The Guardian news paper is reporting that Korea’s LG has won the GSM Association’s ‘3G-for-all’ contract to supply low cost 3G phones to emerging markets. If correct, the deal will be announced at next week’s 3GSM World Congress in Barcelona and is the culmination of a ‘value-for-money’ beauty contest judged by 12 of the planet’s largest mobile phone operators.

The 3G-for-all initiative was first announced by the GSMA in mid-2006 (click) and was also intended to raise the profile and use of 3G technology in developed markets. It followed the winning by Motorola of the two phases of the GSMA’s Emerging Market Handset/Ultra-Low Cost (EMH/ULC) handset programme (click), which saw the unit price of 2G terminals first reduced to under US$40 and then to under US$30.

“Our 3G handset initiative will allow far more people to take advantage of the video clips, mobile music, Internet access, and many other multimedia services now enjoyed by more affluent users in the developed world,” said GSMA ceo Rob Conway at the time of the unveiling of the 3G-for-all project. “Our Emerging Market Handset programme is a compelling demonstration of how economies of scale can be brought to bear to accelerate falls in the cost of manufacturing mobile phones.”

In price terms, the aim of the 3G-for-all is to take third generation terminal production costs some way below the current level of around US$140. Interestingly, one of the ten predictions for 2007 by the inCode wireless consultancy was that intense competition and margin pressure would force 3G terminal prices below US$90 this year. However it is understood that some of the Tier 1 cell phone manufacturers regard the likely margins available to the winner of the 3G-for-all competition as too small and see the project as, if not exactly a poisoned chalice, then certainly a risky undertaking. Earlier reports suggested that EMH winner Motorola, for one, had lost interest in the follow-up contest.

But you can see why operators who have paid through the nose for 3G spectrum might be keen on the project. Figures published by the Global mobile Suppliers Association (GSA) at the beginning of this month had 2.244bn GSM/WCDMA subscribers worldwide at the close of 2006, with a relatively modest 96mn-plus of these being 3G.
John Williamson