0

NTT DOCOMO


Global Expansion Strategy


















Aakanksha Sharma
12DM-002
Ajinkya Vishwekar
12DM-016
Aravind Shenoy
12DM-036
Bharat Maheshwari
12FN-035
Pranav Patil
12DM-099
Surbhi Vijh
12FN-140
1

Sl.No Topic Page No
Executive Summary 4
1 NTT DOCOMO Company Profile 5
2 Japans Wireless Industry 6
2.1 Industry Analysis (2000) 6
3
NTT DoCoMos Strategy
9

3.1 Core Competencies for DoCoMo in Japan
9

3.2 NTT DoCoMos Global Expansion Strategy
9

3.3 Rolling Out a Global Strategy
10
4
Entry Strategy
11

4.1 Analytical Framework: Modes of Entry
11

4.2 Current Challenges
17

4.3 International Expansion
17

4.4 Global Expansion: Challenges
18
2

5
DoCoMo in US: Failure
19
6
DoCoMo in UK: Failure
21
7
DoCoMo Global Expansion: A good strategy?

22
8
DoCoMo in India: The Success Story

23

8.1 TATA TELECOM SERVICES LIMITED
23

8.2 TATA DoCoMo
23

8.3 Entry Strategy
24

8.4 Pricing
24

8.5 Differentiation
25

8.6 Positioning
25

8.7 Competition and Challenges
26

8.8 Marketing Strategy
26

8.9 Marketing Mix: 4Ps
27
3

9
Recommendations
30
10
Conclusions
32











4

Executive Summary
The report covers strategies employed by NTT DoCoMo for expanding into International
Markets. NTT DoCoMo is a Japan based mobile telecommunications company, spun off from
Nippon Telegraph and Telephone in 1991. It commands over half the market in its home
country Japan, having over 53 million subscribers. Looking to access other markets, NTT
DoCoMo looked to expand abroad, initiating tie-ups with European and American operators,
and also with those in Asian markets.
The report looks at the companys initial attempts at accessing the American and UK markets,
following what the group believes to be an Ethnocentric outlook. At this stage, the company
tried to capitalize on its mastery of a superior mobile communication technology. However,
faced with an unassailable lead by rival WAP technology being employed by competitors,
economic recession, less control over equity stakeholders these ventures failed.
However, when it came to Asian markets the companys strategy was closer to a more
Regiocentric approach, where it tried to establish Joint Ventures with equity stakes. This was
conditioned by government regulation, recognition of the competitive environment, and also
the need to hedge risks. Other significant factors were low technological advancement in the
telecom sectors of those countries, a more favorable competitive environment and a market
which was far from the level of saturation of other western markets . In particular, this report
examines NTT DoCoMos entry into the Indian market via a Joint Venture with Tata Teleservices
Limited, and attempts to adapt to local conditions by way of pricing, value added services,
promotion, and technology leadership measures.
It is worth noting that NTT DoCoMos strategy for Western nations also underwent a change
the company moved towards licensing in contrast to its earlier approach of establishing Joint
Ventures.



5

1. NTT DoCoMo - Company Profile

In 1959 Nippon Telegraph and Telephone (NTT) entered the telephone industry in Japan with
an offering of maritime telephone service. They added paging services in 1968, car telephone
services in 1986, and in-flight public telephone service in 1987. In 1991 NTT established a
separate company to provide wireless communication offerings, NTT Mobile Communications
Network, Inc. This new company was then spun off by NTT in 1992, ultimately resulting in one
of the biggest initial public offerings for the time in 1998, and is now 67.1% owned by NTT with
the balance of shares owned by public investors. By 1993 mobile subscribers surpassed the 5
million mark, and consumer growth has been dramatic with more than 20 million subscribers as
of 1998. NTT Mobile Communications Network, Inc. officially changed their name to NTT
DoCoMo in April of 2000 to adopt their widely recognized brand name.
DoCoMo is Japans largest mobile communication company, second in the world in subscribers,
behind Vodafone AirTouch. Today DoCoMo is the most valuable mobile communication
company in the world; the most valuable company in Japan, and has a market capitalization of
42% larger than its parent.
In 1999, DoCoMo launched i-mode (information-mode), the worlds most advanced wireless
Internet service. The outstanding feature of i-mode is that users are always connected to the
wireless web, and users can send simple text email messages, retrieve stock quotes, surf i-
modes portal sites with just a few clicks. This business model was first dismissed by
competitors as low quality with limited usage, but Japanese consumers seem to think otherwise
and are willing to sacrifice quality for convenience: 18,000 Japanese are signing up for i-mode
each day with total subscribers surpassing 20 million this year. At this rate, next year DoCoMo
will have more Internet subscribers than AOL.




6

2. Japans Wireless Industry

Although DoCoMo currently controls 57% of the Japanese market, this situation could change in
the near future. The Japanese government deregulated the wireless services market in 1994,
and as a result, many major global players have entered the Japanese market. British Cable &
Wireless recently bought DDI, the second largest mobile phone operator in Japan. Japan
Telecom, in which British Telecom and AT&T of the US together hold a 30% stake, and
Vodafone AirTouch are working together to compete with DoCoMo in the growing Japanese
market. Japan Telecom and Vodafone AirTouch are the two largest shareholders in each of the
country's nine regional mobile phone companies.
The global wireless communications industry has been characterized by rapid deregulation in
each country. This has been tied to a trend of various acquisitions and the emergence of global
players in various local markets. The following in-depth analysis of the Japanese wireless
communications industry is based on Porters Five Forces Model, and not only illustrates the
profitability and the changing face of the industry, but also gives insight to the key success
factors for DoCoMo in Japan.
2.1 Industry Analysis in 2000
1. Intensity of Competition
Currently, the mobile telephone industry in Japan is becoming more competitive as the demand
for wireless communications increase rapidly among consumers and wireless companies try to
compete for these new customers.
Market deregulation and the appearance of new entrants further intensify the rivalry.
Although there is a high concentration ratio between the top three companies, (C3 of 84% -
DoCoMo accounts for 57% market share), the emergence of international players like Vodafone
AirTouch, British Telecom and AT&T is putting pressure on domestic players to be competitively
efficient. The capital intensity required in the business has resulted in these companies owning
large specific assets. As a result, they are willing to fight fiercely to defend their investments
from competitors.
7

