World Report: The Big Picture of MMS Part I
By Niall McKay in Japan, Carlo Longino in the US and Eric Ransdell in China, Tue Jul 09 00:00:00 GMT 2002

Walking the path of multimedia services proves to be more challenging in certain markets.

Mai Miyanaga spends all her pocket money (over $150 per month) looking after her two pet goldfish - "Kin" and "Gyo" (meaning "Gold" and "Fish"). Like many good goldfish owners, she feeds them, talks to them, and changes their water. But the fish are no more than a couple of Java data objects living on the servers of one of NTT DoCoMo's I-Appli content partners, and her goldfish bowl is her cell phone.

"My parents say that they are not as good as real pets," says Ms. Miyanoga, a 17-year-old high-school student in Kanazawa in Western Japan. "But they are happy that I can care for them properly."

The goldfish service is just one of the over 5000 entertainment, information, and data services available in Japan which have sent wireless network providers’ data revenue skyrocketing in the last three years. Indeed, as much as 15 percent of all Japanese wireless network traffic is data, according to the Japanese Ministry of Posts and Telecommunications.

Other services increasing data revenue include POP-mail access, e-mail, ring tones, audio and video downloads, train timetable information, video conferencing, pornography, online dating, games, and picture messaging. Meanwhile in Europe and the US, network providers are betting the farm on selling similar services called picture or Multimedia Messaging (MMS) in a hope to recoup their massive investment in 3G network licenses. Their only problem now is selling these messaging services to the current generation of SMS users.

Certainly, the analysts are optimistic. According to the research firm Frost and Sullivan, last year there were over 186 billion SMS messages sent worldwide. Another firm, Gartner Dataquest, predicts that SMS traffic will peak around 2003 before been overtaken by multimedia messaging traffic. Revenue, Gartner Dataquest estimates, will double from the current $13.4 billion to around $22.3 billion by 2006. Other analysts are even more bullish, Ovum for example, says that by 2007, the MMS market will be worth around $70 billion.

There is little doubt that Japan's NTT DoCoMo is leading the posse having gone beyond simple MMS with its 3G “Freedom of Mobile Access,” or FOMA, service. Currently, however, the service is little more than extended beta test providing 1980s sized cell-phones equipped with video cameras that provide Internet-like jerky video conferencing, since data rates don't exceed 384 kbps. Both the phones and the network connection fees are prohibitively expensive, which is probably why only 90,000 people have signed up for the service. Few people are willing to shell out about $600 for the handsets (which are still heavily subsidized by DoCoMo), then add that to the monthly charges, which vary between $40 and $150, and data charges (about $.01 per packet, or 128 bytes of data), and you are beginning to talk about some serious cash. And only some, but not all, the phones are able to stream video content such as news and entertainment.

Roll out of FOMA might have gone smoother if wireless LAN or 802.11 networks had not become so popular. DoCoMo was hoping supplement its massive investment in 3G by providing wireless data service to personal computer users, however people aren’t very willing pay up to $70 per month for a 384 Kbps connection when they can get up to 2 megabit connections at an increasing number of cafés, hotels and train stations around the country.

That is not to say that DoCoMo's FOMA offering is a bad service, in fact far from it, it's just too early for it to gain mass-market acceptance. 3G coverage is still patchy and the first-generation handsets are cumbersome, however, rumor has it that some very cool Bluetooth-enabled phone and PDA combos will soon hit the streets. Furthermore, the company is introducing dual I-Mode and FOMA service to improve coverage and will upgrade the network to handle data rates in excess of 2 mbps in the near future.

Other Japanese equivalents of Multimedia Messaging are doing a roaring trade. Take for example, DoCoMo's I-mode 504 service, which offers 9600-kbps connectivity, costs between $40 and $280 per month (depending on how much you want to pay for each phone call or download) and features downloadable video, audio and animation. The service now also offers camera phones so you can take snaps on the go.

"Many of our customers spend between $300 and $600 on their monthly bill," says Harumi Gorojima, a sales assistant at a NTT DoCoMo shop in Kanazawa.

On what? Video conferencing? Entertainment? "Probably pornography and games," she admits. "Because that way they are not only paying the connection fee but premium content cost as well."

