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i-Mode Connection Trouble in NTT DoCoMo's i-Mode Service Casts Shadow over 3G Services
A series of troubles on i-Mode service is casting shadow on NTT DoCoMo's future strategies. These series of troubles not only forced NTT DoCoMo to refund customers influenced, but also is robbing the carrier of an opportunity at winning new customers. In addition, these troubles may impact DoCoMo's third-generation (3G) services scheduled for launch in May 2001. In order to prevent further trouble, DoCoMo is going to build two new i-Mode centers while increasing existing capacity in central Tokyo. The i-Mode service is a very popular Internet access service launched by NTT DoCoMo Inc. has been in February in 1999. The service has been so successful that, as of April 17, there are 6.1 million i-Mode subscribers.
Keiichi Enoki, Director of the Gateway Business Department at NTT DoCoMo, said proudly that i-Mode is the first successful service in mobile Internet in the world. But such popularity and miracle success ironically has led to a series of i-Mode service access problems. As of May 8, a total of 27 such problems have occurred since i-Mode service was launched. These troubles have occurred quite often since the beginning of April. Among the 27 cases, 16 cases have occurred since April. In order to cope with these series of problems, NTT DoCoMo on April 19 announced that the carrier would limit the number of new i-Mode users to half through the end of May 2000. According to DoCoMo, the carrier will stop putting print media and TV advertisements for i-Mode, and will halve its terminal shipment for retailers by the end of May.
The carrier will continue to put ads for other services during the period. Almost all of these access troubles had occurred late-nights between 9 p.m. and 11 p.m., when the Internet access increases. During its peak time, a lot of access rush to the i-Mode Center in Ota-City, Tokyo. These troubles occurred due to large amount of traffic, which far exceeded the maximum capacity of these servers, going through the system. Problems included disorder in server software, voltage meter problems, disorder with its firewall system and failure of server data transaction. But an NTT DoCoMo spokesperson said that shortage of the capacity is merely an indirect cause, and the real cause is bugs in the software. Any software is said to have a number of bugs, and it is difficult to eliminate all such bugs. NTT DoCoMo engineers are trying to eliminate these bugs as much as possible. Some market watchers said that packet switched telecommunications services like i-Mode tend to have such troubles. Unlike conventional circuit switched telecommunications services, i-Mode service is using packet technologies.
The packet switched communications services provide higher efficiency, but its reliability is lower. In order to prevent further problems, NTT DoCoMo will construct two new i-Mode centers: one in Yokohama by upcoming summer and the other one in Osaka by March 2001. In addition, it will increase its data transaction capacity of the existing i-Mode Center from current 8 million subscribers to 10 million subscribers by the end of May, and to 14 million by the end of June 2000. These recent series of troubles will impose an impact on DoCoMo's business in many ways. First, the carrier will refund part of monthly charges for the users impacted. According to the contract between NTT DoCoMo and i-Mode users, the carrier refunds the basic monthly charges of 300 yen when its service is interrupted longer than 24 hours. But NTT DoCoMo said that this time the carrier will refund part of its charges according to the amount of packets transaction during the influenced period for the i-Mode users. According to an estimate by DoCoMo as of April 17, the cost for the refund will amount to 21 million yen in March and will be 370 million yen in April.
The amount might be nothing for NTT DoCoMo whose annual revenues for FY 1999 will be 3.6 trillion yen. Since DoCoMo will impose self-restrictions on its sales promotion efforts, the carrier will lose the opportunity to get more new i-Mode subscribers by the end of May 2000. DoCoMo has won a total of 6.1 million i-Mode subscribers as of April 17. In recent months, the carrier gets 170,000 - 180,000 new subscribers per week or 20,000 - 30,000 new subscribers a day. By halving the shipment of i-Mode terminals between mid April and the end of May, it will lose 500,000-600,000 new subscribers. From NCCs' point of views such as DDI Cellular and J-Phone, it is a big business chance. Both DDI Cellular and J-Phone are providing similar Internet access service with added values: DDI is providing its service called "EZ Web" with a higher data speed, while J-Phone is providing its service under the brandname of "J Sky Service" with full-color content. However, both failed to increase their subscribers due to popularity of i-Mode services. One of the reasons why i-Mode is so popular is its strong content. It is said that more than 9,000 variety of content is being provided for i-Mode services. But the most serious problem from these problems is an impact on its 3G service.
NTT DoCoMo is gearing up preparatory work for launching its 3G service in May 2001, earlier than any other carrier in the world. NTT DoCoMo had already applied for the 3G license on April 3, 2000, and is expected to win one in June 2000. The 3G service, that carriers will provide their services with a high data transmission speed of 384 kbps - 2 Mbps, is a kind of advanced i-Mode service. But the recent series of problems in i-Mode services revealed weaknesses of the technology. It is said that the 3G service fully utilizing Internet mobile technologies will realize futuristic life and business. Eventually the 3G service seems ready to be accepted by the society and will flourish. However, recent problems may lead some people to take a wait and see position for a while until they can confirm full reliability of the i-Mode and advanced i-Mode system.