The remaining two cellular operators in Japan (DDI and IDO) merged their operations to push a
wireless web standard that differs from DoCoMos. Also, the Japanese government is going to
award three licenses for 3G wireless networks in the year 2001. This means that DoCoMo
would have to continue competing fiercely with other players for the licenses.
2. Presence of Substitute Products
Within the wireless industry, there are two competing technologies and standards (W-CDMA
i

and CDMA-2000
ii
) leading to a huge debate between the Americans and Europeans. DoCoMo is
currently rolling out its W-CDMA technology with the expectation of becoming the first 3G
network and gain first mover advantage especially in helping other countries wishing to build
their own 3G networks.
3. Buyer Power
Wireless consumers are fragmented with very weak market power, but because there are not
many dimensions wireless providers can compete in, competition is very keen as providers try
to differentiate their service in various packages and prices. Although companies are trying to
lock-in customers with different strategies, small differences in price and services could cause
customers to change providers.
4. Supplier Power
Suppliers in this industry are handset manufacturers, infrastructure providers, and technology
developers. Handset and infrastructure manufacturers do not have strong market power
because of the relative ease of market entry. For instance, most major electronics
manufacturers, such as Philips and Sony, are building handsets today. Recent international
agreements between major cellular phone manufacturers and mobile service providers have
also resulted in most handsets being compatible with different wireless services provided.
There are several competing wireless standards such as CDMA and GSM, which undermine the
bargaining power of technology developers. It is also noteworthy that wireless service
providers cannot switch from one technology provider to another without incurring high costs
in rebuilding infrastructure. To counter this, DoCoMo backward integrated by investing heavily
in R&D and developed its proprietary standard 2G (2
nd
Generation) PDC
iii
and 3G W-CDMA to
reduce reliance on technology providers.
8

5. Barriers to Entry
The threat of new entrants in this industry is moderate. Currently, there are just a few
important players. These players deter new entrants through ownership of patents and
licenses, network externalities, excess capacity, specificity of assets and high exit costs.
The main players in this industry own licenses to use the technologies for their networks. They
enjoy huge network externalities, which means that the more subscribers they have the more
people will want to belong to that specific network. Therefore new technologies have to be
compatible with the existing ones to find a niche in this market. These companies develop
excess capacity, which deters entrants due to the possibility of price wars. Additionally, the
specificity of the extremely expensive assets required in this industry make it difficult for new
players to enter the market, representing a real threat. Even with all the deterrents mentioned
above, payoffs are high enough to attract new entrants.
Based on our industry analysis, the wireless industry in Japan appears very profitable but
increasing competition could erode profit margins in the near future.














9

3. DoCoMos Strategy

3.1 Core Competencies for DoCoMo in Japan
The key success factors that allowed DoCoMo to secure its dominant position in the Japanese
market are its excellent management and marketing skills, investments in R&D and
relationships with manufacturers.
DoCoMo has built a very strong brand name projecting the image of a new, young and dynamic
company. It has challenged traditional Japanese management practice such as bringing in
people from outside the company to join the management team. It has also relied on various
types of external consulting to make internal management changes. These competencies in
management and marketing have created a strong image for DoCoMo within the new
generation of consumers in Japan, and as a result a high penetration rate in that demographic.
DoCoMo has also invested heavily in technology development. It has constantly improved
acquired technologies so it can sell them in other markets, thus establishing a platform for
themselves and developing competencies in technology. This has been a key strength for
DoCoMo to gain market share at home.
Finally, DoCoMos relationship with suppliers has been very effective in developing a strong
network with handset manufacturers like Motorola, Nokia and Ericsson. These companies sell
handsets marketed under the DoCoMo brand name so they benefit from DoCoMos exploding
pool of subscribers.
3.2 NTT DoCoMos Global Expansion Strategy
NTT DoCoMo seems to have the elements of a successful global player. First, it is in a promising
market. Furthermore, based in Japan, DoCoMo has the advantage over American and European
counterparts, like AT&T, Sprint and Vodafone AirTouch, of being closer to the 3.3 billion users
Asian market. In addition, DoCoMo is at the leading edge of technology and was the first
mobile operator to launch a 3
rd
Generation (3G) wireless network in 2001.
With its huge success at home, DoCoMo has been looking at ways to expand abroad. It wants
to market i-mode worldwide, but unlike its American and European counterparts, who have
been merging feverishly to enter new markets, DoCoMo believes friendly alliances will be more
10

effective, especially in the Asian market. DoCoMo has taken equity stakes in several Asian
companies and plans to woo Asian operators with funds and state-of-the-art technology. With
its newly developed 3G wireless networks, DoCoMo has negotiated additional joint
experimental projects with China, Malaysia, Singapore and South Korea.
Rivalry with competitors in the domestic market does not deter DoCoMo from cooperating with
them in foreign markets. Because DoCoMo is relatively new in the wireless market, it has
relatively limited experience in human resources, management, marketing and the
technological expertise necessary to deal in countries outside of Asia. Therefore, forming
strategic alliances with more experienced competitors helps DoCoMo market its technology
abroad and become a global player in the industry. DoCoMo is involved in several partnerships
and joint research efforts with domestic competitors, such as Vodafone AirTouch.

