The Japan Connection

Europeans wondering what to do with their agonizingly slow wireless Internet phones might want to check out what's going on in Japan. The country is hooked--chiefly to NTT DoCoMo's i-mode service. Already almost 20 million Japanese use i-mode wireless phones to play games, send photos to their friends and get instant maps to the nearest karaoke bar. They have tens of thousands of services to choose from, and they never have to dial up: i-mode is always on. They're always connected.

For Japanese consumers, i-mode is now the most popular way to connect to the Internet, including Web televisions and PC dial-up services, and 55,000 people are still signing up each day. I-mode handsets are almost as hot as Sony's PlayStation 2. In Tokyo's Shibuya district you'll find hundreds of bright, cheery i-mode handsets with big color displays. Each device has built-in software for fancy screen animations and quick and easy downloading of music clips. Some have games and even tiny video cameras. Next to them, Nokia's WAP phones look downright ancient.

When DoCoMo announced last month that it planned to bring i-mode to Europe, many folks interpreted it as a sign that the Continent would finally get a happening wireless service. I-mode technology is clearly superior to present-generation WAP. DoCoMo's mobile network in Japan uses so-called packet switching, in which digital data is sent in discrete chunks. This allows DoCoMo to offer a service in which users are essentially online 24 hours a day but pay only for each packet of data they send or receive. Europe's GSM networks, by contrast, require a dedicated-line connection each time a user want access to a service. That's why WAP phones can take half a minute or so just to connect to a Web page, and it's partly why they're so expensive.

Europeans, meanwhile, are outdoing themselves to go DoCoMo one better. Spain's Telefonica Moviles and Germany's Deutsche Telekom are just now rolling out new, faster networks called GPRS that use packet-switching technology. (In the United States, DoCoMo and AT&T Wireless are planning an i-mode-type service sometime next year.) By the time DoCoMo and its European partners--E-Plus in Germany, Telecom Italia, and KPN in the Netherlands and Belgium--bring out their service at the end of this year, Europe will be getting a healthy injection of competitive wireless technology.

If all these sizzling new mobile networks get built, will Europeans finally reap the benefits of wireless services they anticipated a year and a half ago, when WAP was introduced? It's an open question. Technology, it turns out, is only the half of it. Europe's phone companies are going to have to get a whole lot better at appealing to the masses.

I-mode's dizzying variety of entertainment and simple, useful services has a lot to do with DoCoMo's unique arrangements with the thousands of companies that offer i-mode content and services. Start-ups like Bandai, which invented a hugely popular virtual dating game, are in on it, as are media giants like Sony, which provides music clips. No firm can buy top portal spots; rather, DoCoMo lists the services by popularity, which tends to reward those with broad consumer appeal. If Europe's many national telcos are to pull off similar arrangements with i-mode-type services, they're going to have do a cultural about-face. Each telco has jealously guarded WAP portals for its own national market, which has stifled innovation and fragmented the services.

Marketing is another sore point. So far Europe's track record is dismal. The phone companies hyped WAP technology as the hot new thing, a "mobile Internet" that you just had to have, but they never sold consumers on those seven lines of black-and-white text on the typical WAP screen. "It was one of the biggest marketing mistakes ever," says Carsten Schmidt, telecoms analyst at Forrester Research in Amsterdam. Even now the telcos market the mobile Net mainly as a premium service for stock traders and news junkies, ignoring the young crowd who make up the vast majority of i-mode's Japanese users. "When you can play games and listen to music, that's when it gets interesting for most of our customers," says Stephan Genauck, salesman at BlueTel, a Berlin phone-store chain.

Europe will have to emulate DoCoMo's Japan success and present i-mode not as a technology but as a brand of unique mobile services. When i-mode was introduced in early 1999, DoCoMo had readied thousands of attractive games and applications. Some of them, such as the local maps that appear when the network detects your exact position, were tailor-made for mobile devices.

Are the Europeans paying attention? KPN in Amsterdam is already working on more entertainment-oriented services to roll out with i-mode. "We're in this partnership to learn from DoCoMo," insists KPN's Carla van Lomwel. Nokia's new entertainment division is trying to spice up the next generation of handsets. Deutsche Telekom recently formed a unit called T-Motion to develop new mobile Internet services. But given the track record, few industry observers trust Europe's operators to deliver services that have mass appeal--despite having DoCoMo as a partner. "They're still tinkering with technology instead of trying to figure out what it is that consumers want," says Thomas Fellger, a wireless expert at MetaDesign in Berlin. Unless they figure it out soon, Europeans may very well find themselves disappointed once again in their wireless services.

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