Troubled Times for a Telco Titan

In early 1999, Japan’s top mobile-phone company, NTT DoCoMo, received cheers from customers and analysts alike for introducing its i-mode mobile Internet service. The service, which claims 37 million subscribers and lets them check stock quotes, sports, news and other information over their cell phones, was hailed as the greatest invention in Japan since the Walkman.

EXTRACT: When similar services were introduced in the United States last year, one DoCoMo executive remarked to the news media that U.S. cell phones were still like “black-and-white TV sets” — so passŽ compared to the color i-mode phones in Japan.

Nowadays, DoCoMo isn’t gloating. Compared to glowing reports two years ago that i-mode would conquer all — even cell-phone markets outside of Japan — news coverage on DoCoMo has lately focused on foreign investments gone awry and software glitches plaguing its high-speed 3G FOMA service. “We are afraid we had to recognize impairment loss with respect to some of our overseas investments,” said Miki N. McCants, a DoCoMo representative. “And, unfortunately, sometimes NTT DoCoMo’s FOMA third-generation (3G) service may be perceived as poorly performed. CONTINUE

COMMENTARY: This is a well-written story that sums up DoCoMo’s troubles. But the carrier appears to be doing something about these problems, including creating dual-mode 2G/3G handsets (something they previously said they wouldn’t do), continuing to push i-mode overseas (roll-out in Spain is accelerating with DoCoMo partner NEC building a new i-mode server platform for Telefonica Moviles), and boosting handset makers at home (with a USD$332-million investment in makers). Advice for the carrier? Keep investing overseas, but do it bigger than you have. Seamus McAteer, an analyst with market research firm Zelos Group, is quoted as saying that DoCoMo should consider owning more than 15 percent of a company to wield more influence in a particular market. “You either own it or you don’t.”