Sunday, July 23, 2006

i-mode flat data plan: 76MB data usage per month

May 5th, 2006

Yes, that is the monthly consumption by the flat rate 3G subscribers of NTT DoCoMo Japan, reports Morgan Stanley. The point is that these are the flat-rate users, those that pay a fixed monthly fee for their consumption of mobile TV, mail, music and browsing etc. The average FOMA (3G service) user, on the other hand “only” uses 22MB. While it seems intuitive that people that don’t pay per megabyte use services more, the trick is of course to make the homework whether the overall business case makes sense - will the operator make more money? The answer is… probably. So far, experience has shown that most tariffs for data usage are too complicated for users and effectively stops the majority from using the services. Hence, just using a simpler scheme will release a lot of creativity and freedom for the users and make them pay for the services.

Today we also have to keep in mind that DoCoMo’s 3G venture, FOMA, was plagued by lots of criticism initially and by many viewed as a failure. Look at the subscriber and usage figures now: from 2004Q3 to 2005Q3 the number of subscribers increased from around 6M to almost 17M!

Japan always seems to stand-out as innovation leaders, which is somehow true, but I keep pushing the case of South Korea as almost as useful for looking at 3G best practices. For example, look at the investor presentation by SK Telecom , where you can see how wireless data has had a cumulated annual growth of 60% for 5 years (i.e. the 60% is not just from 1000 users to 1600 like you can sometimes come across). An additional comment is that it is quite pleasing to see a company who states that their Core Business growth strategies will revolve around Music, Communities and gaming, slide 15, (and not just lowering OPEX and buying companies, while there is nothing wrong with those strategies).

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