A week in tech, October 10-16

A roundup of all the latest tech news.

ò Yahoo Japan said it is looking to the sales of digital content, such as music and games as a bigger contributor than advertising to its cell phone service. Observers point to this business model as different from that of YahooÆs main PC-based service, which earns most of its sales from advertising. Internet giants including Yahoo and Google are rolling out new services for mobile phones in Japan. Earlier, Google started a Japanese-language news service for mobile phones this week, ahead of other markets. According to the Digital Content Association of Japan, its market for digital content posted a 12 percent rise to 2.5 trillion yen ($21.2 billion) in 2005 from a year earlier, with about 15 percent coming from mobile phones. In six months, pageviews for Yahoo Japan's mobile services went up by 7.7 percent to 1.5 billion ($12.5 million) in September, outpacing the combined 0.5 percent gain for its PC and mobile sites. Yahoo Japan is working with Softbank Corp. to expand its mobile service.

ò Oki Electric Industry announced the unveiling of two new internet protocol telephony systems to be offered in Japan and abroad, beginning with China in December. The company said it aims to sell 100,000 units of the new telephone systems IPstage MX and IPstage SX in Japan and overseas within three years. Oki Electric said the telephone systems are best suited for offices with less than 100 employees. The IPstage MX targets offices with 100 extensions or less, while the IPstage SX targets those with 30 or less.

ò NTT DoCoMo Inc. announced the unveiling of 14 new 3G-cell phones ahead of the introduction later this month of mobile number portability in the country. Mobile number portability will debut October 24. Under the system, users will be allowed to keep the same mobile phone numbers even after switching from one operator to another. Of the 14 new phones, DoCoMo said 11 are in its 903i series and can have improved music-downloading and game services. KDDI, the country's No. 2 mobile phone carrier known for its au brand, said in August it would debut 12 new models for the fall and winter. Softbank Corp. said last month it would market 15 new mobile phone models by the end of this year.

ò Google Inc. announced that it has started offering a free Japanese-language news service for mobile phone handsets. The internet firm will collect news articles on sites of newspapers and broadcasters then categorize them into politics, the economy and other news areas, and by clicking their headlines, handset owners can read those articles. GoogleÆs launch is expected to spur free distribution of information to mobile phones.

ò Mobile payment solution company Danal announced that it would enter the online game market. A company official explained the move as aiming at enhancing their online music service business. Last month the company signed an agreement with an online game developer. The game, titled ôOn-Air Onlineö, is an online dance game developed by G&P Entertainment and will be serviced on DanalÆs music streaming site, Ohdio.com.

ò NEC Electronics announced its shipment of a chip compatible with both Blu-ray and HD DVD formats in next-generation DVDs, a move that is seen as bridging a format problem that has divided the electronics industry. NEC said that the chips go on sale for 10,000 yen ($84), roughly the same price as NEC Electronics' chips which read only Blu-ray or only HD DVD formats. Observers note that if other hybrid technology is developed, the new chip could bring down costs to build dual-format players, helping consumers and the movie industry sidestep the rivalry between the two opposing camps. NEC Electronics is targeting monthly shipments of 300,000 during the business year starting April 2007.

ò KDDI announced its move to purchase the optical fiber operations of Tokyo Electric Power (Tepco) in a deal that could be worth about $960 million. The two firms said the move is aimed at increasing their competitiveness against telecom market leader and former state monopoly Nippon Telegraph and Telephone Corp. Under the deal, Tepco, the world's largest private power provider, will separate its optical fibre business in January and transfer it to KDDI. In return, KDDI will give 144,569 shares of its stock to Tepco.

