Eastern promise - Special Report China And Japan

CommunicationsWeek International, Feb 4, 2002 by Michelle Donegan

The delay, mirroring the development troubles of other 3G technologies, is due to problems with handset design, battery power requirements and chipsets. "The activities of 3G still stay in the labs. They haven't started GPRS yet," says Li. "They don't see 3G as something to pursue urgently."

Although China predominantly uses GSM technology to provide mobile voice services, China Unicom recently launched a major CDMA network. The operator plans to use the code-division technology for high-end data service users and keep low-end users on their GSM networks.

"China Unicom's customers are [mostly] low end and we want to change that image," says Zhou Jiangbou, senior manager of investor relations at China Unicom. "Many think of GSM as a cheap, low-quality service. But we'll change that image with CDMA."

Japan's market-leading 3G mobile rollout is being watched carefully by service providers, but its broadband growth could make an equal impression. (Special Report: China And Japan)

Michelle Donegan

Japan is at the forefont of next-generation telecoms services, leading the way in third-generation mobile (3G) rollout, and rising fast in the broadband access stakes according to some sources.

In fact, Japan--where the number of mobile subscribers surpassed fixed-line subscribers as long ago as 1999--has become something of a testbed for 3G, with much of the rest of the industry eagerly watching and hoping to learn from dominant carrier NTT DoCoMo's early experiences with next-generation wireless data applications and services. DoCoMo, which launched the world's first 3G service in Japan last October, is targeting 150,000 subscribers by the end of March and 1.5 million by the end of its next fiscal year.

Last month, the company said it had signed up some 30,000-40,000 subscribers, its slower than expected progress due mainly to a limited coverage area and a shortage of handsets and applications. It has now announced expansion into other cities in an attempt to boost the geographic coverage of the service, which offers data transfer speeds of up to 384 kilobits per second.

J-Phone Co., operated by Japan Telecom Co. and its parent Voda-fone Group plc, has announced it will start its 3G service on 30 June. As with DoCoMo, the service will use the wideband code division multiple access (W-CDMA) standard. And KDDI Corp. is set to upgrade its network this spring to the rival cdma2000 1X next-generation mobile standard.

Other countries will also be keeping an eye on Japan's broadband progress, if numbers from some research companies are anything to go by. In terms of broadband subscriber numbers alone, for example. Pyramid Research Inc. ranks Japan second in the world behind the U.S. (see graph, left).

But other factors should be taken into consideration. The Organization for Economic Cooperation and Development (OECD) ranked Japan 12th out of the 30 OECD countries in a report on the development of broadband access, released last October with data as of June 2001. The report ranked countries according to criteria such as opening access networks, investment in infrastructure and its spread throughout each country, as well as regulatory barriers to broadband rollout.