Japanese Ministry Announces Handling of 2GHz Frequencies
DoCoMo Sells Equity in Hutchison 3G UK
NEC Introduces Mega-pixel Handset in Greece
Elcoteq to Open Handset EMS Operation in India
Chicony Electronics' Cellular Phone Camera Module Strategy
Status of Camera Handsets in China
Hutchison Telecom Introduces R-UIM Card CDMA
Samsung Electronics Ships Camera Handset to Cingular

Japan's Ministry of Public Management, Home Affairs, Posts and Telecommunications unveiled its policy of handling 2GHz frequencies, to be used as frequencies for 3G wireless cellular phones, on May 28, 2004.

According to the announcement, when the carriers using 15MHzx2 need the remaining 5MHzx2, the Ministry will reassign the frequencies through a fair procedure. As for 1920MHz-1925MHz, which is adjacent to PHS (Personal Handyphone System) frequencies, the Ministry will not assign frequencies until a technology that avoids interference is established.

The ministry has been discussing how to handle the 2GHz frequencies for 3G services. A poll was taken whether to assign the frequencies to new comers or to assign them to existing wireless service carriers. The second poll took place between March 19-April 19 2004, and seven parties submitted their opinions. Softbank BB, which is preparing to enter the wireless communication market, asked the Ministry to consider assigning the frequencies to the newcomers in both polls. However, the Ministry's announcement this time indicates that the frequencies under discussion will be assigned to the existing wireless carriers NTT DoCoMo, KDDI (au) and Vodafone. [M. Robertson, Portelligent]

NTT DoCoMo of Japan announced that the company would sell all of its holdings in Hutchison 3G UK Holdings. DoCoMo's equity is going to be sold to Hutchison Whampoa, a parent company of H3G UK, for 120 million GBP ($218 million @ GBP 0.55/$US 1). DoCoMo acquired a 20 percent stake in H3G UK in July 2000 by paying 1200 million GBP ($2,181 million). DoCoMo decided to sell its H3G UK stocks due to H3G UK's delay in launching i-mode, DoCoMo's wireless Internet service. Services which have been offered as the result of the Hutchison and DoCoMo tie-up will be supported continuously.

Although DoCoMo gave up on H3G UK, they may be contemplating alternatives such as allying with H3G UK's rival wireless service operators. DoCoMo's spokesperson commented that England is an important market for i-mode. DoCoMo accomplished the launch of i-mode in Germany, France, Italy, Spain and the Netherlands through tie ups. European i-mode subscribers topped the 1 million mark in February 2004. It is uncertain whether DoCoMo will be able to persuade O2, Orange or T-Mobile to launch i-mode. Orange and T-Mobile have already kicked off their own mobile Internet services to challenge the Vodafone Live! service. [M. Robertson, Portelligent]

NEC of Japan began supplying their wireless Internet platform and handsets to COSMOTE Mobile Telecommunications of Greece. COSMOTE began offering wireless Internet service to its subscribers on June 7, 2004. NEC supplies the N410i, which supports wireless Internet and has a 1.3 million-pixel camera. The handset not only supports still images but also MPEG-4 video capture and replay. It is equipped with a 2.2-inch QVGA LCD. The handset supports Java applications for wireless handsets, IrDA, USB and 64 polyphonic ring tones. NEC also introduced the N400i and the N331i. The N400i features a 300,000-pixel camera which is capable of video capture and has a QVGA LCD. NEC has supplied the N400i to KPN Group of the Netherlands, Germany and Belgium and Bouygues Telecom of France. The N331i, supporting a 100,000-pixel camera, has been shipped to Bouygues Telecom and Wind of Italy. NEC also provides an Internet platform which achieves an i-mode-equivalent wireless Internet service on COSMOTE's existing GSM/GPRS networks.

