Telstra expects more than one million Australians will pay $500 for new handsets, plus an extra $10-$17 per month for content, when the telco launches its own version of the i-mode mobile phone content service before Christmas.
The Australian carrier became the first telco in the English-speaking world to sign up with the Japanese telco, NTT DoCoMo, which claims 41 million subscribers for the service in its own country.
The i-mode platform is technology agnostic, meaning it can work on 2G and 2.5G GSM and GPRS technologies, plus future 3G systems. Users who subscribe to the service are promised a vast range of games, email, Internet, messaging, news and information services.
They will need to buy a new handset in order to use the i-mode service. While Panasonic, NEC and Samsung have released handsets supporting i-mode, Telstra said Nokia had not yet released a phone that is i-mode compatible.
Sales of the new handsets and content would be through the usual Telstra channels, Telstra representatives said.
Announcing the partnership at a press conference, Telstra Group managing director, Ted Pretty, said the deal would see the telco paying the Japanese several million dollars upfront for the i-mode service, plus a royalty payment based on take-up.
In return, NTT DoCoMo will provide the intellectual property, platform specifications, business input, brand support and technical assistance.
Pretty said the capital cost of integrating i-mode with its existing systems would be $15 million. As the service was not reliant on any specific mobile technology, Telstra would not need to provide extra infrastructure, such as mobile towers, to run the service, he said.
Telstra claimed its estimate of one million i-mode users within three years was conservative as 2.5 million people in Australia replaced their handsets every year.
Currently, some 12 to 13 per cent of mobile phone revenues are for non-voice services, with around 92 per cent of this accruing from text messaging.
i-mode, Pretty said, would boost non-voice traffic by 30 per cent. He said European users were spending an incremental 6-10 Euros ($10 to $17) a month on i-mode services.
With i-mode already being used in many non-English speaking countries, like Greece, Pretty said Telstra would also use such existing services for Australia’s many immigrant communities. However, the carrier would work with Australian developers, including its own, to create additional Australian content.
“We will be holding a number of developer forums designed to increase domestic content, to provide content to us and the entire i-mode system,” Pretty said.
IDC telco analyst, Warren Chaisatien, said the success of i-mode would naturally come down to pricing.
Telstra, he said, might need to subsidise or hide the cost of the handsets, as customers in Austrealia had become used to subsidy.
“Carriers will have to bundle the hardware in a subtle way, say a 24-month contract-plan," Chaisatien said. "People won’t cough up $500 for a handset."
Similarly, success would depend on the price of the content. A few dollars a month for a news service might be fine, but if reading the world’s newspapers everyday meant connectivity costs of a few dollars a day, i-mode’s potential success would be hampered, he said.