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New 3G service dooms DoCoMo shares

Taking stock * DoCoMo stock tumbled 32 percent this year, compared with a 12 percent dip in the Nikkei 225 Stock Average. * Shares of rival KDDI Corp, which developed a less expensive high-speed service, surged 55 percent, the world's best performance among phone companies with a market value of more than US$200 million.

Yoichi Ito was among the first subscribers to NTT DoCoMo Inc's new high-speed mobile-phone service when it began a year ago. He ditched it 10 months later.

"I couldn't find any merit in keeping it," said Ito, 52, an analyst at STB Research Institute in Tokyo. "It was useless in most areas."

Twelve months after its debut, DoCoMo's service, the first of its kind in the world, has 134,000 subscribers, likely to be short of the 1.4 million Japan's biggest mobile-phone company forecast by next March. Slow growth for the company's so-called third-generation service doesn't bode well for this month's European debut by Hutchison Whampoa Ltd.

"DoCoMo and all other carriers need to review 3G," said Makoto Sakuma, who owns DoCoMo stock among the ?100 billion (US$815 million) he manages at Asahi Life Asset Management Co.

"They need to start the project all over again from scratch."

As DoCoMo shares slide -- Toyota Motors Corp surpassed it as Japan's biggest company by market value on Sept. 18 -- others are turning away from the technology as well. In July, Sonera Oyj, Finland's largest phone company, and Spain's Telefonica SA abandoned a venture to build a high-speed network in Germany using DoCoMo technology.

DoCoMo stock tumbled 32 percent this year, compared with a 12 percent dip in the Nikkei 225 Stock Average. Shares of rival KDDI Corp, which developed a less expensive high-speed service, surged 55 percent, the world's best performance among phone companies with a market value of more than US$200 million.

The difference, analysts say: DoCoMo was too ambitious.

In its race to be the world's first provider of a service that would allow Internet access 40 times faster than older phones, DoCoMo ended up developing a brand-new technology that proved almost unusable inside buildings or on moving trains.

DoCoMo President Keiji Tachikawa acknowledged last month that a service the company christened FOMA, short for "Freedom of Mobile Multimedia Access," has been crippled by difficulties with the technology.

"FOMA's sales are not growing because of its limited network, unattractive handsets and the lack of killer applications," he said.

KDDI aimed lower. Piggybacking on its existing service, it developed one that accessed the Internet just 15 times faster than regular phones. It signed up 2.1 million subscribers to the service since April.
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