Japan’s dominant carrier DoCoMo (NYSE: DCM) is betting that mobile phone services and better network infrastructure and speed will help it stay ahead of its rivals in the country’s hyper-competitive market. After years of luring subscribers with deep subsidies on handsets, DoCoMo sees no more room for growth with this strategy. Instead, the company announced after its earnings report Friday, that they planned on launching faster networks and services including mobile video and location based services to increase how much existing subscribers use their phones to bump up ARPU rates. In September, the company announced a $66 million JV with the country’s largest music and movie entertainment company Avex Entertainment (AEI) to produce and distribute on-demand mobile video content.

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DoCoMo, the country’s incumbent carrier, has a 51.5 percent, compared to KDDI’s 29 percent share, and Softbank’s 19.5 percent. But its smaller competitors, and especially Softbank, have steadily chipped away at its market share. In the last quarter, Softbank added 521,400 subscribers, compared to DoCoMo’s 310,000. In November 2007, DoCoMo embarked on a new plan to drop handset subsidies in favor of lower monthly tariffs. The new strategy has been a success for the carrier, helping boost revenue, and reducing churn (Release).