Meanwhile, both KDDI and J-Phone offer MMS-type services. J-Phone was the first network operator here to start shipping cell phones with cameras. Walk into any café in Tokyo and you are likely to see teenagers with photo albums with hundreds of tiny postage-stamp-sized pictures for their friends and family.

Both J-Phone and KDDI’s service offerings start at about $40 per month with calls costing between $.10 and $.40 per minute, in addition to per-packet charges. Photos typically cost about 4 cents to send and but the recipient also has to pay a per packet fee to receive the message.

Both also offer fairly basic video-messaging services which let users send a short video clip (usually between 15 and 20 seconds). KDDI's AU service which is based on CDMA2000 technology, launched in April, providing speeds of 114 kbps and already has over a million users. Next year, the services will be upgraded to handle speeds in excess of 2.4 mbps. Meanwhile, J-Phone has delayed the roll-out of its WCDMA 3G service until next year. Still, there is little doubt that so-called multimedia messaging has been a success.


While its neighbors Japan and South Korea are leading the world in MMS, China is still firmly stuck in the SMS era. But that may soon be changing. In late May, China Mobile, the mainland's largest operator, with 70 percent of the country's 160 million-strong subscriber base, rolled out its long-awaited GPRS service. As launches go, it was one of the most low-key in Chinese wireless history. The problem is that although some GPRS services are now available, China Mobile has yet to work out a billing structure for both users and its content providers, so for the moment, all GPRS data is being given away for free by China Mobile and its content providers.

MMS is currently months away. According to rumors from the advertising industry, China Mobile is planning a big push for its new MMS services in September or October. But for the moment, the operator is still in the testing phase with vendors such as Nokia and Ericsson and nationwide mobile service providers (MSPs) such as Shanghai's Linktone. Most testing is revolving around animated greeting cards with music, which are expected to be the first MMS services to be rolled out and those with the most drawing power for China's trendy young mobile users.

With 16.9 billion SMS messages sent last year in China, analysts are expecting MMS to be a huge new sector of the wireless market. Two factors are expected to drive adoption. The first is that in a market where 50 percent of mobile subscribers change handsets every year, color-screen handsets from both foreign and domestic manufacturers are just being introduced and are expected to generate significant sales among early adopters this year. That, coupled with the combination of new GPRS- and MMS-based services that will fully utilize the features on those new handsets, have many believing that 2.5 G is almost assured of success on the Chinese mainland.

But some obstacles remain. Pricing is one of the biggest concerns, with Chinese consumers among some of the world's most price sensitive. And so far, China Mobile has given little indication of what rates it will use for its MMS or GPRS services. With huge 2.5G and 3G infrastructure expenses and declining ARPUS, it will almost certainly have to be higher than the current $0.012 to 0.024 charged for SMS. Another obstacle is technical compatibility. SMS was built out on a regional basis with different regions using different vendors for their infrastructure, a situation that created a compatibility nightmare for content developers. But that problem may soon be solved as a meeting between China Mobile and major equipment manufacturers is expected to settle on some sort of MMS standard.


Though South Korea already has picture and video messaging over its Qualcomm-based EV-DO (Evolution Data Optimized system) networks, subscribers to the country's two main mobile operators, Korea Telecom and SK Telecom, have been unable to exchange enhanced messages with one another. As a result, Korea's operators see MMS as the way forward in that it has the potential to become the standard for multi-media interoperability.

Both Korea Telecom and SK Telecom tested their MMS services during the recent World Cup and the results were promising. Over Korea Telecoms KTF (Korea Team Fighting) trial run, users were able to send MMS messages to each individual player on the national team along with popular Dutch coach, Gus Hiddink (tel: 016/018-2002-100), who had all been given MMS-equipped handsets for the duration of the tournament. Thanks to the national team's stellar performance in reaching the quarterfinals, the trials resulted in much more traffic than anticipated although final figures aren't available yet. Analysts expect both of Korea's major operators to offer MMS nationwide in 2003.

Indeed, Korean and Japanese operators are a good deal more aggressive about rolling out their 3G networks and therefore multimedia messaging services then their counterparts in Europe and the US. Next in World Report: The Big Picture of MMS Part II, will have a look at Europe and US services.