Internet Will Change Ticket Sales in Japan
By Yaeko Mitsumori
An Internet ticket dealer in its infancy is shaking up the ticket sales industry in Japan. Entertainment Plus, jointly established by Saison Group and Sony Group, is attracting much attention from market watchers. The Saison Group was the owner of SS Communications (SSC), the second largest ticket business in Japan. But due to disappointing business achievement, Saison closed all of its 250 ticket sales outlets last October (1999) and launched a new Internet ticket dealing business in cooperation with the Sony Group. E-plus, the service name for Entertainment Plus, launched its service on April 1, 2000 on a limited basis.
It will launch into fuller scale business on June 1, 2000. The business model for E-plus eliminates all outlets and concentrates on the Internet business; this shook up the ticket industry throughout Japan. The Japanese ticket sales industry has seen no drastic changes over the past 15 years since the computerized system was introduced. Other major ticket businesses in Japan such as PIA Corp. and Lawson are introducing net sales, but Internet sales are their peripheral business thereof. All ticket dealers rely largely on its outlets.
PIA, the largest ticket business in Japan, is selling up to 80-90% of its tickets through its 6,100 outlets around the country. But for E-plus, Internet sales constitute its main business. Fully utilizing Saison's in-depth knowledge about the ticket business and credit-card customer management skills, as well as Sony's state-of-the-art Internet platform technologies, E-plus worked out an optimal architecture for the Internet ticket business, they said. One of the most remarkable features of E-plus is the "Pre-Order System."
Under the conventional ticket sales system, customers who want a ticket for a very popular event have to make calls many times over - occasionally hundreds of times just to get their call through. Even so, they often fail to obtain such a ticket since they are sold out in a short time. But once they register with E-plus, they can reserve such a ticket anytime around-the-clock and purchase a ticket easily, they said. But their services are not very cheap. Customers pay 350-450 yen per ticket in "dealing fee" plus a 500-yen "delivery fee" for each delivery. At the moment, all reserved tickets are delivered to the buyer using door-to-door delivery service.
Yukihide Hashimoto, vice president of E-plus, said that these charges are quite reasonable for customers who are keenly interested in obtaining platinum tickets. "The system is quite common in other nations. For instance, ticket dealing businesses in the U.S. are charging similar fees," he said. In Japan, ticket dealers get, in average, a 10% commission on the ticket prices from producers selling their tickets. But in case of E-plus- Pre-Order system, E-plus charges an additional dealing fee on its customers and does not receive any commission from the producers. That is, producers need not pay any dealing fees. Hashimoto said that producers who find benefit in the system might willingly let E-plus sell their tickets.
But both Sony and Saison launched the E-plus business targeting the upcoming net society when any tickets will be dealt through the Internet without the need to provide tickets physically. Mediage, a newly opened building complex in Odaiba owned and operated by the Sony Group, is providing "contactless IC card" for theater audiences and shoppers. Once these IC cardholders reserve a theater ticket on their PC, they can enter the theater by just holding up their IC card over the card reader at the entrance gate. Hashimoto said that all theater tickets would become "ticketless" in the future, like Mediage's IC card. Registered E-plus users numbered 400,000 as of May 1. The E-plus is targeting a million registered users by the end of March 2001.
The firm aims to win 15 billion yen in revenues in FY 2000 and 30 billion yen in FY 2002. Hashimoto said that net ticket sales would occupy 70% of total E-plus ticket sales in FY 2002. PIA, the leading ticket sales business with a 60% market share, is also gearing up its effort to expand Internet ticket sales. As part of its effort, PIA in April developed a new ticket sales system based on IC cards. The firm will replace the conventional PIA card with the IC card by the end of 2000, and will launch a demonstration experiment of the system in the spring of 2001. There are 400,000 cardholders, according to the firm.
PIA is going to provide its service in two ways: IC cardholders may reserve their seat at a kiosk located in 6,100 CVS outlets or Ticket PIAs. Or, cardholders who have their own PC with a card reader may make reservation using their PC. Once a reservation is made with either method, they can enter the event site upon holding the IC card over at entrance gate reader. The firm developed the chip using subsidies from MITI. PIA is going to develop a cellular phone with embedded IC card and mobile device with which users can make a reservation, settle payments and pass through the entrance gate at an event site. Hidetsugu Moroe, a PIA spokesperson, said that by introducing the IC card system, the firm could prevent practices such as forgery while accumulating detailed information on the ticket buyers, which PIA will use for future marketing. PIA is planning to implement the electronic ticket system at a major event such as the World Cup soccer games to be held in Japan and Korea in 2002.