Low cost handsets to play major role in rurual India

NEW DELHI: Low cost handsets are good for the emerging economies. It not only helps in bridging the digital divide but also helps in economic growth of the country. For ULCH and LCH to succeed one has to look at profitable models for all players-chip manufacturers, handset vendors, and operators. These were some of the deliberations at the Next Generation Low Cost Handsets (LCH) Asia 2007 was held in New Delhi from 4-5 September 2007.

The event brought together leading operators, handset and contract manufacturers, technology and content providers, and application developers to address commercial and technical strategies to harnessing entry level, ultra low cost handsets (ULCH), and low cost 3G solutions to penetrate emerging markets. It also assessed challenges faced by operators and provides solutions to them to maintain profitability and ARPU maximization in highly competitive emerging markets.

Discussions and presentations

The first day of the event was dedicated to discussions and presentations on the market opportunities and business strategies for emerging markets. India's potential as major market for low cost handset was also explored in these discussions. During the course of discussion an important fact-low cost handsets (below $50) made up around 50% of the total handset market in 2006 in India-was shared with the delegates. Other points that were discussed include mobile phones have permeated into smaller towns, cities, and villages thus expanding the opportunity for adoption and use of additional services.

As there is a great opportunity for mobile VAS industry to grow, mobile technologies can provide forms of interactive services to end users (non literates in the rural market) whom the PC could never reach and rural people could benefit from mobile-enabled services in areas such as education, healthcare, finance, governance, and infotainment. Rural areas, which lack means of dissemination of information, will adopt such services if they are available at affordable prices.

The crux that came out of first day's discussion was the market is expanding and therefore one needs to understand the demands of new and future consumers. New consumer expectations are heterogeneous and are dictated by their attitude to technology, style, brand, and price.

Major points

Evolution of handsets and wireless services, innovative emerging market services/total cost of ownership, and affordable connectivity in emerging markets were the major points on which the discussion on the second day was centered. The fact that telecom remains largely an urban and suburban growth story was also discussed. Despite the realization that a 1% increase in telecom penetration results in a 3% increase in GDP growth, rural areas continue to remain under-penetrated in most south Asian countries.

The role of local manufacturing was also discussed as it is the key to cost cutting, since high volume supply can be supported only with local manufacturing and all major handset vendors have established local manufacturing in Asia. The importance of China, SE Asia, and India as the key players in guiding manufacturing strategy of vendors was also highlighted.

Other issues that were discussed revolved around infrastructure for manufacturing, distribution, tax free movement of parts, components and complete phones are the basic requirements to provide phones at low cost.

sandeepb@cybermedia.co.in