Japan: VoIP for Mobile Phones in 2007 (DCM, NTT)

Includes: DCMYY, NTT
by: Steven Towns

On Thursday Japanese government officials from the Ministry of Internal Affairs and Communications announced plans to introduce VoIP to mobile phones by the year 2007. Japan is considering a new network specifically for cellular technology that will bring considerably cheaper and faster Internet connectivity including telephony and data transfers.

It is essentially the same idea behind the current VoIP for fixed lines. The Japanese government is aware of other country's efforts in this area and is vowing to stay abreast of the competition. More details will be made available in December as officials are reviewing the proposal and will reach a decision by then.

Access speeds on the new network are expected to be up to 15 Mbps, which is more than a 1000x faster than the fastest 3G cell phones available in Japan at 384 Kbps.

The ability to download MP3s, stream audio/video, watch television, and now soon to use mobile VoIP, all demand faster speed and larger bandwidth.

This is great news for consumers and potentially for NTT DoCoMo (ADR ticker: DCM), Japan's largest cellular carrier with approx. 60% market share. Details haven't been released but DoCoMo, among several other carriers, is expected to apply for a license to offer mobile VoIP services.

DoCoMo is nearly two-thirds owned by telecom giant Nippon Telegraph and Telephone (ADR ticker: NTT). The advent of VoIP and now the news of mobile VoIP cannot be good news for NTT. It has long been the target of complaints over its high service costs, historically higher than other rich OECD member countries. NTT itself is nearly half-owned by the government.

It will interesting to watch what new entrants attempt to break into the market and compete against the giants on price.