IN PRACTICE: GLOBAL SUCCESS STORIES
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» There is also fierce competition between a multitude of rival techno-
logical standards, confusing and frustrating consumers.
» The convergence of e-commerce, the Internet, and mobile telephony
is a huge headache for companies in the industry they all want to
be in the game, but it is not clear which strategies and services will
ultimately be successful.
Telcos have borrowed massively to fund their growth, and by 2001
many of them were in trouble. In Europe, telecom firms paid $115bn
for government licenses to operate ``3G'' services, the new (third)
generation mobile technology. Stock prices collapsed as technical bugs
slowed the introduction of 3G. British Telecom, Deutsche Telekom,
Vodafone, and others began to ask European governments for some of
their money back. So far, governments have not accommodated them
and the debt-heavy telcos are now potential acquisition targets.
Japan's largest telco, the Nippon Telegraph and Telephone Corpora-
tion (NTT DoCoMo) is in a position to take advantage of the situation as
it obtained free 3G licenses in Japan. Among the $15.5bn in recent NTT
acquisitions are a 16% stake in AT&T and investments in KPN Mobile of
the Netherlands, the UK's Hutchison 3G, Hong Kong-based Hutchison
Telephone, and Taiwan. To help finance this, DoCoMo carried out
Japan's biggest sale of new shares by a listed company in January 2001.
In 2001 the company also took out a $10bn loan from five Japanese
banks and sold $180bn worth of 5- and 10-year bonds. An additional
¥100bn in bonds were issued in October, 2001.
I-mode, its proprietary mobile service offering Internet access, has
been a huge hit in Japan, capturing 22 million subscribers by mid-2001.
Although NTT has also launched the world's first 3G service, it believes
that it will not be the key to future revenue growth in the short to
medium term. I-mode's boss, Kei-ichi Enoki, commented in 2001 that,
``I don't think the business model will fundamentally change from 2G
to 3G. The essence of the cellular phone business will be the same.''
DoCoMo feels that 3G technology will not be able to carry the large
video and sound clips that many see as a potentially hugely lucrative
new service because costs to the user will be prohibitive.
While the jury is still out on 3G and its successor 4G, NTT has been
making hay in the meantime with i-mode. The company purchased
a large stake in AOL Japan to provide its mobile service with more