ò Softbank CorpÆs founder reportedly pledged a record amount of collateral to refinance $10.7 billion of debt used in the acquisition of Vodafone K.K. Media sources said that Softbank has offered all of the assets, income and shares of Vodafone K.K. as security for $12 billion bonds and loans it plans to sell next month. Softbank acquired Vodafone Group Plc's Japanese business for $15 billion. The deal gives the company some 15 million mobile-phone users in the world's second-largest economy. SoftbankÆs founder Son, whose net worth is $7 billion, according to Forbes Asia, agreed to provide more security because Softbank needs the money to repay 1.2 trillion yen ($10.7 billion) in short-term financing. Vodafone K.K. originally paid interest on the loan of 250 basis points more than a lending benchmark, the Tokyo inter-bank rate. That premium rose to 300 basis points when Softbank was unable to arrange new financing by the end of September. Citigroup, Deutsche Bank and Mizuho Financial Group arranged the initial loan with four more banks and are organising the refinancing, helped by 15 more firms including WestLB AG, Calyon and Royal Bank of Scotland Group. No other details of the deal were disclosed. Analysts are saying that Softbank's deal may be imitated by companies seeking acquisitions in Japan, noting that already there are as many as 10 Japanese companies considering similar deals.

ò LG Powercomm expects its broadband subscribers to surpass the 1 million mark this week. The company ascribes this figure to LG GroupÆs marketing campaign, with a consistent monthly new subscriber acquisition trend of 70,000-80,000 subscribers. LG Powercomm said it is currently preparing for a subscription target of 2 million by the end of next year. The company also stated that if this yearÆs competition was based on speed, next yearÆs competition will be among various convergence services such as TV portal and VoIP, areas they will co-operate with its parent company LG Dacom. In a separate development, LG Telecom said it will no longer be providing adult video, photo and gambling services on its network. All three carriers no longer provide adult mobile services as a measure to protect minors from accessing harmful mobile content.

ò LG Dacom said it is now preparing to build an IPTV system including real-time streaming broadcasting capabilities, marking the second move toward IPTV service in the industry. Considered the largest system integration order for 2006, the new project is estimated to be worth more than 20 billion won ($20.8 million). Earlier last month, the company sent out requests for proposals, with four consortiums led by LG CNS, LS Cable, Ontime Tech and Pos Data expressing their readiness to bid for the project. LG Dacom said it plans to select a preferred candidate next month, but has not decided when to set up a system and provide test services before commercial service begins August next year. With industry analysts saying the deal is leading to more business opportunities in the IPTV area, system providers are keen to win the order this time. Among the bidders, Ontime Tech is the only vendor with IPTV system experience. The company built an IPTV service system for Tele2 of the Netherlands last year. Other bidders like LG CNS and Pos Data have won a variety of SI projects in the broadcasting market, with LS Cable having invested heavily in the SI business since last year.

ò In a move to boost its newest wireless network, KT Freetel, South Korea's second-largest mobile phone operator, said it plans to spend about 400 billion won ($416 million) next year expanding its newest wireless network. The company said it would install equipment used to provide nationwide coverage based on so-called high-speed downlink packet access technology. In a separate development, KT Freetel Co. said it would buy back and cancel 5.5 million of its own shares. In a regulatory filing, the company said it plans to buy the shares from October 16 until January 15. The company expects to spend about 153 billion won ($159 million) on the buyback.

ò LG Electronics announced that its Chocolate phone was chosen as the Best Fashion Phone in the UK, the largest European cell phone market. The Korean electronics maker said its Chocolate phone was given the prize at the Mobile Choice Consumer Awards 2006 organized by phone magazine Mobile Choice, beating Nokia, Motorola, Samsung Electronics and Sony Ericsson. The magazine said the no-frills phone, "boasts a glossy, jet-black finish with a low-key silver trim that gives the phone a very sleek minimalist finish." The award is given every October and selects the best mobile phone products released during year in categories including Phone of the Year, Best Smartphone, Best Music Phone and Best Camera Phone.

ò LG Telecom announced plans to apply for the approval of EVDO rA (EVolution Data Only revision A) service this month deciding to introduce synchronous 3G mobile communication service using the 2G PCS frequency broadband. According to the industry and authorities, LG Telecom is applying for an approval for facility implementation to the Ministry of Information and Communication this month aiming at a trial service at the end of the year. LG Telecom plans to build an EVDO network in some parts of Seoul at the end of the year after approval and upgrade of the network to rA version for commercialization. EVDO rA is gaining attention as an equivalent service to HSDPA called 3.5G service since it is able to send data at the speed of 3.1Mbps. The service has been commercialized by KDDI in Japan.

