3G Services Have Taken Japan by Storm

[Kenny]

3G Services Have Taken Japan by Storm
By Sue Forbes, VP Business Development for OSS Mediation Vendor, Narus

But can this Asian success be replicated in Europe?

The outstanding success of 3G in Japan seems a world away... but shouldn't this success encourage Japan's European equivalents as the 3G era dawns on the western world?

"I believe the seven-million goal is within our reach." President Tadashi Onodera of Japanese operator KDDI, June 2002, referring to 3G subscriptions just two months after its launch.

Europe's 3G Problem: 'Now why would I need 3G?'

Today, if you ask the average man on the street in Europe what they want
from the imminent arrival of 3G, chances are that they will not be able to
give you a sensible answer. The fact of the matter is that the average
European still lacks the knowledge and understanding of the services that 3G
can provide and its overall capabilities in the wireless market, meaning he
lacks the enthusiasm which could aid its success and survival in Europe.

However, the story of the Asian experience offers a light at the end of the
tunnel for European service providers. 3G services in Japan are already
being consumed today in large volumes, in the form of video and music feeds,
location-based and e-commerce services and many, many more consumer- and
business-friendly services. This is perhaps best encapsulated in Japanese
service provider, KDDI's successful 3G services launch in April 2002, which
has since attracted over a million subscribers, with the expectation of
seven million by March next year.

Accounting for Japanese success

But how, after only a matter of months on the market, can such a new
technology be so successful in Japan?

"The focus needs to be on services. People do not go out and buy a network.
They go out and buy because of the fact that they can send pictures to each
other, get traffic information, or find out which of their friends are
nearby." Delia Macmillan (Principal Wireless analyst at Gartner) on the
necessary focus for 3G launches.

The answer lies, therefore, in the quality, and perhaps surprisingly, in the
quantity of services that are offered. 3G providers such as KDDI in Japan
have proven very successful by deploying many different services for various
market segments, and then adjusting their offerings according to what their
subscribers found attractive, whether it be the ability to book a restaurant
table, reserve a cinema ticket, or keep abreast of breaking world news.

By varying the services, KDDI is able to attract the widest number of users
with the understanding that specific content will be popular in some
regions, amongst some age groups and market segments, but not in others.
KDDI was able to track and feedback on the usage patterns of their services
as well as bill for them using an intelligent mediation platform from Narus.

3G Service Providers need to have the ability to know exactly how each of
its customers are using its services, not just in terms of capacity, but
also the ability to be completely creative in the type of billing plans they
offer, according to the customer's needs.

KDDI's feedback has revealed that new services such as movie clippings and
GPS navigation devices have enjoyed a strong demand. As a result of
providing a wide range of services to its subscribers, KDDI has now chosen
to focus resources on video and GPS services, whilst abandoning or writing
off services that have made less of an impression on its subscribers.

The success of this trialing approach was reflected in its first month of
operation (April, 2002) when KDDI's 3G service overtook dominant mobile
operator NTT DoCoMo Inc as Japan's largest 3G provider with 330,000 users
subscribing; three times more than KDDI's main competitor had achieved in
seven months.

Is Europe suited to the Japanese 3G model?

Why then should the European man on the street want 3G? He currently has no
concept of the advanced location-based services, video streaming and
e-commerce capabilities of 3G that the Japanese have been consuming in huge
quantities, so why should he?

However, if marketed and distributed diligently, whilst remembering the
lessons of WAP overhype, 3G services could well offer European subscribers
the largely untapped need to organise their social and work lives at the
touch of a button and on the move.

Whilst still in its early days, 3G is a proven success in Japan, and offers
Europe a business model template which could guide them through the early
days of their own launches. We cannot get away from the fact that the
burden of debt of 3G licenses is likely to have a negative impact on the
scale of the services offered by many European service providers.
Nonetheless the Japanese model offers some positive lessons which should be
considered.

For 3G to be successful in Europe, providers must offer compelling content
and services for their customers, receive continual feedback concerning the
progress of each service, and as a result maintain the flexibility to react
swiftly to consumer sentiment. But as we have seen this will require the
delivery of a service that is diverse and appeals to the needs of many.

There needs to be flexibility in terms of the operators being able to trial
and offer different types of services to see what takes off, because many
are unsure of what these applications are at the moment.

Service providers must be ready and willing to offer a wide range of
services to the subscriber and accept the failures, whilst responding
quickly to those services that rouse consumer sentiment. It may well be a
case of 'if at first you don't succeed, trial and trial again.'