Is the Mobile Phone a Basic Human Right?

You have the right to remain silent, but do you also have the right to talk on a mobile phone? The answer is yes, according to iSuppli, as mobile phones become increasingly ubiquitous, even among low-income subscribers in developing regions of the globe. For mobile-phone makers, this phenomenon is posing both challenges and opportunities as they strive to offer cost-reduced products that appeal to the third world.

Speaking at the iSuppli 2006 North American yesterday iSuppli analysts discussed the emerging market for such inexpensive phones, including a new breed of Ultra Low-Cost Handsets (ULCHs).

"A prominent statesman once expressed the opinion that the ability to communicate with a phone has become a basic human right," said Dale Ford, vice president, market intelligence, for iSuppli. "So, the wireless handset market has moved from being a dollars-and-cents issue to becoming a basic human rights issue."

Ford said that this view of mobile phones is borne out by the wide adoption of mobile phones among a large portion of the world's population. "The level of penetration globally for wireless communications is astounding," Ford said. "Nothing comes close, except for electrical power."

The number of worldwide subscribers for wireless communications services is expected to increase to 4 billion by 2010, up from 2.6 billion in 2006, according to iSuppli. This growth is being driven largely by new subscribers in developing nations.

"With the world's population at 6-plus billion, and with mobile-phone subscribers expected to rise to 4 billion in four years, the statesman's words were visionary," Ford said. "At the time the statement was made, I was skeptical. But now we see that mobile phones are an enabling factor, not just for the economic growth of nations, but also for individuals' ability to live and thrive in the developing world."

Ford said key regions are driving this subscriber growth, including Africa, the Middle East and India. Despite this, global wireless communications subscriber growth actually is decelerating as markets in developed nations become increasingly saturated. This makes the developing regions vitally important to the continued growth of the mobile-phone business.

India paves way for low-cost phones

One of the key regions driving subscription growth is in India, according to Dr. Jagdish Rebello, director and principal analyst for iSuppli, who also spoke at the 2006 North American Briefing.

"India had more than 6 million new mobile-phone subscriber additions in September, making it the fastest-growing wireless market in the world," Rebello said.

Rebello cited an iSuppli forecast showing that India will have 405 million mobile-phone subscribers by 2010, up from 140 at the end of 2006.

"iSuppli predicts that by 2010, one out of every 10 mobile phones sold will be sold in India," Rebello said. The major factor behind this growth is the advent of the ULCH and other low-cost phones. "For India, the next phase of growth will be driven by low-end phones," Rebello said. "To serve this area, manufacturers have to drive down their phone costs."

Navigating the ULCH market

The impact of low-cost phones extends far beyond the Indian market, according to Ford.

"The growth of the mobile-phone market is being driven by mass-market handsets and the ULCHs," Ford said. Because of this, ULCH phones have become an area of greater focus for the wireless handset OEMs. However, a challenge for these OEMs is defining the ULCH and its feature set.

"The official definition of an ULCH is a phone with sub-$30 cost," Ford said. "Manufacturers have the capability to take costs below that now. There have been reports of phones with manufacturing costs less than $20 - and just last week Motorola was discussing a $15 product.

But what are these products like - and what feature sets will they have? You can miss the market by aiming too low. What is the magic price point and feature set that can bring in new subscribers and increase the reach of wireless - while not undercutting the market?"

Companies that can successfully balance these considerations will be the winners in the ULCH market, Ford said.

iSuppli predicts ULCHs will rise to account for more than 9 percent of total mobile-phone units produced in 2010, up from less than 1 percent in 2006."

Posted to the site on 10th November 2006