Asia's Old Guns Growing Tired
By Carlo Longino, Wed Sep 08 21:00:00 GMT 2004

While carriers like NTT DoCoMo and SK Telecom lead the world in technology, investors don't see a lot of upside in their businesses at this point.

Rising penetration rates in places like Japan and South Korea mean operators can't rely on new subscribers to maintain their growth, forcing them to sell current users on new, additional services. Investors' eyes and money have turned to new markets like Indonesia and India, where operators are seeing subscriber numbers -- and revenues -- take huge jumps each year.

The first challenge is moving users over to newer, faster networks, since the overall number of subscribers is expected to grow by only 6 percent in the current fiscal year. Just over 10 percent of DoCoMo's subscribers have shifted to its 3G FOMA network, and the company is keen to get more to make the jump since FOMA users spend nearly 40 percent more each month than 2G subscribers. The company has laid out a strategy to get more people to make the switch, starting with cutting handset prices from their current 300,000-yen level (about $300) to about 100,000 yen.

But just getting the users to switch isn't enough, particularly as the cost to the carriers, in terms of handset subsidies and the like, hurts their results. Some carriers are embracing the new paradigm: "It's good in a way, because it means nearly the whole population carries a mobile phone and we can then grow the business by selling additional services," says the CEO of Singapore operator MobileOne.

The only problem is that operators as a whole don't have such a great track record at finding successful services on 3G that aren't available on 2G networks. The onus is still on carriers to enable an environment where users can access any of the advanced services they want, and developers and content providers can share in the carriers' spoils.