Phone Factories

A recent trip to Japan exposed me to all sorts of neat cellular phones and gadgets that North Americans only dream about. This article discusses the Japanese cell phone market and some of the goodies that service providers and phone manufacturers are putting into their handsets to make them more attractive to the public.
Original publication date: September 2002.
Preamble and Introduction

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I’ve always been amazed at how far “behind” the North American cell phone market has been compared to other places in the world. We are still using AMPS analog cellular, whereas remote countries in Africa are fully digital GSM. Only recently has the thought of custom ringtones been introduced to our cell phones, whereas phones in Europe have been able to download them for years. In this past year, Canadian service providers finally agreed to allow cross-provider SMS messages, something that Europeans have been doing for years, but even to this date, the US service providers still don’t allow cross-provider SMS messages!
Ask someone from Europe about places where their cellular, or more correctly, “mobile” phone doesn’t work and they will look at you funny. Ask someone on the street in North America and they will be able to rattle off a dozen places where coverage is questionable or non-existent. North Americans have to deal with all sorts of technologies (AMPS, TDMA, CDMA, iDEN, GSM) and each of these may come in one or two different frequencies. Phones with different technologies are virtually incompatible with each other. Fortunately, both AMPS and TDMA will be dropped in the next few years, reducing some of the confusion.

A combination of very cheap and available landlines has restricted the development of the cellular market in North America. In Canada you can go to a pay phone and plunk in 25¢ for an unlimited duration landline call. That same money might get you a couple of minutes at most anywhere else in the world. Want a landline in your house or business? The process might take a couple of weeks of waiting. Places in Europe, Central or South America might wait years for a landline installation and the cost would be prohibitive.

Most North Americans turn their cell phones on when they are out of the house and office, when they cannot be reached on a landline. This keeps their wireless minutes down and service providers don’t make a lot on causal users of cell phones (<150 min/month). If cell phone providers allowed alternative long distance services on their lines, people might be more persuaded to drop their landlines and go completely to their cell phones. But only one service provider in Canada offers long distance rates that are even close to what you can get on a land line. The rest of them charge 2.5X or more than you would pay on a landline AND you still have to watch your airtime minutes.

This article takes a closer look into how demand and consumerism drive the Japanese cell phone market. Many people turn to the Japanese market to see what features and services might appear in North America in the near future. Read on to see what you might expect your future cell phone to offer.

The Japanese Market

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Walk down the streets of any urban centre in Japan and you’ll see the same picture over and over again. People with cell phones either glued to their hand or to their ear. Cell phones play a very important part of many lives, and especially so if you are female and between the ages of 12 and 40. Jump on any train or subway line in Tokyo and discreetly watch what people are up to. They are not reading the ads, they are usually not reading a book or a newspaper, they are either looking at their cell phone screen or they have their eyes shut. A quick glance to their screen will reveal that they are checking their call logs, sending messages, or playing games.
Jump off the train at the Akihabara neighbourhood of Tokyo. This is a very famous electronics district, filled with computer shops, camera stores, film wholesalers, and more. Looking for that replacement part? You are guaranteed to find it somewhere here.
Almost every single store has booths outside with dozens of phone models. Go to one of the street corners pick up some silver FOMA (Freedom Of Mobile multimedia Access) kleenex from a cute girl — free advertising for NTT DoMoCo’s new high-speed data services. Go inside some of the larger electronics stores and there might be a half floor devoted just to cell phones and the other half of the floor will be cell phone accessories. Sure, there will be a few car chargers and replacement batteries, but most of the accessories are things that make the phone unique — faceplates, holograms, interchangeable LED covers, fuzzy cases, stick-on antenna characters, and things to hang off your antenna.
It’s not just the electronics district, but everywhere you go there are cell phone stores with dozens of cell phone models for sale. And why not, seeing that almost everyone owns one and everyone likes to have the latest phone out there. New phones might sell upwards of ¥60000 (US$300), but a phone that is a few months out of date can be had for about ¥1200 (US$7).