ò Google announced the signing of a deal with South Korea's government to set up a research and development (R&D) centre in the country. The report said that the R&D centre will conduct research on such key technologies as Internet search, automatic translation, and data and video image processing, with Google adding that the facility will be on par with similar operations in the United States, Britain, Japan and China. The agreement was signed in the country by Google, South KoreaÆs Ministry of Commerce, Industry and Energy and the Korea Trade-Investment Promotion Agency 9 IRG Technology, Media and Telecommunications and Life Sciences Weekly Market Review Week of 8 Octoberû 14 October 2006 (KOTRA). Google also called for government support and assistance for the center that can include a direct injection of funds. The country has already attracted 13 R&D centres from such companies as Texas Instruments, Advanced Micro Devices, Battelle Memorial Institute and Kimberly-Clark Corp, with the companies promising investment valued at some 58 billion won ($60.3 million). Google's South Korean R&D center also marks the latest addition to a growing number of global engineering offices, which include the United Kingdom, Israel, Norway, Japan, Switzerland, India, Russia and the Americas. Google officials also indicated that it would consider direct partnerships with South Korean IT companies although no detailed plans have been released by the company.

ò Focus Wireless, a subsidiary of Focus Media (FMCN), announced its agreement with Huicong, an e-commerce web site to jointly build the first mobile phone B2B platform in China. Huicong is the one of the largest B2B service providers in the country and provides outsourcing, sales and promotion services for more than 2.8 million companies each year. Huicong sees the partnership with Focus Wireless as a new way of testing an e-commerce web site with wireless Internet.

ò Sources from China's Ministry of Information Industry have told the local media that rules related to the mobile phone real name system are expected to be released this year. The new rules will include the Communications SMS Management Measure jointly made by the Ministry of Public Security, Ministry of Information Industry and State Council Information Office. Observers note that the new rules have already caused some problems even before they were implemented. The concern involves the fear that mobile phones will aid criminals and that the real name system will pose a threat to consumer privacy.

ò CA Mobile, Dentsu, and Cyber Communications announced an agreement to co-establish a mobile ad agency in China in December 2006. To be capitalised at about $862,000, the joint venture will be co-owned at 66.6 percent with Dentsu getting 16.7 percent. Industry analysts see the joint venture as a way for the three firms to leverage their Internet expertise and mobile advertising, as well as being able to offer Chinese companies mobile advertising services.

ò The WiMedia Alliance announced the official opening of a chapter in China with the aim of facilitating its work with Chinese regulators in allowing ultra-wideband in their country. The China Chapter of the group said it would work on promoting ultra-wideband (UWB) to manufacturers
and consumers within China and establish working relationships with key Chinese regulatory officials who oversee technological development within radio and broadband platforms. According to the group, future initiatives of the WiMedia China Chapter will involve working with Chinese and international standards bodies for technology standardization and to ensure consumers receive a high degree of interoperability with their UWB devices.

ò Microsoft announced its entering into an agreement by way of a memorandum of understanding with Suzhou Software Park for a Software as a Service incubator program to attract more Chinese software companies to develop software based on SaaS, a model of software delivery where the software company provides maintenance, daily technical operation, and support for the software provided to their client. In previous developments, Microsoft launched many other incubation programs in China including projects for its Xbox platform in Chengdu and Shanghai. The current alliance with Suzhou Software Park is part of the "Potential Development Plan" jointly initiated by Microsoft China and National Development and Reform Commission back in 2005.

ò Changhong, a color TV manufacturer, and IRICO Group Electronic Company Limited, the first CPT manufacturer in China, announced the signing of an agreement to increase investment in their plasma display panel business from 2 million yuan ($253,000) to 1.8 billion yuan ($227.8 million). Earlier this March, the two companies set up a joint venture called Beijing Shiji Shuanghong Display Company with each side holding half of the stake of the company. Under the new agreement, Changhong will hold 80 percent of the company's stake with 1.4 billion yuan ($177.1 million) and IRICO Group holding the remaining 20 percent with 360 million yuan ($45.5 million).

