BEIJING, Mar. 16 -- Japanese mobile-phone shipments rose for the first time in more than a year as customers replaced older handsets with models that offer high-speed Internet connection, video conferencing and other functions, a report shows.

    Shipments rose 5.8 per cent from a year earlier to 3.1 million units in January, snapping 12 straight months of declines, the Japan Electronics & Information Technology Industries Association said yesterday in a statement.

    The gain marks a "turning point" as demand will now come mainly from users buying phones to upgrade to high-speed, or third-generation, services, the report said.

    NTT DoCoMo Inc and KDDI Corp, Japan's top two mobile-phone operators, are trying to shift users to third-generation services by offering cheaper handsets.

    The models will probably account for 70 to 80 per cent of all shipments by the second half of 2005, according to an IDC Japan report released March 1.

    "Sales of third-generation handsets by DoCoMo and KDDI contributed to the January rise," said Kazuyo Katsuma, a telecommunications analyst at JPMorgan Securities Asia Pte in Tokyo. "But it's not a sign of an upward trend as last January was particularly weak for sales of DoCoMo 3G handsets."

    Katsuma last month cut her rating on DoCoMo, whose shares fell more than a fifth in 2004, to "neutral" from "overweight." She rates KDDI, which fell 10 per cent last year, as "underweight."

    DoCoMo said last month it will start selling cheaper third-generation handsets to catch up with KDDI in the high-speed market. KDDI had 17.4 million users for its third-generation service, as of February, compared with DoCoMo's 10.2 million subscribers.

    (Source: China Daily/Daisuke Takato and Pavel Alpeyev)