lifestyle | technology

Cheap Phones for Third World
Coverage is growing in developing countries, but phones are still too expensive.
July 5, 2005

With growing wireless phone coverage, even in the poorest parts of the globe, cell phone manufacturers want to lower the cost of their devices to encourage stronger demand in developing countries.

The GSM Association (GSMA) announced on Monday that it is pushing down the target cost for mobile phones to below $30.

“The next phase of our initiative aims to drive even greater affordability, through sustainable products, at even lower cost than the first phase of the program,” said Craig Ehrlich, chairman of the GSM Association. “At the right entry level we believe there is the potential for over 100 million new connections per year.”

As the United States and European markets for cell phones become increasingly saturated, cell phone makers have to look to the needs of the other 5 billion people on the planet, most of whom cannot afford cell phones with cameras and digital music players.

While more than 80 percent of the world’s population has mobile phone coverage, today’s 1.3 billion GSM users represent only 25 percent of the potential, according to the GSMA.

This is the second phase of the GSMA effort to push down the price of mobile phones. Back in April, Motorola won the race to produce a sub-$40 phone. The company is prepared to sell 6 million phones immediately to carriers in poor countries, with the potential to reach 100 million per year in shipments.

The second phase will be open to cell phone manufacturers worldwide. Once phone makers are selected for the initiative—a process that should be completed in the fall—GSMA expects the ultra-low-cost phones to hit the market in the first quarter of 2006.

The group hopes to have 6 million phones sold under the program within the first six months.

“The triumph of the first ultra-low-cost handset supply tender… has proved that we are beginning to remove the barriers of ownership for the people who will arguably get the most benefit from mobile communications,” said Rob Conway, chief executive of the GSMA.

“The price of the handset is only one hurdle,” he added. “We are also pushing hard for further positive changes that can be effected by governments, such as more flexible regulatory decisions and a more favorable approach to taxation.”