3.3 Rolling Out a Global Strategy
DoCoMo is making a bet in the international markets with W-CDMA technology. Expanding its
3G network throughout Asia, DoCoMo intends to gain first mover advantage and then leverage
its unique knowledge to compete in the global markets.


11

4. ENTRY STRATEGY

4.1 Analytical Framework: Modes of Entry
To analyze the strategic differentiation of major international Mobile Network Operators, we
identify four types of key strategies used to realize the motives/incentives.


1. Establishing an International Presence
A domestic MNO invests in a foreign MNO to expand its own market internationally as a growth
strategy. Most MNOs investing with this purpose try to obtain major stakes in foreign MNOs so
that the revenues generated from the foreign markets can be included in the overall revenues
12

reflected in their consolidated financial statements. Therefore, most MNOs that implement this
strategy are also the most actively involved in international business operations in order to
increase their overall revenues.

2. Creating Business Synergies
When international MNOs use this strategy, they focus on creating business synergies based on
economies of scale. This strategy also requires their active involvement in the international
business operations so the fact that operational cost savings can be achieved in their
international markets. Several forms of implementation of this strategy are listed here. An
MNO may pursue joint procurement of network equipment or handsets for its foreign markets.
Also, several MNOs may collaborate for the same purpose. An MNO may use an international
branding strategy to save on marketing expenses. Finally, some MNOs make strategic alliances
for roaming services. This strategy may be implemented with or without an equity investment
depending on the situation.

3. Generating Revenues through Exporting
When using this strategy, MNOs export services or technologies that have been proven to be
competitive in their own domestic markets to foreign markets. These services are in most cases
consultancy services, and MNOs transfer their own marketing and operational skills to other
foreign MNOs. The technologies are proprietary, such as wireless Internet platforms and
solutions and the MNOs receive royalties from their foreign MNOs through licensing
agreements. The objective of this strategy is to generate additional revenues by utilizing
existing competencies. Therefore, it requires relatively less involvement than the previously
mentioned strategies. Also, depending on the situation, this strategy may be implemented
with or without an equity investment.

4. Earning Capital Gains
A domestic MNO investing in a foreign MNO simply wishes to increase the amount of non-
operating profit that can be distributed in the form of dividends to shareholders. Therefore, the
role of an MNO in a specific foreign market is that of a financial investor, so this strategy
requires almost no involvement in the foreign MNOs business operations.
13


To achieve their goals in each of the four internationalization strategies mentioned above,
international MNOs use investment strategies based on the amount of equity participation
given their resources and the foreign market status.


To succeed, DoCoMo is implementing an internationalization strategy, and its most relevant key
factors are:
1. building friendly alliances and acquisitions
2. developing a sliver strategy focused on providing wireless services without owning the
infrastructure
3. expanding its technologies throughout Asia and the rest of the world

1. Friendly Alliances & Acquisitions
DoCoMo is committed to a strategy of geographic expansion through friendly alliances, joint
ventures and acquiring small stakes of small local companies in the rest of Asia. Traditionally
the telecommunications industry has been state-owned and it is only during the last decade
14

that there has been significant privatization and deregulation in this sector. Hence, most
governments are still deeply involved in the industry because they perceive these investments
as strategic national assets that should not be owned by foreign investors. In light of the recent
uproar about Chinas ban of CCF (Chinese-Chinese-Foreign) structures, DoCoMos strategy
allows market entry into such countries.
DoCoMo prefers not to manage its international operations. Its strategy is to expand 3G W-
CDMA technology throughout Asia and the rest of the world through joint ventures and
alliances, even if buying a small portion of the company is necessary. As DoCoMo CEO
Tachikawa, former Sloan MBA student says in an interview with Business Week, We would like
to see our next generation standard adopted globally without a hitch. To make it possible, we
are ready to offer the necessary support. It could be in terms of technology, staff or money.
Thus DoCoMo gives financial and technical support to these local operators, to expand its 3G
W-CDMA technology and extract rents through consulting fees and other technology transfer
charges.
Recently, DoCoMo has engaged in several projects of this kind. DoCoMo started a joint venture
with S.K. Telecom to develop the infrastructure for a 3G network in Korea. It also bought 19%
of Hutchinson Telephone Company Limited, a Hong Kong cellular phone operator, and is
providing technical support for the development of their 3G infrastructure. Moreover,
Hutchinson has big investments in the Singapore telecom industry, and through this acquisition
DoCoMo is able to reach even farther markets.
In Europe, DoCoMo joined development forces with French Telecom, Deutsche Telecom and
Italia Telecom. In order to develop positive network externalities through expanding its
operations overseas, DoCoMo also joined its R&D forces with industry leaders as Nokia and
Ericsson. Mr. Oya adds, We could get support from Europe in the 3G standardization and it
was a large step toward a single global standard this is largely due to the support of Ericsson
and Nokia. Our role in the 3G system now is to get support from Asian countries the main
reason for our investments is not just to expect direct revenue but also to gain support for our
3G standard and expand our alliance for our 3G system.
By leaving a big portion of its overseas ventures to local investors, DoCoMo has hedged the
intrinsic risk of infrastructure investments. It retains local managers, their business networks
and government connections, as these connections represent assets that will protect DoCoMo
15