Akihabara is one of the biggest electronics shopping districts in the world.

The Players

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Japan is dominated by three service providers. There’s KDDI who provides a service called “AU”, NTT’s “DoMoCo”, and Vodafone’s “J-Phone”. Each provider offers various different services and rate plans and different coverage areas outside the urban centres.
Phones used by all providers are virtually incompatible with any other cellular service in the world. A combination of CDMA and unusual frequencies makes almost all phones sold in Japan useless to the outside world. Don’t expect your overseas phone to work in Japan either. Some of the Japanese service providers do offer international roaming services, such as AU’s “World Passport” that does allow limited CDMA roaming in Hong Kong, Korea, Australia, New Zealand, Canada (on Telus Mobility only) and a few service providers in the U.S.
There’s dozens of phones to choose from with each service provider. You’ll regularly see phones made by Sharp, Panasonic, Mitsubishi, Kenwood, Toshiba, NEC, Denso, Pioneer, Sanyo, Kyocera, Hitachi, Casio, and Sony Ericsson. Phones made by big-name companies, such as Nokia, seem to have very little market share.

Coverage is very important. Microcells are very common and fill in small coverage holes.

Typical Handsets

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Recently I reviewed the new LG TM520 being sold by Telus Mobility in Canada and a very similar model, the LG VX1, is being sold in the US by Verizon. This particular model is about as close in design to the typical handset on the Japanese market. Most phones currently sold in Japan are of the flip or clamshell variety, with an exterior small display screen showing signal strength, date and time, and incoming message icons or phone numbers. Open the clamshell up and you’ll find a huge TFT colour screen capable of displaying 65 536 colours on the top and a regular keypad on the bottom. There might be an external CCD camera lens on the hinge or outside and likely lots of accessory ports.
Only recently have colour screens been introduced to the North American market. Sprint PCS ran a series of commercials in the summer of 2002 bragging about their all new colour screen phone. Telus Mobility offered a coloured handset to the public in late 2001. But as of today almost all phones in North America still have monochrome screens. Ironically only a handful of phones sold on the Japanese market are monochrome, and these are often for use outside Japan on either CDMA or GSM networks.

There’s also a few regular, non-clamshell, phones on the Japanese market. These also feature full colour screens, but they are not as popular due to the size of the phone to accommodate both the screen and the keypad. Small phones are definitely not common, the idea behind Japanese phones is to make the screen as big and colourful as possible and have an easy-to-navigate keypad for messages, games, and more.

Messages

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Messages between friends in Japan is big. You can do regular SMS or email on your phone. Email is of course limited to small file sizes, but many of the phones allow for both English and Japanese characters to be sent. Each provider also allows special characters to be sent, such as an array of happy and sad faces, small animated images, animals, people, hearts, etc. When special characters are not available, people often use a specialized set of faces to show emotion:

Email can also be sent between between different provider phones, but many of the special characters are lost, hence to try and keep your circle of friends on the same provider to receive the special characters. Email, of course, may be sent from computers as well, but files are often stripped of headers and attachments.

ASCII faces

Games and Entertainment

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Most North American phones come with a few games to keep people entertained for a limited duration. Japanese phones come with two different types of games: built-in ones and Java application ones. The built-in ones are simple, but again the graphics are very important to the game value. The two images on either side of this paragraph show a couple of the built-in games, including a SIM game and a Egg Catch game. Not exactly on the same level as the traditional Nokia Snake game.
Java application games are delivered via the network to your phone and there is a charge for this service. These games are much more complex and require streaming data to access. You can play Role Playing Games (RPG’s), fashion design, complex Tetris and more. New games come out monthly. You can even buy joysticks and navigation consoles that plug into your phone.