NEC has supplied handsets and the wireless Internet platform to overseas wireless communication service carriers including KPN Group of the Netherlands, Germany and Belgium, FET of Taiwan, Bouygues Telecom of France, Telefonica of Spain, Wind of Italy. Pictures of NEC's wireless Internet handsets in Greece are available at: http://k-tai.impress.co.jp/cda/article/news_toppage/19158.html [M. Robertson, Portelligent]

A Finnish EMS firm, Elcoteq Network Corp. announced on June 2, 2004, that the company will set up an EMS operation in Bangalore, India. Initially, Elcoteq will provide wireless EMS services to wireless infrastructure and handset OEMs in India from a rented space. Elcoteq says the manufacturing facility in Bangalore will be operational in six to nine months. At full operation, the facility will employ about 1,000 workers.

India, with a population of over one billion, is one of the fastest growing wireless telecommunication communities in the world. Elcoteq's decision to establish an EMS operation in India was influenced by such factors as: a huge communications market, growth potential, abundance of skilled and highly-educated labor, attractive customer base and inexpensive cost structure. [M. Robertson, Portelligent]

Recently Taiwanese and Chinese handset manufacturers are busy commercializing camera handsets in Asia and European markets. Many camera modules adopted in those handsets are made by Taiwanese module suppliers.

At Computex Taipei 2004, which was held June 1-5, 2004, Chicony Electronics, known as a manufacturer of keyboards for personal computers, showcased camera modules for cellular phones and PDAs. Chicony says it shipped over 1 million VGA grade camera modules to Taiwanese cellular phone manufacturers in 2003.

Chicony began manufacturing cellular phone camera modules 2-3 years ago. The company specializes in keyboard production and began diversification of its operations in the late 1990's. It began manufacturing Web cameras in 1998 and digital still cameras in 2000. Leveraging the expertise gained from Web camera and digital still camera manufacturing, it began manufacturing camera modules in 2002. Chicony currently supplies CMOS camera modules. Although the company is interested in CCD camera modules also, it is sticking with CMOS camera modules for the present time. Conventionally, CCD sensors are difficult to secure and design requirements are more complex.

According to Chicony, the mainstream camera modules supplied to Taiwanese cellular phone producers will shift from 300,000 pixel types to 1.3 million-pixel types in the second half 2004. Chicony is already mass-producing 1.3 million-pixel CMOS camera modules. The company also exhibited a 2 million-pixel type, which is available on a sample basis. Although Chicony did not name its competitors, there are about 4-5 Taiwanese module suppliers offering cellular phone camera modules. In the case of Chicony, the company designs camera modules in Taiwan and manufactures them in Dongguan, China. Affected by severe price competition, it makes more sense to manufacture camera modules in China where labor is more affordable.

Another Taiwanese camera module supplier, Premier Image Technology, unveiled its plan to begin commercial production of 2 million-pixel camera modules for cellular phones in the third quarter 2004 during Computex Taipei. The company currently offers 1.3 million-pixel camera modules. The 2 million-pixel camera modules will be assembled by Premier itself with lenses being sourced from external entities. Premier's 2 million-pixel module is scheduled to be used in handsets for the Chinese market. The advancement of camera functions is expected to escalate not only in Japan but also in other parts of the world. [M. Robertson, Portelligent]

Digital still cameras are selling like hotcakes in China. In contrast, camera handsets are facing tough times. In Japan, camera handsets became a threat to the digital still camera industry but it is a different story in China.

Searchina's affiliated company in China (Shanghai Searchina) conducted a survey concerning mobile communications in China. The survey result revealed 5 percent of those surveyed own a camera handset. The survey was conducted April 27 - May 27 2004. Shanghai Searchina surveyed online monitors by mail DM (Direct Mail) with a number of effective responses of 6270. For the question "Would you like to purchase a camera handset?" about 20 percent responded with "Would like to buy one." However, over 40 percent responded with "Will buy when prices come down." Similar to digital still cameras, "cost" is the big issue for camera handsets.

In China, camera handsets are selling for over 2000 yuan ($242 @ yuan 8.28/$US 1), except for limited low-end versions. The majority of them incorporates a 100,000 pixel grade camera. Models with a 300,000 pixel camera cost about 4000 yuan ($483). In October 2004, Sony Ericsson's 1.3 million-pixel camera phone is scheduled for debut. Although the price for Sony Ericsson's high-end camera handset is not released, it is expected to be very expensive and it is doubtful that the consumers will accept the handset for that reason.

