Benchmarking Europe with Japan and the US

Durlacher's recent report - UMTS Report: An investment perspective - identifies the global mobile wireless market as three distinct types of markets: Mobile operator driven
Internet-driven
Technology-driven
Mobile operator-driven markets are characterized by countries with low internet penetration but high mobile services penetration (e.g. Japan). Due to the dynamics of the economies in these countries, network operators can influence content, and employ a closed portal strategy. Internet-driven markets are composed of markets with high penetration of internet and relatively low penetration of mobile services. ISPs, portals, application developers and content providers who have matured in the internet world are dominant players in this market. The US is a good example of this type of market. In Europe the mobile and internet markets are diverse. Northern Europe is a heavy user of both mobile communications and fixed internet access. In Finland for example, there is mobile penetration rate of 75% and fixed line internet access of 50%, according to Durlacher. Countries such as Germany, the UK and the Netherlands are quickly catching up to the Scandinavian countries in terms of both internet and mobile penetration. Southern European countries have high mobile penetration, but have low fixed internet access penetration. Durlacher reports that Italy, for example, had 12% penetration of fixed line internet and 65% penetration of mobile phones in late 2000. NTT DoCoMo's position in Japan is unique in that it is the dominant operator in the mobile market and is well protected from entry of newcomers. Its dominant position has enabled the company to dictate the development of the technology enablers for the I-mode concept. This includes networks, terminals and applications. While NTT DoCoMo controls 59% of the mobile market, KDDI and J-Phone, two other large mobile operators in Japan, have advanced quickly into the mobile space. Japan leads the world in mobile data and internet services and will be the test bed for 3G services. While the North American market leads the world in internet adoption and e-commerce, it lags when it comes to the mobile sector. The multiple technology standards and coverage issues have held back quality and service levels in comparison with leading regions in Europe. 3G license auctions have been postponed to 2002, which will delay the commencement of next-generation mobile services in the US. Another significant factor holding back the development of mobile wireless in the US is the fact that mobile operators employ the "Calling Party Pays" system.