Ultra-low-cost (ULC) handsets, a hot topic in the past three years, can be built for $20 or less and represent a unique segment of the cellular market but require a unique set of strategies for success.
The typical buyers of ULC handsets have limited average disposable income and are difficult to track due to a lack of the necessary infrastructure and systems required. Therefore, it does not make economic sense for operators to significantly subsidize a phone in the hope that they will recover the revenue in service fees.
Operators are further reluctant to subsidize since the majority of ULC revenue is from relatively inexpensive pure voice and SMS services rather than from data services.
Despite the "Ëœlow-cost' nature of the ULC market, it is absolutely unacceptable to have a poorly performing phone since the user will tend to keep the same handset for a long time.And in a competitive market, little prevents a user from switching providers by simply getting a new SIM card.
Therefore, it's critical for an operator to support as many simultaneous users as possible without adverse side effects such as dropped calls, as well as allow the use of the phone wherever needed.These factors are largely network-centric, but there is much that can be done on the handset side as well.
Designing the ULC
There are four key drivers essential to creating a winning ULC product: radio performance, power consumption, features and total cost.
In emerging markets, the 2.5G (GSM/GPRS/EDGE) cellular infrastructure is often bought from Western nations that are migrating to next generation technologies such as 3G.In ULC markets, this leads to an interesting deployment of infrastructure manufactured by a variety of vendors that each implement the GSM specification slightly differently.