If that’s not enough, how about downloading a short video starring Winne the Pooh? A little karaoke perhaps? How about that boring screen on the phone? You can even download beautiful animated colour screensavers from commercial services to place on your phone. Surf a few web sites in full colour and with animations. Pop in a 64 Meg compact flash card and listen to a few hours of MP3 on your cell phone. Pay your parking fees online. The fun just doesn’t stop.

Built-in Cameras

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One of the recent popular additions to many of the Japanese phone models is a CCD Camera that is mounted either on the outside of the clamshell or on the clamshell hinge. The camera lens is slightly smaller than a dime and takes 4×4 cm pictures to display on the phone’s screen or to send to others. Not only can you take pictures, but you can take video clips. Most phones take between 5-15 seconds of footage due to memory limitations, but you can send streaming video over your phone. Many of the advertisements for camera phones show people taking to each other and watching each other on the screen (both holding the phone and camera at arms length and using a hands-free microphone and earpiece). This might be cute at the beginning, but most people end up focusing the camera on a tree or street scenes and talking normally with the phone next to their head. Otherwise a very neat feature, and excellent at showing someone what is going on where you are.
The camera also has a couple of neat accessories that you can get, including an external flash that pops into an accessory port. You can even buy a miniature printer that will print out your pictures.

Camera pictures

GPS-Enabled Phones

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For regular visitors to this site, you have likely seen mention of GPS before. GPS, or Global Positioning System, is a network of satellites that orbit the earth. Using a GPS unit, one can determine their position anywhere on the planet down to a few metres. GPS’s are commonly used by people with boats, hikers, hunters, geocachers, or anyone else that has a need to know their exact position on the planet. GPS is also used with CDMA base stations, but not for position, but rather for the precise time signal that it delivers.
To incorporate yet another gadget into cell phones, many of the phone manufactures are now including a built-in GPS unit. The user can put the phone into GPS mode and determine their position. Base maps can be either downloaded or loaded with streaming data to give a background of streets, terrain, or just about anything else. GPS does have its limitations, with the big one being that you need to be able to receive good signals from at least three satellites to determine a position. This is easy in an open environment, but not inside buildings or along narrow streets with little opening to the sky above. Regardless, service providers promote that GPS-enabled cell phones can help you find your friends by sending your current position to them. On the screen a basemap will appear and customized icons, such as a little Hello Kitty, will appear where your friend’s cell phone is or of a building that you need to go to. It’s a neat idea, but it is a very basic GPS unit with limited waypoints and functions.

Conclusions

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Market demand drives cell phone manufactures and service provides to offer new and improved services and functions in their cell phones. The demand for more visual interaction and entertainment with cell phones in the Japanese market is great and as such, their phones are many years ahead of what we will ever see in North America. Phones have definitely become an important part of people’s lives in Japan, whereas North Americans still many view the cell phone as a tool and not as a entertainment device. The average phone in North America lasts 3-5 years before being replaced, in Japan it is a fraction of this time.
All the services offered on Japanese phones cost money, either up front for the feature or as a airtime or data charge. Owning a basic cell phone in Japan costs about US$40 a month, but costs can quickly rise with additional features, more airtime, streaming data, email and messages. Users of cell phones in Tokyo especially have to watch out for their phone ringing once with a unknown number — dial that number back out of curiosity and you’ll reach the equivalent of a 1-900 number in North America with high per minute costs for adult entertainment.
What will we see in the near future in North America? Colour screens are on the way, maybe video cameras and streaming java games. Likely GPS-enabled phones and streaming movies would not be a big hit if they were introduced to the North American market, simply because there are better devices currently available if you want to determine your position on earth or watch a movie. Who knows what else will show up on your next cell phone? Stay tuned…

Phone accessories for ¥100.

Credits

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Many thanks to Wayne d’Eon, who provided some of the material and pictures used in this article, plus allowing me to test out his J-Phone while visiting Victoria. Thanks as well to Maia Tsurumi, who provided translation of some of the documents used for this article.
Further Reading

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Check out Wireless Watch Japan for all the latest development with cell phones in Japan.

