Low-Cost Mobile Phones Planned For One Billion Users

The ultra-low-cost mobile handset market beckoned to handset manufacturers and service providers at last week's 3GSM World Congress as the GSM Association (GSMA) boasted that the manufacturers were on their way to developing a sub-$30 handset.

But inexpensive cell phones need cell phone services to operate on and growing attention was focused on the 450MHz spectrum as a logical vehicle to deliver service for as low as $5 a month.

"By directly addressing the cost of handset ownership," said GSMA chairman Craig Ehrlich in a statement, "we believe that we can unlock the new 'ultra-low-cost market segment." The GSMA predicts the low end segment can add more than 100 million new mobile connections a year and market research firms often calculate the segment at one billion potential new subscribers.

The GSMA announced that Motorola has been chosen as GSMA's first producer of the lowest cost devices via its C114 platform. Texas Instruments has been promoting its LoCosto chips, which some of its executives predicted could lead to $20 handsets. Even smart phones are dropping in price: Microsoft's CEO Steve Ballmer told the Reuters news agency last week that he expects to see smart phones on the market in a year or two for as low as $100. While those prices may be out of reach of the world's poorer regions, their dropping price tag nevertheless illustrates the inexorable march downward in mobile handset costs.

Nokia, the world's largest manufacturer of mobile handsets, has recently begun to target the long-dormant 450 MHz frequency for use in what it calls "price-sensitive markets."Joe Nordgaard, managing director of mobile wireless consultancy Spectral Advantage, said in an interview Monday that the 450 MHz band is finally getting its day in the sun after years of neglect, ironically, by the GSM providers who now are embracing the technology."All things being equal (for example, the same technology, same power, etc.) 450 MHz has a 20 to 1 advantage over systems deployed at (higher existing bands,)" he said. "For wide-area coverage and green field deployments, lower frequency deployments have a compelling advantage over much more expensive high frequency deployments."

Nordgaard, who is a longtime supporter and developer of cdma450 MHz, points out that CDMA, which was pioneered by Qualcomm, is in use in more than 30 countries, often in rural and emerging territories where lower frequencies propagate better. (Qualcomm, too, has targeted low-cost handset markets with its Value Platform Mobile Station Modem MSM6245 solution for the GSM WCDMA market.)

Nordgaard said that Qualcomm's upcoming EV-DO Rev A upgrade for cdma450 MHz will introduce VoIP and packet-based push-to-talk services with very low latencies. While the timetable for advanced 450 MHz services for both GSM and CDMA hasn't been precisely promulgated, the offerings will result in lower-cost advanced services in rural regions.

The GSMA notes that it is working with operators and vendors to bring low-cost cell phone service to consumers and regions currently not well served.

The GSMA policy has been echoed by Nokia. In supporting the use of GSM450 frequency recently, Nokia said it "envisions a mobile landscape where operators can profitably offer mobile services to a broader range of consumers for as little as $5 a month."According to published reports, Rich Templeton, president and CEO of TI, said at last week's GSM meeting: "The next billion new customers will come from emerging markets such as India, China, Russia, and Brazil."