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Bringing mobiles to the masses
Telecom companies are now being innovative so they can attract low-income consumers.
• Huawei Technologiesexternal link
Is the digital divide between those who can and cannot afford the latest tech getting bigger?
Technology (general)
Telecommunications Equipment

BEIJING, China (CNN) -- Technology companies have always tried to win over the ultra-savvy consumer at the cutting edge of the market, but now they are going after another audience.

Firms are now designing handsets and payment systems that work for those who would not normally be able to afford mobile services.

Telecommunications companies are realizing that $800 for the latest mobile phone handset is just too expensive for the average consumer -- particularly for those in low income countries.

"With many markets in the developed world maturing, handset makers and service providers are looking for new ways to generate revenues," David Almstrom from Trolltech told CNN.

"One way is to target the lower income subscriber. Today we have one billion subscribers and we need to get another billion subscribers."

On the outskirts of Beijing, Chen Zhenghua makes a living growing and selling vegetables. The 36-year-old takes home $83 a month -- modest wages for most -- but good enough for Chen to consider buying a mobile phone.

"A mobile phone comes in handy," says Chen. He is one of a growing number of lower income consumers signing up for mobile phone services.

Handset makers are targeting these markets by offering mobile phones which come with only the most basic functions such as voice calls and text. In China, some of the phones are even simpler.

"In China, we are selling the PHS handset. We're selling almost one million right now, and these handsets are very cost effective, especially for low-end customers," says Richard Lee of Huawei Technologies, a Chinese handset company.

Innovative and cheap airtime

Service providers have also come up with innovative ways to cater to the needs of the low-end consumer, using the text message as a virtual prepaid calling card.

The consumer sends a text message to a number saying they agree to pay, and in return receives a specific amount of airtime.

This system is paperless and cheaper to operate than other prepaid services. Normally mobile users need to buy credit card-style vouchers bearing an identification number that they key into their handsets to add airtime.

Under the electronic system, operators do not have to print vouchers or be involved with distributing them. Therefore, they can afford to sell airtime in smaller amounts.

"It might be valid for a shorter number of days, but it is much easier for a subscriber. Rather than paying $3, they can pay $1 dollar each time for X amount of minutes," says Davina Yeo from technology analyst firm IDC.

Smart Communications, the Philippines' biggest mobile phone company, allows people to add as little as 54 cents of airtime to a mobile phone electronically. The trend has spread to India, Indonesia and Thailand -- telecom analysts say China may be next.

"I think they will probably look at what other countries like the Philippines have done and consider these micro-prepaid options down the road," says Yeo.

According to the China Daily newspaper, the prepaid service helped Smart Communications add 1.7 million subscribers and cut costs by more than $5 million.

-- CNN's Eunice Yoon contributed to this report

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