Ben Turner
MSFS-555-01
Spring, 2008
Prof. Irene Wu
Comparing and Contrasting Japanese and
American 3G Mobile Networks
Introduction
Japan and the US are both front-runners in establishing high penetration rates for next-generation mobile phone data usage. However, they are taking differing paths towards the future, and these paths are being determined by such factors as cultural demands for applications, telecommunications policy differences, private-sector innovation priorities, societal and habitual differences, geography, and population density. This manifests itself in strange ways: the way a Japanese consumer uses a cellphone is markedly different than the way an American consumer uses one. Why? Also, why do their respective mobile phone providers look so different from each other?
In comparing the path of development between next-generation mobile phone high-speed services in Japan and the US, which is the purpose and scope of this paper, my goal is to determine the viability of my future business that would rely on users entering information about themselves through an application on their mobile phone. Will these countries, in the near future, develop networks with low latency and high bandwidth to allow for fast, reliable, cheap data transmission, so my customers can interact at a high standard of satisfaction with my business? Such a requirement for mobile data transfer is a little premature for the environment that currently exists, as there is still a lot of shake-up to be done technologically in the business of providing high-speed data services. But where will I find the most opportunity? And what conditions should I look for?
Because I am focused on developing an application that is data-dependent and which uses Internet-compatible transfer protocols, I am primarily concerned with analyzing the potential of next-generation high-bandwidth networks. High Internet- and mobile phone- connectivity penetration rates (it is important to separate the two) in the United States and Japan are good news for consumers and vindication for sound telecommunications policy in general, but both countries will need to transition quickly to next-generation technologies that will allow for a less voice-dependent and more data-dependent culture and marketplace. Mobile phone service providers are scrambling to upgrade their backbones, infrastructure, and services in order to respond to customers' demands, but they are struggling to agree on which path to take and which standards will be the most robust in the long-run, looking forward.
In the telecommunications industry, the next generation of wireless technology and standards is loosely called 3G, for "third generation". Prior to 3G, what existed was 2G, more commonly known to be divided into two major competing standards: CDMA (Code Division Multiple Access) and GSM (Global System for Mobile [communications]).
I will begin by describing the standards underpinning mobile phone networks. Then I will describe the mobile climates in each country by listing the largest providers and which standards they've chosen. Afterwards, I will analyze and explain how these environments came to be, based on cultural and structural differences.
CDMA[1]
CDMA was standardized by the American company Qualcomm under the names IS-95 (2G) and IS-2000 (3G), and therefore requires for its licensing that fees be paid to Qualcomm. CDMA is generally associated with allowing far more users onto each cell tower because it is more tolerant in dividing up the bursts of short voice traffic into different packets and sending them when available, as opposed to dedicating all the time in one channel slot on a spectrum to one user, who rarely requires that whole channel for voice calls. CDMA also is unencrypted and is therefore less demanding to transmit in aggregate. This, however, makes it less safe from intrusion.
CDMA 2000: 1xRTT and EVDO[2]
CDMA 2000 is a hybrid 2.5G/3G standard, allowing for some degree of backward compatibility while pushing the network capabilities forward. 1xRTT and EVDO are variations within the standard, 1xRTT being true 3G and EVDO being 2.5G.
Focusing on 1xRTT in particular, it doubles the number of available channels to 128, from IS-95's 64 channels. This allows the 3G technology to transmit at a maximum of 144 kilobits/second, compared with the 2G CDMA IS-95's paltry 14.4 kilobits/second.[3] Such a dramatic increase in bandwidth spurs growth and experimentation in data-heavy applications to be used over such a network.
CDMA 2000 should be expected to be available where CDMA is, as it is built on top of existing infrastructure. It cannot be construed as a possible physical replacement for the 3G GSM competitors in areas where CDMA was not already available.[4]
GSM[5]
GSM has enjoyed far greater adoption of its standard than CDMA has, partly because of countries deciding to make the GSM standard mandatory as part of their telecom policies. Question the source, but the GSM Association estimates that 82% of the global mobile market uses GSM. GSM is somewhat more flexible than CDMA on a practical level for consumers because it allows one to take out a SIM chip (Subscriber Identity Module), about the size of half a stamp, carrying all of a subscriber's personal data and his phone number, and put it in a new handset quickly and without any configuration. In countries where consumers tend to replace handsets often, or rely more on pre-paid or calling card plans, this versatility is valuable both economically and culturally for consumers.
