Mr. Shizuo Koyama, President, DDI Tokyo Pocket Telephone, Inc.

It has been three years since the launch of PHS service in Japan, and the PHS business is shifting: from its initial stage to the next, higher level. I feel as though a long time has passed when I look back at the many changes we have seen in consumer trends, culture, society, and technological developments in that time.
PHS service has earned itself a strong presence in the market over a very short period. However, I am afraid that some industry experts and analysts have doubts about the future of PHS service, as a result of misunderstanding recent sluggish growth in PHS subscriber numbers or of insufficient knowledge of PHS’s differences from cellular phones. As a matter of fact, for the fiscal year 1997 (that ended on March 31, 1998), a couple of DDI Pocket Group companies posted profits for the first time, and the DDI Pocket Group as a whole is expected to go into the black in the fiscal year 1998. I think our business is doing fine against the fact that local telecommunications businesses like ours need to make huge investments. I very much hope this article will help readers fully appreciate the current state of the PHS business as well as its future direction.
In our view, the advantages of PHS are inexpensive pricing and the high affinity with ISDN (Integrated Services Digital Network), which makes PHS a kind of wireless ISDN. Neither PHS functionality nor its usage are very different from fixed telephony.
Indeed, we see much PHS indoor usage for both voice and data communications. This indicates that PHS subscribers are satisfied with tariff levels, PHS speech quality and transmission speed, as they are nearly the equal of fixed telephones.
Taking advantage of the fact that PHS subscribers are fully aware of the difference between cellular service and PHS service, we can expand the PHS market in our own way, not by competing directly with cellular operators.
The satisfactory level of functionality for users differs depending on how and why they intend to use the service. The fact that PHS subscribers are rather young is because the speech quality and lower tariffs are satisfactory for those who mostly use PHS terminals for speech. This is in stark contrast with cellular subscribers.
Subscribers should also take compatibility into consideration: people should basically choose the same communications system as those around them. For instance, use of DDI Pocket’s latest short message service (SMS) “P Mail” has been boosted by signing up groups of people who need a common communications system. “P Mail” calls account for 30 % of all calls handled by the DDI Pocket Group, and this percentage is increasing. Character-based communication is becoming a major form of communications, and is creating a new type of communication culture. This non-voice communications and mobile computing is the direction that PHS should move toward in the years to come.
As the first step, the DDI Pocket Group will enhance its SMS. In addition to the existing SMS, DDI Pocket will begin transmission services for handwritten messages and text files of up to 1,000 characters to stimulate demand from the business sector. DDI Pocket will also develop technologies that enable users unfamiliar with the complicated operation of personal computers or multi-function telephones to use data communications with ease.
DDI Pocket will offer 64 kbps data communications services at an early date as its second step, enabling much more convenient Internet use and image transmission. The service will activate a variety of mobile services, including geographic and image data. By linking the PHS location information service, such services will become much more useful. In addition, this speed, equal to that of fixed ISDN, will promote the merging of indoor and outdoor systems, thereby turning PHS networks into wireless LANs.
There is still large scope for PHS to develop further. We have cultivated just a portion of PHS’s huge potential. I have no doubts in my mind that PHS’s high capability will continue to win public attention, and that PHS will eventually constitute part of the social infrastructure as society becomes increasingly information-oriented. Please have high expectations for PHS development in the years ahead.