from problems of foreign ownership of infrastructure. Moreover, DoCoMo is less exposed to
expropriation risks because it is not only in the business of transferring technology to local
mobile operators abroad, but also receives royalties for its patents on W-CDMA technology.
2. Sliver Global Strategy
DoCoMo is a rather vertically integrated corporation in Japan. It owns all the infrastructure of
its wireless network (having inherited much of it from NTT), and is also a wireless service
provider (i-mode). However, in expanding abroad especially Asia, DoCoMo has adopted an
asset-light sliver strategy by focusing on its competitive advantage in leading edge W-CDMA
technology. Currently, only a few companies own the patents for the two contending 3G
protocols W-CDMA and CDMA-2000; in fact, Qualcomm and DoCoMo wholly own the patents
for W-CDMA.
3. Expansion of technology
Currently there is no uniform wireless standard in the world. Asia, Europe and the United
States adopted incompatible transmission protocols in the 2G wireless network. As a result,
consumers from the United States could not use their cellular phones in Europe or Asia, and
vice versa. Also, wireless service companies have difficulties competing in foreign markets
because of the differences in the protocols hence forcing them to license both competing
technologies. In contrast, the wireless web market is much less segmented. Information about
the different wireless transmission and web standards is summarized in the table below.


Japan US Asia Europe
Current 2G
wireless
transmission
protocol
PDC CDMA Mostly GSM
iv
GSM
Current 2G
wireless web
protocol
DoCoMo: i-mode
Others: WAP
WAP
v
WAP WAP
16

Next
generation 3G
wireless
protocol
W-CDMA
CDMA-
2000
W-CDMA W-CDMA
Next
generation 3G
wireless web
protocol
DoCoMo: WAP or
i-mode
Others: WAP
WAP WAP WAP

As a result of the current segmentation in 2G wireless transmission protocols, DoCoMo has
been prevented from even entering the Asian market because it is using an entirely different
standard, namely PDC. Tomoyuki Oya, a DoCoMo employee in R&D comments, At the early
stage of PDC in early 1990s, DoCoMo focused only on the domestic market because we were
quite busy competing with domestic competitors. When DoCoMo recognized that global
penetration of the system is necessary for manufacturers to have a large market share, all the
Asian countries had already decided to choose GSM system. That is why DoCoMo is working
hard to become a leader in developing the 3G W-CDMA technology and expanding it to other
markets.
Some companies like Ericsson are working on developing both 3G W-CDMA and CDMA-2000
technologies since a universal standard has not yet been decided on by the International
Telecommunications Union (ITU). DoCoMo, on the other hand, is betting on the W-CDMA
technology, believing that it is superior. Since Europe and Asia seem inclined to adopt the W-
CDMA standard, DoCoMo is helping wireless service providers in these regions to adopt the
technology. Last year a W-CDMA experiment was successfully tested in Hong Kong in
cooperation with Hutchinson Telecom and in South Korea in cooperation with SK Telecom.
Wireless web service is different. DoCoMo holds proprietary knowledge of the i-mode
technology, but the rest of the world, and other Japanese providers, are adopting the WAP
standard even though i-mode is superior to WAP because it allows users to be connected
permanently and is consistent with the standard compact HTML gaining access to a larger
subset of the World Wide Web.
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4.2 Current Challenges
After huge local success, DoCoMo now faces new challenges in becoming a major player in the
global telecom industry. Today DoCoMo is developing joint ventures and acquiring companies
in Asia, in Europe and in the United States. It is also rolling out its 3G wireless network based
on W-CDMA, while the rest of the world still debates technology standards.
Increasing rivalry may reduce the attractiveness of the profitable wireless industry in the short
term. However, multinational telecommunications corporations, which are becoming
DoCoMos domestic competitors, may represent its best allies in pursuit of global expansion.
The future of DoCoMo abroad depends on its ability to leverage these alliances and its core
competencies in marketing, management, R&D, and good supplier relations which have been
responsible for its success in Japan.
Given the risks involved in investing in telecommunications infrastructure in foreign countries,
DoCoMo has chosen an asset-light sliver strategy, focusing on providing technology without
ownership. This is done through friendly joint ventures and acquisition of small stakes in local
operators with the purpose of expanding its technology worldwide and becoming the
technological leader. DoCoMo seems to be doing well in this respect as its 3G W-CDMA
technology gradually gains wider acceptance among other countries. However, expanding i-
mode, a revolutionary idea and currently the best wireless web option available, to the rest of
the world seems difficult because WAP has become almost a universal standard.
Although DoCoMo is a young and inexperienced player, it is implementing a rather aggressive
international strategy. If W-CDMA is adopted as a global standard for 3G wireless networks,
then DoCoMo will clearly emerge as the world technological leader. On the other hand, if the
ITU decides to push CDMA-2000 as the universal standard, DoCoMo would suffer major
setbacks in its development plans abroad and its future could be threatened.

4.3 International Expansion
To extend i-mode and 3G services outside Japan, DoCoMo focused on acquiring stakes in
various cellular countries around the world. Commenting on this, Natsuno Takeshi, Executive
Director of DoCoMo said DoCoMo alone is very sure of the potential of 3G, because we have
already experienced the explosive success of the data business. Our overseas business is to
18

offer our know-how. We cannot give it away free, but we can make a minority investment in
interested partners. I think it is a perfect strategy. DoCoMo invested in foreign mobile
providers who were aiming to deploy the next generation technology. In May 2000, it bought a
15 percent stake in Dutch KPN mobile to set up Europes rst i-mode service and in December
2000, completed the acquisition of a 16 percent stake in AT&T for $9.8 billion, planning to
establish the rst 3G network in the U.S. in 20032004. DoCoMo also invested in Hutchison in
HongKong, KG Telecom in Taiwan, and Tele Sudeste in Brazil. In exchange, these carriers agreed
to roll out i-mode and DoCoMos version of 3G mobile technology. Through these investments,
DoCoMo improved its access to Asia as well as the European and American markets. Its
network of international investments was intended to leverage DoCoMos know-how from the
advanced Japanese market. It planned to offer i-mode-type services based on 2.5G to be
followed by 3G products and services, which would be well developed in Japan by that time.
DoCoMo was aiming to establish its WCDMA technology as the de-facto world-wide standard
for 3G mobile phones. However, its global aspirations soon ended due to the downturn in the
global telecommunications market.

