Irvine Cellular Company Finds Niche in Japan : Telecommunications: TravelPhone rents mobile phones to Japanese flying to the States on business.

A start-up company usually develops a domestic market before taking a risky plunge abroad.

But an Irvine firm that had been unable to rent cellular phones to business travelers in the United States decided to try the same strategy in the tough Japanese market, and the plan is paying off.

TravelPhone rents portable phones to Japanese traveling to the United States on business. The phones provide a consistent number that allows an executive’s home office to reach him no matter what city he’s in.

The traveler picks up the phone at Narita Airport outside Tokyo on the way to his plane, and drops it off when he returns. He is billed for the service later.

Market research showed TravelPhone that airport phone rentals might attract more customers in Japan--because cellular service makes international telephoning easier--than in the United States.

In addition, the Japanese cellular market is still evolving--so niche opportunities are available. And TravelPhone was able to find a respected intermediary to arrange a formal introduction to a Japanese business partner.

Vice President Gary Keswick said TravelPhone opened a counter at Los Angeles International Airport 2 1/2 years ago with the idea of catering to Americans traveling on business in this country. Perhaps because phone credit cards make it easy for American travelers to keep in touch with their home offices, “it turned out that very few people came by and rented phones,” he said.

So the company shifted its focus, providing cellular phones to producers of special events such as ESPN sports broadcasts. Portables are the best way to communicate during the fast-moving events, said Keswick, who added that that business has been growing nicely.

But Keswick and TravelPhone President Russ Werdin Jr. couldn’t let go of the notion of renting phones to business travelers.

Then, 18 months ago, the company got a call from an investor with ties to Japan. Mike Langley, a South African who had just retired as a Japan Air Lines pilot, was responding to a newspaper ad in which TravelPhone sought additional capital.

Talking to Langley gave Werdin the idea that airport phone rentals might work in Japan, where on any given day thousands of business people fly to the United States.

Before making a commitment, however, the company did market research to make sure the numbers backed up its hunch.

“Three million people fly from Narita in first class or business class every year,” Keswick said he learned. “We figured that only one-quarter of 1% of this could amount to a substantial business for us.”

Another good sign was the fact that Japanese business people often visit several U.S. cities on the same trip. That means that they spend a lot of time in transit and thus are not reachable at a single phone number--a perfect scenario for cellular phones. The next step was finding a Japanese partner--an effort where Langley proved invaluable.

The former pilot asked his friend Larry Clarke, vice president of the Los Angeles-based Japan Air Lines tour subsidiary PCS, for a business introduction. In Japan, such introductions are made with care, because if the new relationship sours, the person who made the introduction loses face. Clarke’s boss, PCS President Yohei Yamashita, introduced TravelPhone to Air Baggage Co., another JAL subsidiary that handles luggage at airports throughout Japan.

The introduction put TravelPhone on such solid ground during the negotiations that it was able to work out a licensing deal with Air Baggage instead of a less-lucrative joint venture.

Under the arrangement, TravelPhone employees in Irvine decide which of several phones to rent to a customer--based on his itinerary--and Air Baggage makes the actual rental. If a traveler plans to visit American cities that are close to each other, he receives a phone programmed with perhaps one number. If he decides to visit several far-flung cities, he gets a phone with two or three numbers programmed in, one for each region.

Privately owned TravelPhone declines to reveal its sales or profit figures, but Keswick said its Japan business is double what it was when the company launched it eight months ago.

One reason that an upstart American firm such as TravelPhone could grab a piece of the cellular action in Japan is that the industry there is still evolving, experts say.

Brian Ponte, a market programming manager for Motorola’s Cellular Subscriber group in Arlington Heights, Ill., said it wasn’t until 1989 that Japan’s cellular market “really started to take off.”

Still, only eight in 1,000 Japanese were cellular phone subscribers in 1990, versus 23 of 1,000 Americans, he said. That suggests a lot of room for growth, especially in niches, experts say.