The following text is copyright 2002 by Network World, permission is hearby given for reproduction, as long as attribution is given and this notice is included.

Silly question: Are the carriers smart enough?

By Scott Bradner

Many pundits think that NTT DoCoMo's iMode success can not be exported from Japan. They claim that iMode is tapping into something in the Japanese culture that does not exist elsewhere. I'm no sociologist, as I'm sure the other pundits are, based on their astute observations of cultural differences, but I do think that there is at least one thing that is quite exportable: the realization that carriers are not omniscient.

Telephone carriers all over the world are busy, or so they claim, rolling out next generation digital wireless. The carriers have spent many billions of dollars for radio spectrum licenses, and are planning to spend many billions more over the next few years. They are also spending, or planning to spend, many billions more installing hardware to make use of the spectrum. Much of the expenditures are to support 3 G (3rd generation) services whose raison d'etre is high-speed data to and from wireless devices. The International Telecommunications Union (ITU), the standards group for this sort of thing, defines 3G as those networks offering 144 Kbps of data service shared by the users of a wireless cell (antenna). Some of the carriers are first trying out 2.5 G (generation two and a half) services which supports lower speed data services but with a lower investment.

There is one not-so-minor problem with the carriers rolling out these services: no one has any proof that cell phone users are willing to shell out for the major increases in monthly fees that will be needed to pay for the billions in expenditures. There is a surfeit of assertions of what the users will be willing to pay big bucks for including email access, web browsing, news headlines, finding the nearest Starbucks (maybe Starbucks will pay for this instead of the user), instant messages, video phone calls, dirty pictures (on that puny screen??), and interactive games (a la GameBoy). The carriers are scrambling to offer these and other seemingly bright ideas. But this just points out what they have not learned from the most successful packet-based wireless service in the world.

NTT DoCoMo's iMode service (http://www.nttdocomo.com/) has been an astonishing success attracting 28 million subscribers since it started in 1999. Subscribers can access more than 40,000 Internet sites, many of which offer some type of service. But NTT DoCoMo has business relationships with only a small percentage of these sites.

NTT DoCoMo does have business relationships with a few thousand sites. The sites can get listed on the NTT DoCoMo menu and NTT DoCoMo can do billing by adding the site service charge to the user's phone bill for a percentage of the bill. But for the other sites NTT DoCoMo gets to bill for minutes of airtime. NTT DoCoMo's big message is that it is not omniscient. It will not think of all of the applications users want. So it lets others play and takes a cut, even if that cut is just minutes.

disclaimer: Harvard thinks in centuries not minutes so the above is my own view