As a product of the network effects of compatibility across many different countries and standardized use of spectrum, GSM also allows mobile phone users to travel across countries and use their tri- or quad- band phones internationally, a feature CDMA phones are not very successful at matching. While roaming and interconnection rates are still high internationally, these rates are dropping quickly.
GSM requires more battery power from a handset to operate than CDMA does. However, it also is far more secure than CDMA, offering a challenge and password authentication system which remains far more difficult to intrude upon than CDMA. GSM is far less efficient than CDMA, as it breaks up spectrum into time-division channel slots that only one user per channel is granted whether they are using the full slot or not. And finally, GSM has a 35 kilometer hard-locked limit to its range, whereas CDMA's range is unlimited, depending on the electromagnetic environment and power output of the transmitter.
W-CDMA[6] and UMTS[7]
W-CDMA, or Wideband Code Division Multiple Access, is the 3G "air interface" for the GSM standard. It is the basis for FOMA (Freedom of Multimedia Access, used in Japan) and for UMTS (Universal Mobile Telecommunications System, used in Europe), which are considered the actual 3G competitors to CDMA 2000. W-CDMA is not backwards compatible with 2G GSM, unlike CDMA 2000's 2.5G or 2.75G backwards compatibility with 2G CDMA, but it has been adopted rapidly in countries with standardized GSM networks.[8]
UMTS supports up to 14 Mbits/second, although right now it may only transmit at 384 kilobits/second on some handsets and networks. This is compared to CDMA 2000's 144 kilobits/second.
UMTS has had some difficulty in the US, since the US has allocated spectrum differently than the international standards. But since most new GSM handsets are generally quad-band, this circumvents most incompatibility problems. UMTS also is regarded as having high power usage and was cited as a reason for the lack of inclusion of 3G in Apple's iPhone (which went with EDGE, instead). Both issues will be discussed later in the paper.
Mobiles in Japan and the United States of America
Keeping the two major competing standards in mind, one can now move on to how each has been deployed differently in Japan and the US. Both countries are highly-connected to the Internet and to mobile phone networks, but the US has fallen significantly behind in its rollout of broadband and true 3G services, for reasons to be explained shortly. Japan enjoys penetration rates of about 95% for Internet broadband, 75% for mobile phones[9], and about 49% for 3G services. The US only has about 57% Internet broadband penetration, but 84% mobile penetration and about 49% for 2.5G to 3G penetration. Within these statistics, there are many subtleties that make each country unique. So how are they different?
I. Japanese Telecommunications Infrastructure
Japan is a small country, particularly relative to the US, with a land area of 375,000 square kilometers. However, its population reached 127.4 million people in mid-2007. While the numbers vary, this puts Japan's population density at about 337 people per square kilometer. Contrast this with the US, which has about 301 million people within a land size of 9.6 million square kilometers. Thus, the US's population density is only 31 people per square kilometer.
As a result, in terms of building out an efficient telecommunications network that provides substantial utility both to the consumer and the supplier, Japan finds it far easier than the US to roll out the newest generations of technology such as FTTH (Fiber to the Home) for fixed broadband access and 3G networks for mobile phones. Having a densely-packed population creates network effects and an efficient clustering bias that encourages rapid adoption of communications devices. As a result, broadband is much cheaper in Japan than most countries; compare its prices, $0.07 per 100 kilobits/second, with the United States, where bandwidth costs $0.49 per 100 kilobits/second.
Interestingly, Japan did not use GSM for its 2G standards, instead inventing its own: PDC (Personal Digital Cellular) and PHS (Personal Handy-phone Service).
Japanese Telecommunications Industry Breakdown
Within Japan, there are three major mobile phone providers: NTT DoCoMo, au (owned by KDDI), and SoftBank Mobile (formerly Vodafone).
A.) NTT DoCoMo[10]
NTT DoCoMo has over 50 million subscribers and thus controls more than 50% of the Japanese mobile market. NTT DoCoMo decided to use the W-CDMA standard after employing PDC (Personal Digital Cellular) standard for 2G service. NTT DoCoMo's 3G service is called FOMA (Freedom of Multimedia Access), and, having developed FOMA itself, has been able to create a strong suite of applications for its mobile phones.
