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TMCNet:  NTT DoCoMo Focuses on Mobile Content Offerings

[July 21, 2009]

NTT DoCoMo Focuses on Mobile Content Offerings

Jul 21, 2009 (Zacks.com via COMTEX) -- NTT DoCoMo (DCM), the largest wireless service provider in Japan, has decided to focus strongly on mobile content offerings, which is a new avenue to increase revenue.

DoCoMo will start implementing LTE (Long Term Evolution) networks - the next-generation (4G) high-speed network technology - in Japan from 2010. The main purpose of deploying the LTE network is to offer mobile content services in the matured Japanese telecom market.

LTE is expected to achieve download transmission speeds of 300Mbps and offers several advantages over other wireless techniques. This includes spectral efficiency, lower costs, and solid integration with other open wireless standards. After the introduction of LTE, the existing 3G FOMA handsets of DoCoMo will become compatible with 3G networks of other service providers. DoCoMo will launch LTE handsets in 2011 that are compatible with its current 3G network, enabling customers to access services even if they are outside an LTE coverage area.

DoCoMo signed a $66 million joint venture with Avex Entertainment Inc, the largest music and movie content company in Japan, to produce and distribute on-demand mobile videos. The company holds 30% in this partnership. On May 1, DoCoMo started a new service called Bee TV. This service offers custom-made videos for mobile phones. As of now, more than 400,000 paying customers have signed up for this service. Management expects this service to induce customers to sign up for unlimited data packages offered by the company in addition to paying for content and movies. DoCoMo can use its LTE network to economically deliver this bundle of services.

At present DoCoMo commands more than 50% of the Japanese wireless market. However, this market is highly competitive. Smaller service providers like Softbank Crop and KDDI Corp have started competing aggressively on price after the introduction of mobile number portability system in Japan.

In order to maintain its innovative technological edge in the market, DoCoMo embarked on the next phase of mobile infrastructure through LTE. The largest beneficiaries of DoCoMo's huge expenditure for LTE will be Alcatel-Lucent (ALU), Hitachi Ltd (HIT) and NEC Corp. These three companies implemented the major part of DoCoMo's LTE backhaul. We maintain Buy for NTT DoCoMo.

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