DoCoMo says 3G on track, but shares fall

DoCoMo says it is on track with its 3G launch in October

TOKYO, Japan (CNN) -- Japan's largest mobile phone operator, NTT DoCoMo, said Monday it would launch commercial third-generation phone services on October 1 as planned.

The 3G services offer faster transmission speed and the possibility of real-time video for mobile users.

DoCoMo also said it would expand the service from Tokyo and Yokohama to other big markets such as Osaka, Kobe, Kyoto and Nagoya by December, and to major cities nationwide by March 2002.

Shares in DoCoMo failed to benefit from the news, dropping to a record low of 1.38 million yen, down 5.5 percent.

DoCoMo is the largest stock by market capitalization on the Tokyo Stock Exchange.

In May, DoCoMo postponed the commercial launch of 3G services but rolled out trial services for a select group of 4,500 corporate and individual users.

Morgan Stanley Dean Witter said Monday it had cut its investment rating on DoCoMo and its parent Nippon Telegraph and Telephone Corp (NTT) to neutral from outperform, Reuters reported.

No longer a 'high-growth stock'

In a note to clients dated September 3, Morgan Stanley said it now viewed DoCoMo as a blue-chip stable growth stock rather than a high-growth stock due in part to the maturing domestic market.

For NTT, MSDW said price falls stemming from intensifying competition and a declining broadband market share should translate into declining revenues.

Shares in NTT were down 2.6 percent to 526,000 yen.

DoCoMo said Monday afternoon it would offer 3G services on various tariff plans, with a fixed monthly charge ranging from 2000 yen (about $16.70) to 8,000 yen (about $67).

It said there would be five comprehensive plans and one data-only plan.

There would be cheaper packet charges suitable for high-speed and large-volume transmissions. It said transmission fees would range from 0.02 to 0.10 yen per packet. One packet carries 128 bytes of data.

There will be an incentive for customers switching over from existing phones. The Nihon Keizai Shimbun reported on Saturday that 3G mobile handsets will likely be priced at around 50,000 yen ($420).

Faster than existing i-mode service

DoCoMo's existing i-mode Internet mobile access service, which has 26 million users, charges 0.3 yen per packet, or 128 bytes of data, on top of a monthly fee of 300 yen. An email with 50 Japanese characters costs about 1.5 yen to send.

DoCoMo's "i-mode" phones and 3G phones, which transmit data nearly 40 times faster than i-mode, are operated under the packet systems where users are charged by the amount of data, not by air time.

Motoharu Sone, a telecoms analyst Tsubasa Securities, said i-mode users pay only an average of 2,000 yen on data transmission per month and that the fee does not include voice transmission.