as quoted by Kyodo News.
Despite its success in Japan and Korea, 3G has yet to gain mass acceptance in most of the world. Vodafone said it was targeting over 10 million 3G customers by March 2006. NTT DoCoMo, by contrast, expects some 10.8 customers by the end of March 2005.
3G has much lower operating costs than 2G, and the costs per bit of data are a small fraction of 2G. Unlike in most other parts of the world Japanese 3G licenses are free, allocated by the Government, and by well before 2012 DoCoMo will have written-off its network build-out capital costs.
In contrast the costs of operating the 2G network will have risen, and further capital investment would be a waste - especially since those investments could be better directed to 4G.
DoCoMo has already indicated that officially it will roll out 4G services by 2010. No doubt they will offer sufficient incentives to ensure that all "mova" 2G subscribers are off the network before this date and ahead of the just-announced schedule.
In BRIEF: Mitsubishi 3-button mobile password system
Mitsubishi Electric has developed a safer system to input an eight-digit password on a cell phone using only three buttons. Since the user actually does not type in the number of characters making up the password, other people who see the phone display cannot tell what the password is, according to the company. Mitsubishi aims to promote the system for use in electronic commerce and information services.
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The agreement won't generate much revenue for DoCoMo but will extend its brand in Europe. For mmO2, the move gives it an easy route to provide mobile internet services by exploiting DoCoMo's extensive experience with i-mode. 
Kirk Boodry, Dresdner Kleinwort Wasserstein 
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