DoCoMo ordered to open its network

The government is ordering DoCoMo to allow its I-mode users to choose additional service providers

In this story: More consumer choice Escalating government pressure RELATED STORIES, SITES

By Kristie Lu Stout
CNN.com Writer

TOKYO, Japan (CNN) -- The Japanese government has called upon NTT DoCoMo to open up its networks and connect rival companies to its lines.

The order is part of a government plan to boost IT competition and lower communication costs in a three-year regulation reform plan through fiscal year 2003, according to the Nihon Keizai Shimbun.

The plan represents a growing trend by the government to curtail potential market abuse from the nation's largest phone services provider.

More consumer choice

NTT DoCoMo will widen its popular i-mode Internet data service network to other carriers and Internet service providers in spring 2003.

"It's inevitable that the market is going to open up and people will ask for unfettered access to the wireless Internet," says Gartner Group mobile analyst Nick Ingelbercht.

"It's something that DoCoMo will have to bend with."

QUOTE "It's inevitable that the market is going to open up and people will ask for unfettered access to the wireless Internet." - Nick Ingelbercht, Gartner Group

The move will allow i-mode's 20 million subscribers to choose a service provider other than DoCoMo, according to another mass-circulation daily, the Yomiuri Shimbun.

The Yomiuri report quotes an unidentified DoCoMo executive saying the move would in fact boost i-mode revenues since opening the network would increase data transmission volume.

DoCoMo will spend up to $400 million over the next two years on infrastructure and equipment to enable other service providers to connect to its network, the Yomiuri reports.

The government's IT plan also includes a proposal to compel NTT to allow rival telecom firms to use its telephone poles, conduits and fiber optic network.

The Nihon Keizai Shimbun says the government is expected to adopt the plan at a cabinet meeting Tuesday.

Escalating government pressure

DoCoMo, Japan's largest company by market capitalization, and its parent Nippon Telegraph and Telephone (NTT) have been under escalating government pressure to open up their networks and lower interconnection fees.

"It's a trend that's been going on for some time," Ingelbercht told CNN.com.

"It stretches back 18 months where people have been looking at DoCoMo under the microscope and saying these guys have market power, and we have to introduce the same market regulation that you see in the wireline environment."

Recently, NTT DoCoMo was asked by the government to widen the content offerings of its i-mode Internet data service beyond its proprietary menu of 1,480 premium sites and 40,053 independent sites.

Analysts say the government was motivated by fair competition issues to open up the i-mode service to all Internet content providers.

Japan's Telecom Ministry is also pressuring NTT DoCoMo to offer interconnection rates to other carriers at prices approved by the government.

NTT DoCoMo's high domestic market penetration is unparalleled in other developed nations.

The telco holds a 60 percent share of the Japanese mobile phone market and is the nation's biggest company by market capitalization.

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