Published on Monday, December 24, 2007 by The Independent/UK

Mountain of Discarded Cell Phones Grows at ‘Frightening’ Rate

by Nic Fildes

Snazzy new mobile phones like the iPhone and other must-have electronic gadgets, such as the latest laptops and iPod models, will fill many stockings this Christmas. But disposing of the older devices will not be at the forefront of most people’s minds.

Around 11,000 tons of unused phones already sit dormant in drawers across the UK, and that figure is likely to rise this Christmas as people upgrade to better devices. Factoring in old laptops, games consoles and portable music players, the environmental implications of celebrating Christmas with a new digital toy start to look ominous, as most of the older electronic products will end up in landfill sites, leaking dangerous chemicals into the earth.

While reusing the devices either by passing them on to friends or selling it is the best solution, recycling the gadget is the next best thing. Companies such as the Body Shop and mobile phone operators such as Orange have been offering to recycle handsets for years, but UK consumers are still much more likely to bin their old phone as soon as they have transferred their numbers.

Johan Thomsen, a manager at Green Mobile, argued: “The problem today is that people upgrade their mobile phones every year and only a small percentage of these phones are disposed of safely.” The situation is ” frightening”, he said.

Green Mobile, a small operator that passes on a portion of its profits to environmental charities such as the Woodland Trust and Friends of the Earth, does not woo users with a free, leading edge handset, as is commonplace in the UK. Instead, it asks people to hold on to their existing phones for as long as possible and passes on the savings of not having to subsidise a new handset to the user through lower call charges.

Mr Thomsen said that a handset is designed to last five years, yet 100 million people in Europe upgrade to a new phone every year. The company also offers environmentally friendly wind-up phone chargers for customers who want to reduce their phone’s environmental impact further.

For those mobile phones, laptops and iPods that have seen better days, recycling is the best way to reduce the environmental impact of the product. EU legislation requires that hardware companies that produce electronic products are also responsible for disposing of the device, and a number of companies, including Fonebak, ReCellular and Eazyfone, have built businesses based on recycling phones on behalf of manufacturers. Meanwhile, device makers are designing phones that are easily recyclable and contain less hazardous chemicals.

ABI Research expects that shipments of recycled phones will exceed 100 million units in 2012, driven by shorter handset replacement cycles, growing demand for low-cost mobile phones in emerging markets, regulation and growing consumer demand. By 2012, ABI expects the market for recycled handsets to be worth $3bn (£1.5bn), but the analyst Shailendra Pandey said the key challenge is to revamp the old mobile phones at the lowest possible cost, to ensure a decent margin on the resale.

However, with 1 billion handsets sold around the world every year, and Nokia alone shipping 1 million mobile phones a day, consumers need to take some responsibility for the safe disposal of their old devices, starting this Christmas.

Chinese want handsets with MP3 players, cameras, and more — and local companies aren’t delivering

Annie Chen just can’t seem to hang on to cell phones. The 23-year-old secretary in Shanghai has lost — and replaced — a half-dozen handsets in the past three years. In June she blew more than half her monthly salary of $730 on a fancy Motorola camera phone that includes a Chinese-English dictionary. It’s a lot of cash, she admits, but she lives with her parents and can afford to splurge. Besides, she likes to use her new phone to look up words and take photos of her friends. When it came time to choose a phone, Chen didn’t even consider any Chinese brands because they didn’t offer the features she wanted. “This phone has many options, it’s small, and it looks cool,” she says.

