Q : Once there was a concern about the PHS that it might be defeated by the 3G even in data communications area which is advantageous to it as well. However, now it's a common view that the cellular phones are difficult to provide a flat rate broad and high-speed data communications service as the PHS for the time being.
     High frequency efficiency of the PHS has clearly been brought out, hasn't it?

Mr. Kikugawa : Yes, as for data communications, DDI POCKET's insistence is just being realized.
     The most important point of the PHS is its micro-cell network system.
     A cell of the cellular phones contains many users, however, microcell can do only limited number of users. In other words, micro-cell can provide a user with more frequency resources. This high frequency efficiency is the biggest point of the micro-cell. As a result, the PHS can provide a flat rate data communications service for the PC.
     Data communications is not a case for which such high frequency efficiency is utilized. Voice quality is the same. The cellular phone system is to provide somewhat low quality voice communications service in a congested area. It's so called "Half-rate"using a half frequency band from normal. On the other hand, the PHS's micro-cell network system is designed so as to maintain the original 32 kbps bandwidth in such case as well, then no need to do so as the cellular phones. The PHS can always provide high quality voice communications service.

Q : What do you think the reason why the PHS market was forced to be behind the cellular phones though it has many advantageous functions than them?

Mr. Kikugawa : I think that the reason was a small coverage of the Cell Station (CS) and accordingly it took quite long time to establish the service area. In the early stage of the PHS service, it had given users a negative image such as "the service area is small" "a call won't go through easily"etc. because of its small coverage.
     From now on, we'll try to remove such negative image and to emphasize the PHS's advantages again. A true product planning to utilize PHS's advantage has just become possible about ten years after the PHS service was launched. Now we have more than 150,000 CSs and completed the communications network with which we can confidently recommend our service to the users.

Getting close to the PC's Information Capacity by HTML Browsing

Q : DDI POCKET launched a new AirH" PHONE "AH-K3001V"in this May and it was quite favorably received so that many shops faced the sellout problem. Could you comment on this?

Mr. Kikugawa : First as the mobile telephone, "AH-K3001V"is equipped with the Web browser "Opera"and realized full HTML browsing. This point impacted on the users and that received their high evaluation.

     Then how it will become convenient by "Opera" For example, if you try to search the word "mobile" there will be only 189 hits at the cellular sites, however, 1,600,000 hits at the PC site which can be browsed by "Opera" Users are able to get incomparably vast information by browsing the PC sites.
     Full HTML browsing is the function to maximize the micro-cell's advantages. Only DDI POCKET which has completed a solid network available for a flat rate data communications service for the notebook PC could realize that we think. We will continue to lead the cellular phones in this area because it's difficult for them to provide the same service as the PHS for the time being.

Q : What class of users bought "AH-K3001V"most?

Mr. Kikugawa : I heard that most users are IT-oriented "Heavy Users"because it's just been launched. According to the subscription contract, 60% of the users subscribed to 32 kbps flat rate service and this validates our original target user of this product.

100% Population Coverage is our ultimate Target

Q : Further speed-up may be required in the future for the PHS data communications as well. What do you think of this?

Mr. Kikugawa : Yes we are planning to launch 256 kbps data communications service within this year. Data compression technology is being improved rapidly so we will try to increase the data speed as well as to decrease the rates.

Q : How to attain your target of 100% population coverage?

Mr. Kikugawa : We have been improving our PHS technologies and as a result we have become confident of attaining 100% population coverage. Adaptive array antenna is one of such technologies and it has a capability to increase the radio wave propagation into the room in the central area and to increase that's reach up to 4 - 5 km in the outside area. Thanks to that the same area can be covered by one fourth of the current CS number. We are hoping to attain 99 - 100% population coverage by 2006 without so big investment in equipment.
     Adaptive array antenna is also effective in the frequency efficiency improvement. 256 kbps data communications service will be provided by bundling 8 channels in the beginning, however, in the area of the latest CSs, only 4 channels are enough for that. Currently the number of the CS with adaptive array antenna is approximately 80,000 and all CSs within the 23 wards of Tokyo will be replaced by adaptive array antenna CSs from now on.

We can create the Market to be shared with the Cellular Phones

Q : Do you think that to attain 100% population coverage is significant against the cellular phones as well?

Mr. Kikugawa : I don't think so. We are not so conscious of the competition with the cellular phones. One of the reasons of the PHS's trouble was because it's been confused with the cellular phones. Originally the cellular phones are developed from the car telephone and the PHS from the cordless telephone. Only their similar appearance made them be confused.
     We think that the cellular phones and the PHS have their own market, however, actually the cellular phones or fixed telephones are used in the PHS market now.
     What we should do is to explain the PHS's advantages to its true market correctly.

Q : Which do you think the most PHS's target market?

Mr. Kikugawa : One is as I said before the market for high functionality and effectivity terminals represented by "AirH" PHONE"and the other is reliable and secure market.
     The PHS has an advantage of low radio power emission and DDI POCKET already has a product category utilizing such advantage "Anshinda-Phone"aimed at children and medical institution etc. and showing quite steady growth in sales. This area is still almost virgin and so quite promising in the future.
     Built-in module type PHS is also growing steadily and promising with the spread of the information-home electrical appliances. Excellent low power consumption and price features of the PHS are really ideal for home electrical appliances under the mobile environments.
     We have an "Equipment Certification Platform"to realize different tariffs according to each equipment by certifying that. With this an appropriate flat rate service can also be provided to each equipment with its usage volume.

Profile

Mr. Masaki Kikugawa DDI POCKET, Inc., Member of the Board, General Manager, Corporate Planning Division (present: Corporate Officer, General Manager, Corporate Planning Division)

1963: Born in Hiroshima Prefecture 1987: Graduated from the School of Commerce Waseda University 1987: Joined Daini Denden Incorporated (present: KDDIKDDI CORPORATION) 1995: Joined DDI Tokyo POCKET TELEPHONE, Inc. (present: DDI POCKET, Inc.) 2001: DDI POCKET, Inc. , Head of the General Business Strategy Division 2002: DDI POCKET, Inc., Member of the Board, General Manager, Corporate Planning Division (2004: DDI POCKET, Inc., Corporate Officer, General Manager, Corporate Planning Division)