Wireless Gate Japan is run by Ikeada, a former NTT DoCoMo wireless engineer who envisaged exploding data usage and established the company in 2004. Wireless Gate (WG) employs only 11 staff but sees this as plenty, despite 30% annual subscriber growth. Wireless Gate has 380,000 customers and remains confident growth will remain sustainable as consumer data needs, much like memory, tend to remain sticky to the downside.
Spectrum and Infrastructure of Wireless Gate [WG]
WG leases lines from carriers and resells to its own customers. The contracts with the carriers are billed on a ‘usage’ basis. WG sees no benefit being in the infrastructure game as it is hard to get a decent return on the capex.
WG has a 35% share of Japan’s public wireless LAN [in establishments such as McDonalds, Starbucks and public infrastructure like train stations and airports] subscription service. WG sees that data usage is doubling annually and the need for more bandwidth is rising with smartphone penetration. 260,000 customers are on the WiFi plan with 120,000 using WiMAX. Sales and profits are mostly driven by the WiMAX services. Gross margins are around 35% in aggregate
WG is well positioned to benefit from the growth in smart phones and tablets as it drives much higher demand for bandwidth. WG believes that consumers’ data usage trends will continue to grow with increasing levels of video content and use of social networking and file sharing. WG believes that its prices will remain firm as the penetration rates remain relatively low.