DoCoMo to replace mobile phones for 3G service

Eriko Amaha

TOKYO: In a sign of the steep hurdles facing third-generation (3G) wireless

technology, Japan's top mobile operator NTT DoCoMo Inc said on Friday it would

replace all of its 1,400 3G mobile handsets. "We are replacing handsets to

improve their function, not because of technical problems," said Takumi

Suzuki, a DoCoMo spokesman.

He did not say when the handsets, the N2001 model made by NEC Corp and

distributed to users when trial 3G services began in Tokyo's 23 wards on May 30,

would be replaced. The move, effectively a recall, highlights the difficulty

DoCoMo is having with super-fast 3G technology, which allows quick Internet

access, video and music downloads.

The 1,400 handsets were distributed at the launch along with 1,900 separate

data transmission cards for laptop computers. DoCoMo has promised to deliver a

delayed allotment of 1,200 handsets capable of video transmission by the end of

June.

Analysts said DoCoMo's decision had been expected. "The purpose of the

trial service is to improve their handsets," said Kate Lye, a telecom

analyst at UBS Warburg. "We (UBS) have one of those handsets here. It needs

a lot of improvement. It's not a great handset. So it's good that improvements

are being made by them," Lye added.

Users had been warned of the possibility of a recall or replacement. Japanese

newspapers reported that users would be given replacements starting in early

July. Customers had reported to Reuters various glitches with the phones,

including a battery that ran out within a day, going out of range within the

service area, dropped calls and the occasional freeze, whereby the phone stops

functioning and has to be turned off then on again.

DoCoMo admitted there have been such claims but stressed the main reason for

the replacement was to upgrade the phones. "We are adding new

features," such as the capability to connect handsets to a personal

computer, DoCoMo's Suzuki said. E-mail services on 3G and DoCoMo's iMode

Internet-capable phones were disrupted a day after the launch but DoCoMo said

this had nothing to do with 3G technology and blamed it on the computer servers

handling Internet e-mail.

3G’s October launch



Analysts said, however, such glitches made it too early to tell whether
plans to launch commercial 3G services on Oct 1 would be disrupted. "I

think it's far too early to judge that things could be difficult for

October," said Lye, adding that the replacement costs would be minimal and

have little impact on earnings.

"The biggest impact on DoCoMo for this rather than earnings is image,

perception," she said. "As long as they manage that, I see little

impact on earnings." DoCoMo's president and chief executive Keiji Tachikawa

said recently that its 3G service would be nationwide in a year, have six

million users in three years and be profitable in four.

Managing its image will be a challenge for DoCoMo, after reports this week

that it plans to list its shares in New York and possibly London. On Friday, The

Asahi Shimbun Daily became the latest publication to report that DoCoMo's

overseas listing was being planned, possibly by its parent Nippon Telegraph and

Telephone Corp.

DoCoMo confirmed it was considering an overseas listing but denied it had

specific plans, while an NTT spokesman reiterated on Friday that it was

"not aggressively considering selling off shares in DoCoMo or listing them

(overseas)."

(C) Reuters Limited 2001.