AT&T Wireless Services Inc will delay and scale back the introduction of its high-speed mobile-phone service, the latest setback for Japan's NTT DoCoMo Inc, which owns 16 percent of the US company.
The third-largest mobile-phone company in the US will debut the service, based on a technology called wideband code-division multiple access, in parts of San Francisco, Seattle, Dallas and San Diego by the end of 2004, it said in a Business Wire release.
Under DoCoMo's original agreement to take a stake in AT&T Wireless, the US company promised to introduce the service in 13 of the US's 50 largest cities by June 30, 2004. The setback adds to DoCoMo's problems with its own high-speed service, dubbed FOMA, which has fallen short of subscriber goals in Japan.
"Unless DoCoMo succeeds with FOMA, its foreign partners will be hesitant to promote their own high-speed services," said Shoji Hiraga, who manages Japanese Yen 10 billion (US$83 million) in Japanese equities, including DoCoMo shares, at Resona Asset Management Co.
"FOMA's slow takeoff has cast a cloud on the global introduction of third-generation services."
Vodafone Group Plc and other European phone companies paid US$100 billion for high-speed wireless licenses. They've started to open up their networks after months of delay and scaled back expectations as subscribers are slow to adopt the services.
Italy's H3G SpA, which is controlled by Hutchison Whampoa Ltd, had said it would introduce the new high-speed mobile access in September of this year. That target was moved back to December and the company still hasn't begun the service. H3G doesn't yet offer any mobile-phone services.
Italy's three operating cellular-phone companies, all of which bought the new licenses in 2000, have said that while they will introduce the service next year, it won't be widely used until at least the middle of 2004.
DoCoMo pushed back the start of its commercial launch of its 3G service to Oct. 1, 2001, from its original May target. The shares rose 1.4 percent to Japanese Yen 220,000 before today's announcement. They've declined 29 percent since Jan. 1.
Tokyo-based DoCoMo has attracted just 149,000 subscribers in the 13 months since FOMA's introduction, forcing the company in November to slash its target for the service, which it initially expected to attract 1.38 million users by the end of March. DoCoMo now expects 320,000 FOMA users by then.
Japanese rival KDDI Corp, the country's second-largest mobile-phone operator, has signed 4 million users to a high-speed phone service using a competing technology called CDMA2000 1X since its introduction nine months ago.
To help with AT&T Wireless's new service, DoCoMo said it will dispatch a second board member to its US counterpart.
Because of the service's delay, the two companies said they had revised their original agreement covering the schedule and scope of AT&T Wireless's third-generation introduction.
The original agreement was reached in December 2000 when DoCoMo agreed to pay US$9.8 billion for the AT&T Wireless stake in a bid to help establish W-CDMA, the technology that DoCoMo helped develop, as the global standard for high-speed wireless services.
Between September 1999 and February 2001, NTT DoCoMo spent Japanese Yen 1.9 trillion to buy stakes in US and European carriers in hopes the companies would adopt its W-CDMA technology. DoCoMo has written down Japanese Yen 1.4 trillion, or about 75 percent, of its overseas stakes.
In October, DoCoMo placed the book value of its AT&T Wireless stake at Japanese Yen 266 billion, 78 percent less than it paid.
* NTT DoCoMo owns 16 percent of AT&T Wireless.
* DoCoMo agreed to pay US$9.8 billion for the AT&T Wireless stake in a bid to help establish W-CDMA as the global standard for high-speed wireless services.
* Between September 1999 and February 2001, NTT DoCoMo spent Japanese Yen 1.9 trillion to buy stakes in US and European carriers in hopes the companies would adopt its W-CDMA technology.
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