DoCoMo Buys Into Wi-Fi
By Eric Lin, Sat Nov 06 00:15:00 GMT 2004

In a surprising move, for a number of reasons, NTT DoCoMo has announced it will buy an ISP that supplies broadband and Wi-Fi to high-class hotels.

When new DoCoMo chief Masao Nakamura took over this summer, he said the company would refrain from making any more large overseas investments, not wanting to repeat the mistakes of his predecessor. Instead Nakamura said DoCoMo would work with foreign companies on technology agreements, although his first deal involved a small investment in an Asian location based systems developer. Today DoCoMo abandoned that promise altogether and agreed to buy hotel internet provider inter-touch for $70 million.

That price is just a drop in the bucket compared to what DoCoMo invested, or even is getting back from AT&T Wireless, but the price or even the fact that DoCoMo has made yet another foreign investment is not really a shock. What comes as a surprise is that DoCoMo has bought a company that is solely dedicated to providing broadband internet hotspots (primarily to travelers). Although news from Korea reveals that 3G data and Wi-Fi are actually complementary, normally it is telcos like DoCoMo's parent NTT that are launching or buying Wi-Fi networks in order to extend their reach, not the carriers themselves.

Recently we have seen a number of wireless operators use free or cheap Wi-Fi access as a bonus in an attempt to reduce churn, and it is possible this is DoCoMo's intention. In Japan, where wireless penetration is already high, churn is a critical factor. And while DoCoMo is adding more customers than it loses every month, it is still adding fewer than KDDI and needs to do anything it can to hang on to its subscribers. However inter-touch only offers broadband services in four and five star hotels, so this is not a deal that will enable DoCoMo subscribers to pop into a coffee shop and get online for a few yen.

The one thing this deal does offer DoCoMo is something to give its users when they are outside of Japan. inter-touch operates in hotels throughout Asia, as well as the Middle East and Europe. If DoCoMo subscribers can't use their mobile phones when they are away on vacation or business, at least they can use their computers.