For instance, there is imode, which is a platform offering i-appli (application base for games, weather updates, and news stories, et al), i-area (location-specific news, weather, and local restaurants/shopping), and i-motion (allowing users to capture video and upload it to the Internet). Much talked about has been Osaifu-Keitai, an e-wallet using a mobile phone that's been adopted by all the major Japanese providers: it lets users treat their phones as a method for not just making calls, but also for transferring money (using Sony's RFID FeliCa technology[11] and Edy, a contactless technology similar to a SmarTrip card in Washington, DC), buying tickets, verify their identities, and more.[12]
B.) au (KDDI)[13]
au is the second-largest provider in Japan, and as of 2006, it had over 24 million subscribers. au is based on CDMA networks and is using CDMA 2000 1xRTT for its 3G networks.
au also offers a diverse suite of services including video distribution (EZ "Chaku-Uta-Full"), Osaifu-Keitai, and Edy. EZ Navi Walk is a GPS service allowing users to be guided via map to their destination.
C.) SoftBank Mobile[14]
SoftBank Mobile is based on a 3G W-CDMA network with over 15 million subscribers. In the last couple years, it has been growing faster than its competitors by virtue of its White Plan, which offers flat-rate voice calling. So it is competing on price and therefore offers fewer services.
Japanese Handsets and Mobile Plans
In Japan, subscribers can't buy phones without post-paid or pre-paid plans.[15] Services and features are somewhat built in to the phone as an extension of the control the providers maintain over the user's experience with his phone. Japanese phones do not work in foreign countries, and there is only limited roaming for international phones on Japan's networks. These difficulties and incompatibilities have a lot to do with the restrictive nature not only of Japanese providers but of Japanese standards and laws. For instance, you must show proof of citizenship to purchase a cellphone plan in Japan. If you are a foreigner, you must have an Alien Registration Card and may be required to purchase using only a credit card.
Japanese Mobile Culture
Japan has a unique mobile culture that has developed out of its dense, everyday commuter schedule. With a population density of 337 people per square kilometer, Japan's commuters spend a lot of time on mass transit. But social etiquette while on mass transit dictates that people not talk or make noise on their cellphones. Therefore, design for cellphones has moved towards facilitating text messaging, video transmission, and reading data online.[16]
Partially because of the many Japanese character sets, and partly because of the expressiveness of Japanese emoticon culture, cellphone design is crucial to sales. Japanese consumers prefer to be able to use one hand when using their phone. Another example of importance of design is Japanese reaction to Apple's iPhone, which is revolutionary within the United States, but garners a completely different reaction in Japan. One anecdotal story:
"Claude is a 27 y.o. Japanese male I met in my college days. He lives right outside Tokyo working as a textile designer. He thinks the iPhone is super sexy. To him, it doesn't look like any other phone out there. He loves how slim it is and is completely smitten with the multi-touch interface, but when asked if he'd give up his Sharp branded phone; he says no.
"Claude's typical day starts with him checking his email on his phone. He gets all his daily tasks and calendaring events this way. He then syncs it with his computer. He pays for the subway by placing the phone on a kiosk granting him access past the gates. The commute is spent watching TV on his phone by rotating the screen. A small antenna extends up and catches the wireless digital TV signals (something we will never have here in America). About 45 minutes later, he's in Tokyo and heads to a vending machine to buy fresh fruit and water. He places the phone up against a pad. The vending machine reads his bank information which is tied into his phone. He then places his thumb on the phone's tiny thumbprint reader to verify his identity. As he makes his way to the office, he waves the phone near the door handle to unlock it. During a 10 minute break, he's flips thru a magazine and sees something he wants to buy. The item has a tiny stamp size barcode pictogram next to it. He scans the pictogram with his phone. A receipt and shipping confirmation hits his email minutes later. As the day ends, he syncs with his work computer and goes grocery shopping paying for items with his phone. Before heading home, he heads to a bar his friend has invited him too. He uses the phone to give him step-by-step directions. The day is finally over and his phone's battery is nearing the end of its life. He plugs it in and goes about the rest of the evening relaxing before bed.