More than 50% will move to 1x by next year says CEO

date: April 23, 2002

On April 1, KDDI launched its 3G service called CDMA2000 1x. The company aims at gaining popularity by keeping down the prices of terminals, but not by making users conscious of 3G and the capabilities it has to offer, but by pursuing a different strategy from the preceding FOMA of DoCoMo.

The greatest strength for 1x as the 3G mobile phone is the coverage of the service area. The high-speed packet communications with a maximum of 144kbps can be used in the main cities nationwide since the beginning of the service. As far as the three major areas in Japan -- Tokyo, Nagoya, Osaka -- are concerned, about 70 percent of the population is covered. Telephone calls and the packet communication with a maximum of 64kbps also can be used in the non-covered areas.

On the other hand, FOMA started from a part of Kanto area in October 2001, and finally extended to the main cities nationwide in April. The coverage is about 60 percent of the population.

Another strength of 1x is the handsets. The battery duration of 200-250 hours in stand-by mode, and the size of the terminals are almost the same as with ordinary cdmaOne terminals. The prices are expected to remain under 20,000 yen even for the highest-end models.

On the contrary, the battery only lasts for about 55 hours with the FOMA terminals, and the size is also slightly larger than the preceding PDC terminals. Further, the price is rather expensive too, of between 30,000 yen to 60,000 yen. Because of these and some other factors, the subscribers of FOMA are only 55,700 at the end of February, or five months later since the service was first started. This is 0.1 percent of the NTT DoCoMo users.

As KDDI does not use 3G to attract people, if the terminals compare poorly with the PDC mobile phones of other companies, good sales promotion cannot be expected. By releasing inexpensive and attractive terminals, KDDI is planning to sell 7 million 1x terminals by the end of March 2003. That amounts to 66 percent of the current cdmaOne users.

"By the end of March 2003, more than 50 percent of our users will become 1x users. Competitors could never do the same," claimed KDDI President Tadashi Onodera, confidently.

Early, KDDI said that expects to sell 280,000 cdma2000 enabled handsets by the end of this month. If the company did manage to meet this target in its first month of service it would exceed the number of 3G subscribers that DoCoMo has.

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