DoCoMo's latest i-mode compliant handsets, the 506i series, have 1 million-pixel+ cameras and are selling for 20,000 yen ($182 @ yen 110/$US 1) in Japan. Camera handsets in China are far more expensive than the ones in Japan. Considering the average income levels in China, ordinary Chinese consumers will not be able to afford those handsets. In China, 5 million-pixel digital still cameras are available for 4000 yuan ($483). The cost performance of camera handsets with a low-grade camera is not appealing to Chinese consumers.

Another obstacle for Chinese camera handsets is that a GPRS or CDMA 1x high-speed data communication network is necessary for mailing captured images. The majority of camera handsets in China support high-speed data communication, yet many mid-range handsets do not support this function. Also, a color screen handset is not a commodity in China yet. Even if a consumer owns a camera handset, he or she is likely to have a limited number of friends that can receive mail with captured images. The contrast is astonishing to Japan where high-end camera handsets are must-haves and a 3 million-pixel camera handset is going to be released this month. [M. Robertson, Portelligent]

Hutchison Telecom of Hong Kong released a new handset model based on R-UIM (Removable User Identity Module) for its 3-CDMA service. The handset, model 1828 supplied by TCL of China, is a basic model with a monochrome LCD. It supports voice calls and SMS. Priced at 480 HK$ ($61.54@ HK$ 7.80/$US 1), the handset is cheaper than low-end GSM models and available for free depending on the subscription plan.

Hutchison Telecom also renewed its fee structures and introduced three plans based on low monthly basic charges, 18 HK$ ($2.31) a month, 38 HK$ ($4.87) a month and 88HK$ ($11.28) a month. The 18 HK$ ($2.31) plan is the cheapest in Hong Kong.

Hong Kong CDMA service had fewer handset models than GSM and new handset models weren't introduced for a long time. It is also not very flexible as a subscription per handset is necessary. CDMA subscribers in Hong Kong have been declining. There were about 280,000 CDMA subscribers in 2000. Its subscriber base dropped to 40,000 at the end of 2003, which is less than one percent of the Hong Kong wireless subscribers. The last CDMA handset release in Hong Kong was C401SA manufactured by Sanyo Electric in April 2001.

The new TCL handset focused on the basic functions of voice calling and SMS. The previous C401SA supported a color screen, polyphonic ring tones and content services.

Industry experts speculate that Hutchison changed the target of its CDMA service to low-income consumers and distinguished user segments of CDMA and GSM services.

Currently, Hutchison is the only company that has a CDMA license in Hong Kong. Its CDMA license will expire in November 2005. Hong Kong's telecom authority is not likely to grant Hutchison the right to renew the license automatically, in order to protect the interest of the subscribers, and plans to welcome bids from other companies as well. Hutchison's introduction of an R-UIM handset is viewed as a strategy considering the circumstances.

CDMA handsets based on the R-UIM card have been adopted in China, Taiwan, and Thailand. KDDI (au) of Japan is also considering introduction of R-UIM handsets. [M. Robertson, Portelligent]

Samsung Electronics of South Korea is going to supply the high-end camera handset model SGH-P107 to Cingular Wireless, the largest GSM service carrier in the U.S. With this new service contract with Cingular, Samsung now has supply contracts for camera handsets with five major wireless service operators: Cingular Wireless, Verizon, Sprint, AT&T and T Mobile.

Samsung Electronics' spokesperson commented, "Quality of our camera phones were recognized by majority of mobile communication service operators, which represent most of the U.S. market. Popularity of camera handsets is influenced by penetration of MMS service, which supports instant photo mails in the U.S. market." Samsung Electronics plans to debut a mega-pixel camera handset in the U.S. before the end of 2004 to secure the leading position. The U.S. camera phone market is currently dominated by the 300,000-pixel class camera handsets. [M. Robertson, Portelligent]