4.4 Global Expansion: Challenges
In scal year 2001, DoCoMo was forced to write off almost 1 trillion yen due to the decline in
the value of its investments in various foreign wireless companies. The gross impairment
charges were 664.5 billion yen for AT&T Wireless Service, Inc., 320.5 billion yen for KPN Mobile
N.V., 36.5 billion yen for KG Telecommunications Co., Ltd., and 56.4 billion yen for Hutchison 3G
UK Holdings Ltd. In mid 2002, it was reported that DoCoMo was facing problems in convincing
its partner wireless companies to adopt its technology. These companies were reluctant to
spend huge amounts upgrading their networks, as they feared DoCoMos products and services
might not attract customers in their countries. They had already spent billions of dollars in
acquiring 3G licenses and did not have the nancing to set up and operate 3G networks. As a
result, a number of leading telecom companies in Europe and the U.S. decided to delay their 3G
roll out plans, which were initially projected for 2002 and early 2003.

19

5. DoCoMo in US: Failure
in December 2000, completed the acquisition of a 16 percent stake in AT&T for $9.8 billion,
planning to establish the rst 3G network in the U.S. in 20032004.
The various reason of failure could be:
I-mode: At the time of the acquisition of AT&T, Japan and Europe had already begun
migrating to the 3G networks whereas in the U.S. there were many full second-generation
network coverage and some 2.5G providers. Although the limited 2.5G data transmission
speed did not support advanced multimedia services, it provided the basic content that
satised customers. This was, however, not sufficient to be marketed as i-mode under
DoCoMos standards. The preferred protocol for mobile information services in the U.S. was
wireless application protocol (WAP), which allowed users to connect to the Internet and
advanced telephony services. It required the use of wireless markup language (WML) to
create content (Internet sites). WAP is an open standard, not controlled by a single vendor.
But its widespread adoption was uncertain due to its technical limitations. In contrast,
DoCoMo used its own protocol for i-mode in combination with its proprietary c-HTML
language. Switching to i-mode would thus be more expensive. Although most carriers had
introduced mobile Internet access based on the WAP protocol, similar capabilities were also
offered by providers of mobile e-mail services, such as Blackberry, and of wireless personal
digital assistants (PDAs). The distinction between cellular phones and PDAs were beginning
to blur as new cellular handsets incorporated PDA functionality and wireless PDAs were
voice enabled. Furthermore, the U.S. market was different from the Japanese market in
terms of fragmentation and a widely dispersed population. The intense competition in the
U.S. market had led to at rate calling plans, so there was little incentive for mobile carriers
to increase network usage. In addition, U.S. prices were often set too high to encourage
frequent use of additional services.
DoCoMo and Cingular Wireless are negotiating to introduce i-mode and 3G services to
Cingulars customers in the U.S. They aim to reach an accord in 2005. DoCoMo also announced
that it will soon set up a $100 million venture fund in the U.S. to invest in start-up companies
that develop advanced mobile communication technologies. After the company failed in its
20

overseas investments, it decided that smaller investments in promising venture companies
would be a better option. Investment in stakes of U.S. ventures will also shorten DoCoMos own
development cycle, lower R&D costs, and widen its opportunities.

















21

6. DoCoMo in UK: Failure
In July 2000, DoCoMo bought 20% stake in Hutchison 3G UK Holdings Ltd. Although DoCoMos
technology was far superior to WAP, which European operators had been successfully
marketing to their customers, very few users signed up for i-mode. Mobile Internet services
were not as popular in Europe as they were in Asia and after studying the UK market, 3UK
decided against deploying i-mode. The local operators in Europe were also facing problems in
launching i-mode compatible technology in place of the standard WAP technology. In May
2004, DoCoMo announced that it had terminated its investment in Hutchison 3G UK holdings,
which operates 3UK. Some other reasons that contributed to the failure were the launching of
i-mode service during a recession, poor quality of i-mode enabled handsets, and the
opportunity for WAP to bounce back. Many consumers considered i-mode as an interim
technology that would soon be superseded by 3G. As John Tysoe, mobile-industry analyst at
WestLB Panmure in London pointed out, It will be tough to persuade people to get an i-mode
handset when so much has been said about 3G. Investors wanted DoCoMo to rethink its
overseas adventures.
In November 2004, DoCoMo signed an agreement with mm02plc under which the European
mobile operator will provide i-mode services to its 22 million customers in the UK, Germany,
and Ireland. O2 U.K and O2 Ireland will exclusively use i-mode brand and technology in their
markets. In Germany, O2 will launch services based on i-mode technology but under its own
brand.






