The GSM Association, a global trade organization representing GSM operators, would like mobile phones and wireless service to be both functional and easily accessible everywhere on the globe.

 

The organization’s Emerging Markets Handset program is helping to achieve that goal. According to new research from ABI, the initiative has made possible the sale of 12 million Ultra Low Cost Handsets (ULCH) to mobile operators in Bangledesh, China, India, and Russia.

 

There’s a problem, though. Cheap as they are ($30 per), the handsets still aren’t affordable for users in the markets they’re targeted at.

 

“The annual gross per capita income in sub-Saharan Africa is just US$371,” ABI points out in a press release about the GSM Association’s efforts. “It is unrealistic to expect people there to spend 10 percent of their annual income on a mobile phone.”

 

ABI says that semiconductor vendors—including Texas Instruments, Freescale, Philips, and Infineon—are reducing “the Bill-of-Materials for ULCH even further, heading towards $20 and $15 in the next few years.”

In the press release, Alan Varghese, an analyst at ABI, commented on the reduction in handset prices: “We may see trends similar to those for the conventional handset in the developed world. In the early years, it was purchased primarily to transact business; it was only when prices had dropped that handsets penetrated the mass market."

But, there’s another way to make wireless service more widely available. “In South Africa, software vendor Sharedphone enables the use of the ULCH as a mobile payphone,” ABI reports.

 

Ah yes, remember pay phones?

 

In the press release, ABI described how a ULCH phone would be turned into a pay-per-use service: “Local entrepreneurs buy this phone and sell airtime at the roadside. For such a ‘service provider,’ the $30 price is not prohibitive; it is far cheaper than setting up a conventional payphone.”

In the cell-phone-as-payphone scenario, per-minute charges would be high, so users would probably place short, businesslike calls, ABI added.

 

Varghese pointed out that, if this idea takes off, it would have an impact on handset vendors like Nokia, Motorola, Sony-Ericsson, Samsung, and LG Electronics.

 

He advised such vendors to “think about how they can further enable varied uses such as the ‘mobile payphone.’ They could add value, for example, with software to manage the whole transaction: making the call, presenting the consumer with a summary of call-times and charges, and keeping track of repeat customers in order to offer discounts."