The New York Times has bought the proposition that what works for cellular services in Japan will work elsewhere, despite strong evidence to the contrary. In an article published today the paper states, “…carriers in America, Asia and Europe are also waiting to see if the [3G] market in Japan continues to grow before they introduce or expand services.” Huge investments by NTT DoCoMo to launch iMode service around the world have failed to generate even a fraction of the subscriber numbers in Japan, and the bulk of wireless subscribers in Japan use networks based on Japan-only protocols. Even DoCoMo’s WCDMA service, FOMA, uses a home-grown variant of the ITU standard. The Times quotes a CSFB analyst as saying, “If 3G is validated here, a lot of carriers and suppliers will point to Japan as a success. This could touch off a 3G rally.”
Nonsense. 3G will slowly – very slowly – take over from second-generation networks, but 3G spectrum licensees who also operate second generation newtorks have no incentive to force subscribers to migrate to the new networks. New operators will have to compete with incumbent operators on price, which will delay potential profitability for years. And subscribers of 2G networks, save the early adopters, have not shown a willingness to bear the high monetary and service costs of moving to 3G.
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