MMO2 To Join i-mode Alliance
By Carlo Longino, Tue Nov 30 21:00:00 GMT 2004

The worst-kept secret in the business is now out in the open: mmO2 has agreed to offer i-mode in the UK, Ireland and Germany.

The announcement comes as no surprise, as rumors of the link-up have been going around for quite some time. The company will offer i-mode services alongside its existing O2 Active WAP portal, which has been quite successful in the UK, with O2 saying it accounts for half the country's mobile Internet use.

While the agreement isn't anything too noteworthy, there are a couple interesting tangents. First, it's ruffled feathers with KPN, which believes it has exclusive rights to offer i-mode in Germany through its E-Plus unit until 2013. mmO2 execs say their agreement is with NTT DoCoMo, and doesn't have anything to do with KPN, though the company will market the services in Germany under the Genion brand rather than using the i-mode name. KPN says it's in talks with DoCoMo, which has confirmed both companies will offer i-mode services in Germany.

The other sidenote is that this is a strong move to bolster mmO2's clout with handset manufacturers. While carriers like Vodafone, and, indeed, DoCoMo are forcing vendors to follow specs they lay out for devices, those the size of mmO2 may find it a little harder. The company formed the Starmap alliance to build some economies of scale with other small European carriers, and it's now touting the i-mode deal as giving it improved access not only to mobile content, but "scale in the handset business," according to CEO Peter Erskine.

Joining another group from which mmO2 can common-source handsets will help it, but it may help DoCoMo and the rest of the i-mode licensees even more. There are only about 3 million i-mode users in Europe; mmO2 has 22 million subscribers in its three markets. And while mmO2 may be looking to get handsets from Asian manufacturers, the deal comes just as DoCoMo is looking to sell Western handsets in Japan. The i-mode alliance can help open doors for mmO2 with Japanese vendors, while its relationships with Western vendors may smooth things along for DoCoMo, which may be looking to the likes of Motorola and Nokia to provide some competition for those Japanese vendors as part of its effort to cut procurement costs.

This deal won't kill off the persistent rumors of a Telefonica buyout of mmO2, either. It's likely O2 will leverage its existing investment in WAP content delivery, and roll out something akin to Telefonica's i-mode-based e-mocion service. mmO2's supposed admiration for the Spanish carrier's WAP implementation of i-mode may turn out to be something more.