22

7. DoCoMo Global Expansion: A good strategy?
It is questionable whether DoCoMo saw its business as a global business or rather a multi-local
business. DoCoMo focused on acquisitions to expand its business without truly analyzing the
synergy effect from these deals. According to nancial theory, mergers and acquisitions will
generate economic gain only if there is a synergy effect or if two rms are worth more together
than apart. An analyst from Dresdner Kleinwort Wasserstein, pointed out that there was no
additional gain for DoCoMo by acquiring stake in AT&T Wireless. However, some analysts also
say that DoCoMo was a latecomer in the U.S. market and partnerships with most carriers were
foreclosed to it. DoCoMo selected AT&T wireless largely because of AT&Ts national footprint
and because AT&T agreed to deploy i-mode and implement DoCoMos WCDMA standard by the
end of 2003. Furthermore, despite regulatory changes, economics of the mobile industry has
remained primarily national in nature and it is better to be a market leader in one country
rather than a follower in many countries. In general, a broader geographic scope and higher
subscribers than that of other companies is the true benet for the leader. Although DoCoMo
was the leader in Japan, this was not true for Europe or North America. To be successful in
international market by way of merger and acquisition synergies, DoCoMo should have been
more serious about gaining management control. Although it accumulated direct or indirect
shares in nine mobile operators during the telecom bubble period, it was the major player only
in KPN Mobile in Netherlands and Hutchison in HongKong, which were minority geographic
markets. The rest of the investments were not successful for being a market leader. AT&T
Wireless was the No. 3 player in the U.S., KG Telecom was No. 4 in Taiwan, and Hutchison was
No. 5 in U.K. Since DoCoMo was the minority shareholder, it had very little or no management
control. DoCoMo argued that the objective of global business expansion was to generate
royalties from its i-mode business model for mobile Internet services in joint ventures with
newly acquired partners and to increase the adoption of DoCoMos 3G mobile technology
standard. In Japan, DoCoMo was able to dominate the entire value chain by specifying
standards for handset manufacturers and regulating the content from content providers.


