'Phone makers talk about performance, not affordability'

Ben Soppit

Ben Soppit, commercial director of the GSM Association, the apex global body for global systems for mobile (GSM) mobile service companies, has been winging his way around emerging markets ranging from Africa to Russia and India trying to push low cost phones among mobile service companies in these countries.

Soppit was in India last week meeting GSM mobile service companies in order to size up the potential of the Indian market. Excerpts from an interview:

How is the emerging market handset programme to develop a low cost phone different from what other telecom companies are doing to make cheap phones?

The approach is different. Most manufacturers just have one entry phone and think that is enough. And it is based on old technology. They don't realise that there are different segments in this market which have to be addressed with different products and that low cost does not mean low technology "� in fact, they have to be more reliable and sturdy.

Today phone makers talk about phone performance, they don't talk about affordability. PC manufacturers stress both. We want mobile manufacturers to do the same

Are you underestimating the ability of the rural market to pay for phones? Why should people in rural areas buy a black and white phone when they can have colour phones at a slightly higher price? After all, the price gap between colour and black and white phones has come down. So why invest in black and white technology?

Yes, after some time the cost of manufacturing both black and white and colour phones will nearly be the same. But that has not happened and might take another 12 to 24 months.

So you cannot just wait for the market to go by. The fact of the matter is that 75 per cent of the world's population which has telecom coverage does not have mobile connectivity. This means that it is still expensive to buy the service. The low cost phone is democratising telecom access for everyone.

Does this mean that operators will be in a position to offer phones free to customers and subsidise the cost? That seems to be the only way the market will grow.

At the moment the approach is to offer attractive tariffs bundled and give value in airtime rather than subsidise the handset . But with prices of handsets falling to below Rs 1,500, it is possible to look at that alternative.

Many mobile manufacturers might say you are helping Motorola build a market for ITSELF through this programme. Is that fair?

Motorola was chosen by the operator members of the programme on the basis of certain criteria. After all, it was a commercial decision of these 13 operators.

We only provided a platform for them to come together to resolve the problem of reducing entry barrier costs in these markets. We will have a second tender this year and it could be won by anyone else.

In fact, our aim is to encourage multi phone manufacturers to come to the fore and offer products. After all, customers will have more choice.

In India many operators are already offering phones bundled with a mobile connection for as low as Rs 1,499. So why is the $ 40 phone a big deal?

What we are looking for is a sustainable model in which the manufacturer, the operator and the distributor makes money. You can always have deals with someone who has a large inventory and wants to get rid of phones at low prices. But that means the manufacturer is making losses. And these are one-time offers.