Mobile phone operators call for low cost equipment

Service providers claim less expensive equipment would help them better serve poor countries

All the talk at the 3GSM World Congress Asia about ensuring people in poor countries have access to inexpensive mobile phones prompted some operators on Tuesday to call for the development of lower-cost equipment, so they can extent their networks throughout less-populated areas.

"A low cost handset isn't enough, we also need a low cost network," said Lu Xiangdong, a member of the board of directors at China Mobile (Hong Kong) Ltd., the world's largest mobile phone service provider. The remark came after he was asked how China Mobile would ensure people in rural China could gain better access to mobile telecommunications services.

As much as 60 percent of people in China's crowded coastal areas already own mobile phones, but penetration in rural areas is as low as 20 percent, leaving about 900 million people unconnected, Lu said. China Mobile already boasted over 231 million subscribers as of the end of August, according to its Web site.

"GSMA needs to work with vendors to lower network equipment costs," he said, adding that operators should work together to negotiate with vendors in order to lower prices.

The head of the GSM Association (GSMA), which was hosting the congress, made light of the statement. "I think some vendors just had heart attacks," joked Craig Ehrlich, chairman of the GSMA.

Such a proposal could cause headaches for equipment providers such as Nokia Corp. and Motorola Inc., which are already being asked to help push down handset costs. It could also help mobile phone services proliferate, especially in hard-to-reach areas.

Other operators from areas with a lot of ground to cover and limited income from their customers supported Lu's proposal.

Erik Aas, chief executive officer of GrameenPhone Ltd., one of the largest mobile phone operators in Bangladesh, said that the proposal makes sense and that GrameenPhone is doing it already.

Norway's Telenor ASA, which holds stakes of 11 mobile phone service providers worldwide, including GrameenPhone as well as other companies in developing nations such as Malaysia, Russia, Ukraine, Thailand and Montenegro, is trying to leverage its multiple companies to gain better deals from equipment providers.

Bargaining already works for handsets and Telenor is trying to do the same thing in mobile phone service equipment, said Kjell Nordhagen, procurement director at the company.

Currently, 77 percent of the globe is already covered by some form of mobile telecommunications service, but within the covered area, a quarter of those people are not connected because they don't have handsets, according to the GSM Association.

"We are keenly interested in the emerging markets and connecting the unconnected in those markets," said Rob Conway, chief executive officer of GSMA.