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8.1 TATA TELECOM SERVICES LIMITED
Despite being a late entrant, Tata Indicom, TTSL's CDMA brand, had already established its
presence and was the fastest-growing pan-India operator. Incorporated in 1996, Tata
Teleservices Limited was the pioneer of the CDMA 1x technology platform in India. In 2008-09,
Tata Teleservices Limited, along with Tata Teleservices (Maharashtra) Ltd, served over 37
million customers in more than 320,000 towns and villages across the country offering a wide
range of telephony services including Mobile Services, Wireless Desktop Phones, Public Booth
Telephony and Wire line Services.
8.2 TATA DOCOMO
Tata DoCoMo is Tata Teleservices Limited's (TTSL) telecom service on the GSM platform arising
out of the Tata Group's strategic alliance with Japanese telecom major NTT DOCOMO in
November 2008.
Tata Teleservices received a pan-India license to operate GSM telecom services, under the
brand Tata DoCoMo and was also allotted spectrum in 18 telecom Circles. The company rolled
out GSM services in 14 of Indias 22 telecom Circles in a quick span of under six months.
Currently, it has rolled out services in all the 18 Circles that it received spectrum in from the
Government of India-Tamil Nadu, Kerala, Orissa, Karnataka, Andhra Pradesh, Maharashtra,
Mumbai, Madhya Pradesh-Chhattisgarh, Haryana-Punjab, Kolkata, Rest of West Bengal,
Jharkhand, Bihar, UP (East), UP (West), Gujarat, Himachal Pradesh and Rajasthan.
Tata DoCoMo has also set up a 'Business and Technology Cooperation Committee, comprising
of senior personnel from both companies. The committee is responsible for identification of the
key areas where the two companies will work together. DOCOMO, the worlds leading mobile
operator will work closely with Tata Teleservices Limited management and provide know- how
on helping the company develop its GSM business.
On November 5, 2010, Tata DoCoMo became the first private sector telecom firm (third overall)
to launch 3G services in India, with a 20 city launch. The joint venture between Tata
Teleservices and Japanese telecom major NTT DoCoMo officially began rollouts with a plan to
invest $2 billion for its pan-India GSM services.
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The launch of the Tata DoCoMo brand marked a significant milestone in Indian telecom
landscape, as it redefined the very face of telecoms in India, being the first to pioneer the per-
second tariff option-part of its Pay for What You Use pricing paradigm.
Tata DOCOMO also became the first Indian private operator to launch 3G services in India, with
its recent launch in all the nine telecom Circles where it bagged the 3G license. In association
with its partner NTT DOCOMO, the Company finds itself suitably positioned to leverage this
first-mover advantage. With 3G, Tata DOCOMO stands to redefine the very face of telecoms in
India.
8.3 Entry Strategy
Country-wide TATA DOCOMO service rollout is set to be completed this year itself. Best
coverage was ensured in every state of India at the time of launch. It started its rollout from
Southern India and continued to other parts of India. The launch was supported with DIVE-IN
stores. The stores have a unique concept that offer a relaxing and interactive environment for
consumers and are aimed at inspiring and educating them on the benefits of mobility. These
stores are perfectly placed to execute aggressive sales promotion of the new brand and to
connect with customers.
TATA required technology expertise as Indian market is expanding and also with latest
technology infusion, they required expertise to keep pace with other players. DoCoMo also
injected $2.3 billion into Tata Teleservices. They were first to launch 3G services only because of
DoCoMos help DoCoMo has technology and is looking for partners from quite a long time to
enter India JV best option as Indian telecom laws are quite strict and also cap n FDI also a
problem And India still provides a big market. Looking to raise stake in JV from 26% to gain
more chances of earnings. Tata being a value oriented player works well with DoCoMos values.
8.4 Pricing
Indian Telecom space was Disrupted by Tata DoCoMo when they came out with a 1 paisa per
second tariff. Wikipedia defines disruptive innovation as an innovation that improves a product
or service in ways that the market does not expect, typically by being lower priced or designed
for a different set of consumers.
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We have earlier seen how Reliance India Mobile changed the mobile industry by coming up
with the lowest tariff in the beginning of this decade. The call charges were around Rs 2-3 per
minute and because of Reliance this was brought down to around Re 1 per minute.
Tata DoCoMo was the next one to employ disruptive innovation in the Indian mobile industry.
Currently the game is not played on the price front but Value added services front, which is
evident from the advertisements of Airtel (Madhavan and VidyaBalan) and Vodafone (Zoozoos)
in the past.
If Aircel is redefining how telecom operators approach value added services and GPRS in India,
TataDoCoMo is doing its bit to change billing practices.
TATA DOCOMO is the pioneer of PAY- FOR-WHAT-YOU -USE. A joint venture of Tata
Teleservices (TTSL) and Japans leading mobile operator NTT, DOCOMO took the right steps to
penetrate into the overly crowded Indian telecom market. The first step was of knowing their
target audience well and hence emerged plans like per second charging scheme for calls and
per character charging scheme for SMSs, with Rs 95 for unlimited GPRS. The innovative concept
was mixed with perfect marketing to win over other players.
8.5 Differentiation
It used tariff plans to differentiate itself from other major players like Vodafone, Airtel and Idea
in the GSM category. It has cheaper rates than any other CDMA service provider and the added
advantage is that unlike CDMA, a different handset is not required. Pulse rate of per second,
where all other services used one minute gave TATA DOCOMO the first mover advantage.
Also, services offered were customised as per subscribers. TATA DOCOMO has unveiled a
portfolio of Value-Added Services that has reinvented mobile telephony in India. It offers
products and services like diet SMS, Free VoiceMail, Timed SMS Service, Missed Call Alerts, Call-
me Tunes, etc. All of them are customized to liberate and refresh the subscribers.
8.6 Positioning
TATA DOCOMO has positioned itself as a value for money brand. The first move on this front
was to cut through the clutter and redefine the entire pricing paradigm. In the clutter of
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confusing service providers, TATA DOCOMO is positioned as the countrys most transparent,
innovative and liberating telecom brand.
Tata DoCoMo appears to be banking heavily on its tariff plans the company offers a 1 second
pulse instead of the usual 1 minute pulse that other telecom operators were offering. This
means that consumers are charged on a per second basis, instead of a per minute basis, and
end up saving money on unused seconds. A nifty little application How much can you really
save on DoCoMos website explains how this works. Rs. 0.01/second is a marked change from
the Re 1/min and Rs. 0.49 /min charges that usually apply. Now while this plan might sound
unique, it isnt that it hasnt been tried before: back in 2004, Tata Indicom had launched 1
second pulse plans, which going by their current plans, appears to have been shelved. At
present, Tata DoCoMo has launched voice portals, 24-hourmusic, cricket commentary and voice
chat, apart from offering free Missed Call Alerts and Voicemail. Interestingly, voice based
services are also being priced with a per-second-pulse: 24 hour music and voice chat are priced
at Rs.0.02/second. Caller Tune search service Genie is also being priced at Rs. 0.02/second.
This is a marked change, again, from the per minute pricing, and can offer consumers cheaper
options
8.7 Competition and Challenges
Other players in market have stolen the success formula of TATA DOCOMO. Vodafone, Airtel,
Loop, Aircel and others have introduced 1 sec pulse. But TATA DOCOMO still has the edge over
competitors.
As they are in the GROWING phase of product life cycle, their innovative rates planning is
keeping them ahead of the crowd. The customization provided in VAS is still a novel concept in
the market. But to sustain the lead they have acquired, they need to innovate continuously.
8.8 Marketing Strategy
Segments for TATA DOCOMO are not restricted to any particular age, sex or mood; it includes
all Indians who have the potential to use a mobile phone. Tata DoCoMo appears to be banking
heavily on its tariff plans, the company is offering a 1 second pulse instead of the usual 1
minute pulse that other telecom operators are offering. This means that consumers are
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charged on a per second basis, instead of a per minute basis, and end up saving money on
unused seconds. A nifty little application How much can you really save on DoCoMos website
explains how this works. Rs. 0.01/second is a marked change from the Re 1/min and Rs.
0.49/min charges that usually applies.
8.9 Marketing Mix: 4PS
Product
TATADOCOMO has good range of services. Tata DoCoMo provides both postpaid and prepaid
services. Tata DoCoMo has good quality network which provides clarity in voice.
Price
TATADOCOMO has 1paisa /sec it is applicable for both prepaid and postpaid. A fifty little
application How much can you really save on DoCoMos website explains how this works. Rs.
0.01/second is a marked change from the Re 1/min and Rs. 0.49/min charges that usually
applies.
Now while this plan might sound unique, it isnt that it hasnt been tried before back in 2004,
Tata Indicom had launched 1 second pulse plans, which going by their current plans, appears to
have been shelved.
The pay per second model has really paid off well for the latest entrant in the Indian GSM
space, Tata DoCoMo. The new pricing strategy from Tata DoCoMo has changed the rules of the
GSM game, which is dominated by AirTel and Vodafone. Mobile pricing innovation Tata
DoCoMo now charges per website for Mobile Browsing!
The new pay-per-website offering however, takes it to a complete different level and unheard
of pricing strategy. This is a very thoughtful strategy and something which has potential to
growth rapidly. Tata DoCoMo pricing strategy.
We have been quite impressed the way Tata DoCoMo have gone about their innovative pricing
models as well as marketing strategies.
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Per Character SMS Pricing: On 8th September 2009, the GSM branch of the Indian carrier
Tata introduced a novel pricing strategy for text messaging. Under the brand Diet-SMS, Tata-
DOCOMO bills its customers by-the-character, rather than on a per message basis.
It is a very attractive marketing scheme, since many wireless subscribers, almost by habit, tend
to pepper their text messages with abbreviations and acronyms.
Under the new plan, Tata-DoCoMo charges one paisa per character. For example, a text
which reads tnx (for thank-you) is charged at 3paise instead of the normal SMS charge.
Tata DoCoMo has gathered significant market share, owing to its pricing strategies. Existing
mobile operators are matching the price and the clear winners are the subscribers since all the
competition is sending the prices downhill.
Place
Good range of channels of distribution: As Tata already exists in this field of
telecommunications as Tata Indicom. It has wide range of channels of distribution to sell
TATADOCOMO services.
Promotion
Advertising: TATADOCOMO following different style of advertising pattern in TV and
newspapers. Due to that reason it was reaching public very fast. The company has carried out a
few adverts that highlight the brand's unique features and some other topical advertising
during Ganesh Chaturthi and Diwali. The latest from the GSM provider is the 'Friendship
Express' TVC. The ad opens inside train, where everyone is doing their own thing. A couple of
the travelers don't like the solemn mood and start humming the DoCoMo tune. Slowly and
steadily, others pitch in and soon most of the train is singing along. The ad ends with the super,
'Why walk alone when we can dance together'.
Cutting through the clutter that the Indian telecom landscape finds itself in with customers
forced to jostle with confusing and complicated products, services and tariff plans Tata
DOCOMO is Doing the New again, with the launch of its new brand campaign, aptly titled
Keep It Simple. Tata DOCOMOs unique Keep It Simple Campaign is in a form of a stand-up
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comedy show with many episodes, which aired during the course of this IPL season. It focuses
largely on how Tata DOCOMO simplifies the telecom experience, and hence the consumers
life, by providing differentiated products and services. Each individual advertisement starts by
illustrating a complexity in the category, and presents the Tata DOCOMO product and/or
service as a means of simplifying things. This campaign is simple, captures the various moods of
Ranbir depicting those of Tata DOCOMO.
DOCOMO has invested heavily into outdoor, print and television media. But the fact that they
are open to the idea of using social media marketing is in itself laudable. TATA DOCOMO has
understood the Indian fondness for E-MEDIA and has used social sites like Twitter and
Facebook. This demonstrates their social marketing approach.
The theme of marketing being used by the brand gives a trigger to forget the old ways and do
the new. The launch of DOCOMO was carried forward with the association of the brand with
the thought do. Such theme connects with everyone in diverse segments. Also the fact that
they achieved this feat without any celebrity endorsement is laudable. Recently, it has struck a
deal with Neo Cricket as season partners and is promoting itself heavily during the ongoing
India vs. Sri Lanka test series.
The print advertisements are customized as per the states. Different states with respective
culture, dances etc. are shown with TATA DOCOMO highlighted on the ads. The TATA DOCOMO
signature tone is being liked and recognized by the Indian public in general; especially the
advertisement with Friendship Express is gaining popularity. To complete the promotion
strategy the website for TATA DOCOMO has all the elements to engross the GEN-X. Currently
they have the Animator Ahoy contest to engross the visitors.




