i-Mode's Owner in Hold Mode on Cingular
i-Mode's Owner in Hold Mode on Cingular

i-Mode's Owner in Hold Mode on Cingular

i-Mode's Owner in Hold Mode on Cingular

At last week’s regular press conference, DoCoMo president Keichi Tachikawa managed to confirm most of what we wrote about in last week’s WWJ Viewpoint DoCoMo: New 3G Plans for USA?. Most importantly, someone in the U.S. is still obligated to roll out third-gen W-CDMA services because this was grandfathered into DoCoMo’s original contract with AT&T Wireless. Tachikawa said last week that the phones have already been ordered! However, DoCoMo is still in hold mode about how it will approach the purchase of its stake in AT&T Wireless Services by Cingular Wireless LLC (should the deal be approved later in the year). One option on the table is for DoCoMo to invest in Cingular.

According to Tachikawa, DoCoMo is in a holding pattern until the purchase goes through, with the company estimating it will take until the end of the year before approval by both the U.S. Department of Justice and the FCC (for spectrum issues) is granted.

Tachikawa made his feelings on whether Cingular has indeed inherited AT&T Wireless’ commitment to roll out a third-generation W-CDMA service (based on at least 1,000 cell sites in four cities) by the end of this year crystal clear: “Our position is that our rights will be continued,” he said. Otherwise, NTT DoCoMo can insist that AT&T Wireless buys back its stake (at a value pretty close to the investment that Big D originally made in the American carrier). “We have never said that we would sell our stake, we never said that,” he added in answer to the question if DoCoMo intended to dump its substantial stake in AT&T Wireless.

For more details on DoCoMo’s stance on the Cingular/AT&T deal, don’t miss WWJ’s Wednesday video program (Mar. 3); we promise a spin-free, fact-filled, and analytical rundown on DoCoMo’s official position.

Let’s hope for the customer’s sake that the purchase doesn’t further downgrade AT&T’s already patchy performance. With a 16-percent stake in AT&T Wireless, DoCoMo is the largest shareholder in a company that has developed a rotten reputation. A 27 February article by Mobile Pipeline News stated that AT&T has recently been the subject of nearly half the U.S.’s tally of complaints about problems related to wireless local number portability (WLNP), according to FCC statistics.

Since last November when WLNP was introduced, AT&T has single-handedly accounted for 2,787 of the 5,852 complaints nationwide, mainly related to delays in switching numbers from one carrier to another. This is yet more fat in the fire for the company, which, as we pointed out in previous reports, has been the target of much media criticism; the company has been criticised for appearing to be more more intent on enriching its top management than improving services.

But despite the evidently iron-lock obligation to roll out W-CDMA (a prima facie positive development for NTT DoCoMo in its role as a major W-CDMA IP rights owner), we’re not sure if the purchase and AT&T’s issues bode well for ultimate success; but as the network equipment and handsets have been ordered, we wonder what sort of service will emerge from the mess?

For one thing, DoCoMo does appear to have played smart in its U.S. strategy with AT&T. Tachikawa fielded a series of questions about the company’s overseas strategy and defended the huge write-downs the company suffered. Tachikawa has constantly argued that nobody could have foreseen the 2001 telecoms meltdown and, at the same time, DoCoMo needed to seed W-CDMA internationally with strategic investments. As we have suggested over the past few weeks, it was a near certainty that DoCoMo would not put in a bid for AT&T at least in part because the company’s overseas strategy has evolved into taking a behind-the-scenes approach as a minority shareholder or technology partner (rather than outright owner), or as Tachikawa said on Friday, “We will now be much more cautious.”

Overall, Tachikawa showed his frustration with both the lack of progress in 3G network building outside Japan and the slow growth of i-mode. There is a sense that DoCoMo is slowly realizing that it has morphed from being a company confidently exhibiting leadership in technology and service platform strategy in the international market to just one more tech giant whose hands are tied by market forces beyond its control.

There has been a lot of press recently about i-mode outside Japan passing the 2-million mark and now being up and operational in seven countries, but Tachikawa was much less celebratory about the whole deal. “It’s taken two years to get to this level, finally, and at last people have started to see the benefit of i-mode,” he said. Similarly, there was a tinge of bitterness about 3G. “The overseas markets have not always been in line… 3G has been delayed; in fact it’s 4 years late. Timing wise, things don’t always go the way you want them to,” he said.

— Sr. Editor Paul Kallender