Comm J Market Notes
#58, October 2009
Willcom on the Skids
Japan's phone carriers have been managing this recession pretty well. NTT even recovered the #1 position in corporate profits from Toyota Motors.
However the 4th largest mobile carrier – Willcom – is in deep trouble.
Willcom entered the Japanese equivalent of Chapter 11, and the company is being restructured under legal supervision.
Willcom started in 1990, and has operated a PHS (Personal Handiphone Service) network. Thanks to cost advantage of this "half-duplex" technology, Willcom could keep a 5% share of Japan's 100 million subscriber mobile voice market until 2 years ago. It was a pioneer of wireless data services, and an early leader in that market.
But PHS remained a niche technology adopted marginally in Japan and China, while Willcom's competitors DoCoMo, AU and Softbank adopted CDMA with economies-of-manufacture from worldwide deployment. Meanwhile, newcomer EMobile leapfrogged Willcom's data rates with an HSDPA service.
In 2007-8, Japan's Ministry of Communications made two 2 "Broadband Mobile" licenses available, and Willcom applied proposing a "Next Generation PHS" network. The ministry favored this "Made-in-Japan" technology and awarded Willcom a license. But Willcom has struggled to bring off development of a platform with few prospective users worldwide. It buckled under the $Billion+ development cost, on top of its existing $Billion+ debt.
Meanwhile the other licensee UQC (a consortium led by KDDI) deployed its WiMAX service on schedule.