The USD 70 billion mobile broadband market has long been dominated by three main players - NTT DoCoMo, KDDI and Vodafone Japan, which has recently been acquired by Softbank. That is all set to change as a wave of new competitors ready themselves to enter the market.

In November 2005, the Ministry of Internal Affairs and Communications (MIC) awarded three new 3G licenses to IP Mobile, eMobile and Softbank (which later returned its license after taking over Vodafone Japan). Coupled with the recent introduction of mobile number portability - making it easier for subscribers to change operators - competitive conditions have never been more intense.

Atsuhiko Ohkita, Ericsson's senior analyst in Tokyo, says greater competition is expected to spark an explosion of new and exciting mobile data services and applications. "Operators in Japan generally compete on the size and attractiveness of their service offerings rather than price," he says.

"Mobile phones are a status symbol, a fashion item. The cost of a new service is going to be slightly less important to consumers than content that is entertaining and functional."

In Japan, mobile phones are no longer just a communication tool but a personal gateway to a host of enticing services. An indispensable part of everyday life, they serve as everything from multimedia players to digital wallets. To attract new subscribers operators are going to have to continue to offer cutting-edge services and applications.

Greenfield operator eMobile is taking up the challenge of the dynamic Japanese mobile market and is planning to launch its Ericsson-supplied WCDMA/HSDPA network in March 2007. Eric Gan, CFO for eMobile, says bundled services and a simple pricing structure will be key.

"Similar to the theme park business, you do not see consumers comparing the price of entrance tickets but they compare the attractions among the theme parks," Gan says. "You need more attractions in your monthly bundled tariffs."

To understand how to succeed in Japan's current mobile data revolution you have to go back to its roots in 1999 and the introduction of i-mode, an NTT DoCoMo service that first packaged the mobile internet into an easy-to-use format. It set a precedent that has greatly impacted on how subscribers interact with their mobile phones.

The Japanese market was radically changed by i-mode. "DoCoMo never used terms like WCDMA or even 3G to consumers," Ohkita  says. "It used fun branding and marketing, and subscribers were attracted by the end-user experience rather than the technology that enabled it."

Mobile users have since been treated to an abundance of news, information, games, shopping, e-mail, video and photo functionality. Ever-improving, high-speed Japanese mobile networks are making even more-advanced services possible. Services such as video/TV, music and game downloads have already taken off.

Whereas nearly every public transport commuter under the age of 30 in Tokyo formerly spent their entire journey writing e-mails on their phones, now a growing proportion of them can be spotted playing mobile games. Figures from the Ministry of Internal Affairs and Communications  show that the value of Japan's mobile gaming industry has more than doubled over the past few years to reach nearly USD 0.5 billion.

The Japanese are also starting to tune into mobile TV, with a digital terrestrial broadcasting service launched in April 2006. Although schedules follow the same programming as normal television stations, mobile operators are watching closely to assess the potential of new mobile-specific, and even location-specific, services and content.

The hottest mobile data segment is mobile music. According to the Recording Industry Association of Japan, more than 90 percent of digital songs purchased in Japan between January and March 2006 were downloaded over mobile services rather than PC-based services.

Japanese operators are also cashing in on the mobile wallet concept. The big three all allow subscribers to use their phones as a prepaid e-wallet or even credit card. Subscribers can buy everything from groceries to cinema tickets by placing the phone in front of a reader. Charges show up later on their monthly phone bill.

Mobile data applications continue to drive overall revenue. Currently worth USD 20.4 billion, Pyramid Research predicts their value to increase to USD 33.2 billion by 2011. Mobile data revenue is vital to operators, and Ohkita says newcomers will have to offer differentiated data functionality just to compete.

"In the future, operators will need to ensure they keep data access and develop new revenue streams from services," he says. "There is a crossover into the domain of the fast moving IT and media industries and telecom will need to follow their lead, probably through partnerships."