DoCoMo unveils 3G, with caution

By CNN's Kristie Lu Stout and reports

TOKYO, Japan (CNN) -- After a bumpy four-month delay, NTT DoCoMo Monday unveiled the world's first commercial third-generation (3G) service in Tokyo.

The service will allow users to receive data at six to 40 times faster than current speeds, making fast mobile Internet access and video downloads possible.

The launch was originally slated to take place in May, but technical hiccups forced DoCoMo to postpone the commercial service by three months.

Playing it safe

DoCoMo President Keiji Tachikawa said last week that most problems experienced during the trial period had been resolved.

But the mobile carrier is still playing it safe, staging its 3G debut within a 30-kilometer radius in downtown Tokyo before expanding the service to Osaka and Nagoya by the end of the year.

DoCoMo is also wary of aggressive milestones, expecting only one in every 10 mobile subscribers to have a 3G handset by 2004.

The carrier currently boasts 60 million mobile customers, with more than 27 million subscribing to its wildly popular I-mode mobile data service.

Tachikawa told reporters prospects for increased sales from 3G were good, with monthly average revenue per user (ARPU) expected to rise to $84.84.

DoCoMo's monthly I-mode ARPU is $60.97 for voice services and $12.28 for Net services, according to the latest data.

Analysts expect voice revenue to also represent the main revenue stream for 3G.

"Three-G is first and foremost about moving voice telephony from fixed to mobile," said WestLB Panmure in a research report.

"What is going to get average revenue per user up? Well it won't be new data services. It will be good quality, organic voice growth," another analyst said.

A voice-driven revenue stream would help prop up the service as DoCoMo faces a dearth of multi-media rich content.

Last week, DoCoMo's Tachikawa said its 3G moving picture distribution service would be held back until the northern spring due to the limited availability of content, largely caused by copyright issues.

Reputation at stake

But analysts say DoCoMo has little to lose if the service fails to meet customer expectations.

"DoCoMo has a 2G network which is just about to pay for itself early next year," Nikko Salomon Smith Barney analyst Makio Inui told CNN.

"And most important, this company did not pay a dollar for acquiring the spectrum."

Compared to other mobile operators that paid billions of dollars for 3G licenses, the Japanese mobile giant has little to lose.

But DoCoMo has its reputation at stake with the commercial launch of 3G.

The entire world will be watching to see if the world's leading next-generation wireless operator can deliver another mobile miracle.

Reuters contributed to this report.