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Last Updated: Monday, 14 February, 2005, 12:06 GMT
Mobile firms plan cheap handset
A Sudanese phone business
Even landlines are hard to come by in many countries
An alliance of mobile phone firms has launched an ultra-cheap handset in the hope of connecting millions more customers in developing countries.

Motorola is to make the first device at a wholesale price below $40 (21), and aims to sell 6 million in six months.

The initiative comes from the GSM Association, 18 of whose member operators are behind the plan.

Developed markets are near saturation, while handsets remain too expensive for most customers in poorer nations.

The new phones are being launched at the 3GSM trade show in Cannes, France.

Out of reach

The GSM Association groups operators who run mobile phone networks using the GSM standard.

Their subscribers comprise two-thirds of the world's 1.7 billion mobile phone users.

A Sri Lankan man using a mobile phone
Mobile phones are too expensive for many people in poorer nations

The association said that there were three billion people living within its members' network coverage who could not afford to own or use mobiles.

Many also live in countries with poor-quality fixed-line networks, cutting them off altogether from electronic communications.

Some handsets are available for less than $50, but tend to be old models only available in limited quantities.

A group of 18 operators is driving the cheap handset project, including India's Bharti, Thailand's AIS, Globe Telecom from the Philippines, and Orascom from Egypt.


The initial tender won by Motorola will only provide a tiny fraction of world handset sales. More than 600 million units were sold worldwide in 2004.

Investing in handsets is a huge expense for developing-world customers.

With most customers spending only small amounts on a pay-as-you-go basis, the heavy subsidies which have driven take-up in developed countries are impossible.

In addition, many developed nations now have mobile take-up in excess of 80%, meaning the market is now mature.

Ultra-cheap handsets could open the door to rapid growth elsewhere.

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