ò Asia Netcom, a submarine cable operator, said it expects to sell shares in an IPO in London or Hong Kong within 18 to 24 months amid rising investor interest in telecommunications shares. The company revealed its share sale plan even as it disclosed its network expansion programme valued at some $60 million to $200 million. Asia Netcom has not turned in a profit in recent years due to excess bandwidth capacity in the region dating back to the telecommunications boom of the 1990s. Asia Netcom's major markets include Hong Kong, the United States and Japan. China accounts for less than 10 percent of group revenue.

ò Industry sources said China Telecommunications Corp, the parent of Hong Kong-listed China Telecom, is filing an application to the stock exchange in a bid to spin off its telecommunications engineering and technical service arm. The unit, China Communications Services Corp, is expected to launch the initial public offering next month. The company is seeking about HK$2 billion ($256.7 million) by selling new H shares. Goldman Sachs and China International Capital Corp are the joint sponsors for the deal. The telecommunications group owns 91.5 percent of China Communications, while subsidiaries Guangdong Telecom Industry Group and Zhejiang Telecom Industry Group hold 6.2 percent and 2.3 percent respectively. China Communications will include the telecommunications engineering and services businesses in Shanghai and provinces including Guangdong, Fujian, Hainan, Hubei and Zhejiang.

ò HSBC announced that it has opened an internet-only bank in Taiwan, a service that offers higher interest rates on deposits, hoping to lure new customers to the no-branch model. Without the overhead necessary for traditional branch banking, HSBC is able to offer Taiwanese customers interest rates on deposit accounts three times greater that average banks in the country. HSBC is currently offering 1.5 percent interest on deposit accounts. The internet-only bank has no minimum deposits and 24-hour call centers as well. Since the bank opened last month, 80 percent of the customers opening accounts are new to HSBC. About half of all customers are between the ages of 25 and 35, but they only account for 30 percent of the deposits. Roughly 13 percent of the accounts belong to customers over the age of 45, and they account for more than half of the deposits. HSBC expects competition of Internet-only banks to pick up in the near future, as other banks such as Citigroup and ING Direct have already opened online branches in other markets.

ò Chunghwa Telecom (CHT) announced an investment of NT$20.1 million ($0.6 million) to acquire a 30 percent stake in Spring House Entertainment, a local Taiwan provider of broadband video/audio digital content. Spring House indicated plans to develop 3G digital content over the next two years and tap markets in Hong Kong, Singapore and China. Before founding Spring House in February 2000, the company's executive team had established what it claimed was the world's first Chinese-language animation web site in September 1999. Earlier this year, the company began partnering with CHT to offer animation services on CHT's web portal (emome), providing various mobile value-added services for 3G users. In related news, CHT is considering an investment in Qware Systems, the BOT (build-operate-transfer) provider of the Taipei citywide WLAN service (WiFly). In addition to CHT, Far EasTone Telecommunications and Taiwan Mobile are Qware's target partners.

Hong Kong

ò New World Mobile Holdings, the mobile-telephone services unit of New World Development, announced that it is profitable once more after the company sold its telecommunications assets to a venture with Australia's dominant telephone group Telstra Corp. The company announced net profit of HK$911.6 million ($117 million) for the year to June, reversing a net loss of HK$10.4 million ($1.3 million) the previous year. The firm attributed its profit as getting its boost from the gain of HK$1 billion ($128.3 million) for the sale of its local mobile-phone operating unit New World PCS Holdings to Telstra in exchange for a 23.6 percent stake in a new joint venture with the Australian giant, CSL New World Mobility.

ò The Hong Kong Special Administrative Region (HKSAR) disclosed that it is set to introduce legislation in the 2006-07 legislative years to effect the establishment of a new communications authority. An official said that consultations were conducted with the public early this year regarding the reform of the regulatory regime and the proposed merging of the functions of the Office of the Telecommunications Authority and the Broadcasting Authority. The report noted the fact that the application of new wireless communication technologies has also spread rapidly and widely, adding that the SAR government will carry out public consultations by the end of 2006 on the policy of radio spectrum management.

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