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2/21/2006
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Low-Cost Mobile Phones Planned For One Billion Users

It's not just the handsets themselves, but also inexpensive services that suppliers are scrambling to deliver.

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.

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