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9. Recommendations
Producer Network Alliance
While Tata DoCoMo currently provide its own mobile sets, an alliance with mobile handset
producers like Nokia (which has a 70 percent plus market share) and Samsung should help in
attracting a greater number of customers.
Products and Services
Given that the Indian market is fundamentally heterogeneous, DOCOMO will need to adapt its
services to cater to both urban and rural customers. This may be done by providing multi-
lingual interfaces and devices which cater to both markets.
Promotion
The company should consider better utilization of its presence on social media by allowing
marketers to interact with consumers, influencers. It can consider hiring celebrities as brand
ambassadors who can communicate to consumers on social networks. This aspect seems to be
neglected in their current promotion strategy.
Channels
The company should consider adopting a multi channel sales strategy to penetrate the market
quickly by offering cell phones online and through non-Tata owned consumer electronic outlets
for urban customers. In Rural markets deploying mobile sales vans and establishing local,
village-based networks to take advantage of personal relationships an account for the
influencers in any particular area.
Pricing
For the urban market which is more likely to spend on smartphones and utilize 3G enabled
services using the same, the company can consider offering service bundles or contracts
incentivizing the acquisition of phones as well as subscription to Tata DoCoMo services. In this
context, it can consider the system of contracts followed by telecom providers in the US.
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In rural or low income market it will have to increase volumes by offering family and friend
deals in services and if necessary will have to be prepared to lose money in selling low-end
instruments in exchange for service contracts. While the latter is contrary to current customer
behaviour its a needed shift if the goal is to own a strong subscriber base in the short-term and
grow ARPU in the long-term.

















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10. Conclusions
After analysis and interpretation of the data it can be concluded that Tata Docomo is
providing a broad range of schemes ranging from international calling to hello tunes. This is the
critical factor in attracting different types of customers and is resulting in a rapid increase in the
number of customers for Tata Docomo.
Tata Docomo has emerged as a giant killer due to their tariff plans and heading towards the
position of dominator. This is largely because tariff charges introduced by the Tata Docomo are
found to be cheaper than other services. However, Tata Docomo is providing some unique
features and services like pay per second, SMS per character, pay per site plans that are making
them being different from their competitors and giving them it an advantage.
At this stage, awareness of the Tata Docomo is spreading widely among people due to their
promotional activities. Buyers are now insisting for cheaper plans or threatening to opt out.
This surely bodes well for Tata Docomos prospects.
So far as NTT Docomo is concerned, a change in from the earlier Ethnocentric strategy for
Internationalization, to Regiocentric has brought about positive results as can be seen from
the failure of its early US and UK ventures and the success of its Indian venture.
.








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