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Shuichi Kako, Associate Senior Vp, Uq Communications

WIMAX Vision speaks to Shuichi Kako, associate senior VP at UQ Communications, about the operator’s plans for a nationwide mobile WIMAX network and how UQ intends to differentiate from ‘3.5G’ and wireline broadband plays in Japan.

WiMAX Vision (WV): You have been conducting mobile WiMAX service trials using dongles and PC cards since the end of February. What has been the customer feedback so far?

Shuichi Kako (SK): We’ve had a lot of positive feedback from pilot customers. In fact, we haven’t yet received any major negative comment so far.

WV: What downlink speeds are you offering UQ WiMAX trial users?

SK: It varies in different places as we are still rolling out the base stations. In some areas [in Tokyo] we are seeing more than 15Mbps on the downlink. On average, we are seeing between 3Mbps and 10Mbps in many areas. These are very good numbers.

WV: UQ is using Wave-2 Phase-2 mobile WIMAX base stations from Samsung. Are you looking at any other base station suppliers?

SK: We are rolling out Samsung base stations as a start-off point because Samsung has several IOT trials [with end-user device manufacturers]. We also don’t foresee any huge problems with the Samsung base stations because Samsung has some experience in the US [with Clearwire’s mobile WiMAX rollout], which they can draw upon. When we launch commercial service on 1 July, we will only have Samsung WIMAX base stations but we might use other suppliers’ base station later on.

WV: Why do you think there is a business case for mobile WiMAX in Japan, bearing in mind the ever-increasing presence of FTTH and the prevalence of ‘3.5G’?

SK: FTTH penetration of households in Japan is only around 30 percent. Our biggest competitor in the home is ADSL, so our target in the home is the ADSL user. We are not just targeting mobile users with WiMAX but fixed-lime users as well.

WV: How do your prices compare with ADSL providers?

SK: We can’t compete directly on price with ADSL because it is cheaper than our WIMAX offer. However, we can offer outside connectivity, which might help persuade customers to join UQ.

Note: An ADSL service in Japan typically costs between ¥3,500-5,000 per month. UQ is pricing its WiMAX service at a flat rate of ¥4,480 per month with a separate sign-up fee of ¥2,835.

WV: How will you persuade mobile users to sign up to UQ?

SK: We have to have a big advertising campaign over TV and live events. We need to explain what WiMAX is and why there is an advantage compared with 3G. We will start our marketing push around the June 2009 timeframe, with Intel and perhaps some others at a special event. We will also launch TV commercials at that time. One of the big advantages of WIMAX is it will be embedded onto several mobile PCs including the popular and cheaper netbook devices. Also, WiMAX will be less expensive than 3G and have a much better performance.

WV: KDDI, the biggest single investor in UQ, is of course an established mobile operator in Japan. Are there any conflicts of interest between UQ and KDDI?

SK: The UQ and KDDI business cases are totally different. KDDI is not a big competitor to UQ because UQ is focusing on mobile data communication where KDDI focuses more on voice. Existing 3G carriers are suffering from lack of backbone capacity for increasing data traffic, and they might utilise UQ WiMAX to add a high-speed alternative to their existing service.

WV: Offering MVNO facilities are a mandatory requirement of UQ’s nationwide 2.5GHz licence. How will you price it?

SK: It depends on network configuration between UQ and MVNO. However, the MVNOs are allowed to set their own retail prices.

WV: How many MVNO customers do you envisage?

SK: It’s difficult to say but at the moment we are in discussion with over 50 potential MVNO customers. But from this number, we don’t know how many will actually become MVNOs but I suspect most of them will.

WV: How has the economic downturn affected UQ?

SK: I don’t think there is a downside for UQ. Maybe the economic downturn can even help us because we are offering something that is less expensive but with a much higher performance.

WV: UQ has raised ¥17bn (around $170m) in investment so far. How much more capital does UQ need going forward?

SK: We will have another financing round. The initial capital investment was fairly small so it’s something we have to do.

WV: Is LTE becoming more of a threat to WiMAX in general and UQ in particular? KDDI, for example, is said to be looking seriously at LTE deployment in Japan.

SK: There are several high hurdles for LTE to overcome. One is that any LTE operators haven’t got enough spectrum to offer LTE. The second issue is money. If a 3G operator goes to LTE, it will still have to run parallel operations for many, many years to come. Meanwhile, we expect mobile WiMAX (802.16e) to upgrade to 802.16m in 2010 or 2011, which will offer better performance and cost efficiencies [than 16e]. It is only at that time we will see LTE. I don’t think it will be this year because LTE doesn’t have enough spectrum. In 2011, digital TV will fully replace analogue TV in Japan, which might release 5MHz or 10MHz spectrum to each carrier. But until that time, I don’t think LTE has enough spectrum.

WV: How does UQ strategy differ from other major mobile WiMAX deployments in the US and Korea?

SK: We are the only company that has a nationwide approach. We will have more than 90 percent population coverage by 2012 but we will remain focused on data services, though, not voice. Our MVNOs will, however, be able to offer VoIP.

WV: What are the main challenges facing the WiMAX community?

SK: To expand the WiMAX market we need to find another opportunity beyond PCs. For example, in-car navigation looks promising. There are major car manufacturing companies based in Japan, as well as CE device manufacturers. We are also working closely with them, as well as Intel, to develop these and other opportunities.

WV: When do you expect WiMAX-embedded devices to come into the Japanese market?

SK: Within a year.

Dont miss UQ’s Keynote presentation at WiMAX Asia Congress next week! Visit www.wimax-vision.com/asia to download the brochure..