That kind of talk has a nice ring for foreign handset makers. With more than 300 million cell-phone users, China is a market that the likes of Motorola, Nokia, and Samsung can’t afford to lose. They ruled China for years, enjoying a virtual lock on the market until 2000. But since then upstart locals such as TCL Mobile Communication Co. and Ningbo Bird Co. have gained favor among Chinese consumers; last year they made 46% of the phones sold in China. By licensing technology from outsiders, the Chinese were able to focus on selling low-tech but nifty-looking phones that appeal to local tastes, prompting some executives to boast that the future belonged to domestic players. “In China, handsets are more and more about fashion,” George Guo, a TCL senior vice-president, said last year. “When everyone’s quality is good, what do people look at? Style.” (TCL and Bird executives declined to comment for this story.)

But as more and more Annie Chens seek phones with ever-snazzier features, the multinationals are holding the line. This year, Chinese manufacturers are likely to take just 44% of the handset market. Next year that number will probably drop below 40%, according to brokerage Credit Suisse First Boston. The sudden halt in momentum has spooked investors in Bird and TCL. Bird’s Shanghai-traded shares are down 29% this year, and TCL International Holdings Ltd., which owns a controlling stake in TCL Mobile, has suffered a 23% drop in its Hong Kong-listed shares.

What’s hurting the locals is a growing Chinese appetite for sophisticated phones. Chinese companies have done well with simple units used largely for voice calling, but mainlanders are going upmarket. In July, 82% of the phones sold in China had color screens, up from 31% a year earlier. Camera phones, meanwhile, represented 23% of the market in July, vs. 13% in February, according to CSFB. While Motorola has also seen its market share slip to 14% from 15.7%, the company has compensated by increasing the average price of its phones by 13%, to $237, as it sells more complex models. “Customers are starting to look for more,” says Patrick S. Kung, corporate vice-president and general manager of Motorola’s handset business for North Asia.

CAVIAR AND CATWALKS
Those fancy phones are tough to manufacture. The Chinese “generally have very weak design capability,” says Alison Yip, an analyst with CSFB in Hong Kong. Cameras and color screens require better computer chips and software than do simple voice phones, which have become commodity items distinguished by little more than the shape of their plastic cases. Chinese manufacturers, though, lack the research capabilities of the foreigners. “The domestic handset makers have stumbled,” says Ted Dean, managing director with BDA China Ltd., a Beijing consulting firm.

Nokia, for its part, aims to stay ahead of its local rivals. That’s one reason the company threw a bash on Sept. 9 in Shanghai’s plush Exhibition Center to launch a trio of high-end phones. As more than 350 guests nibbled caviar, grilled watermelon, and truffle pâté, fashion models sashayed down the catwalk showing off new phones costing as much as $625 that include gee-whiz features such as streaming video and MP3 players.

There’s more to Nokia’s China strategy, though. Even as it stretches the upper limits of the market with the fresh phones, it’s also shoring up the low end. In April the Finnish company slashed prices for some models by 15%, to as low as $110. Nokia also has started looking beyond big cities such as Beijing and Shanghai to less-developed markets that had been strongholds for TCL, Bird, and smaller Chinese players such as Amoi and Soutec. Eighteen months ago, Nokia had just four offices throughout China. Today it has 50. “It took a number of years to respond” to the Chinese threat, says Colin Giles, Nokia’s senior vice-president for sales and marketing in China. “But we have leveled the playing field.”

Asian manufacturers are dialing up hefty gains in China, too. Crucial to the early success of the domestic brands were limits Beijing placed on the number of newcomers from abroad. Now the government is easing the restrictions, and the neighborhood rivals are coming on strong. Samsung’s market share jumped to 12% in July from 8% in January. Taiwan’s BenQ is planning to roll out new phones of its own after selling through a joint venture with a small Chinese player, CEC Telecom Ltd. And in mid-September, LG Electronics said it plans to triple the capacity at its handset plants in China next year, to 30 million phones annually. The Korean company hopes to sell models with cameras, video recorders, and MP3 players to status-conscious Chinese consumers looking to upgrade their handsets. “The replacement market requires more sophisticated phones,” says Kim Man Sik, LG’s vice-president for telecommunications marketing in China. “There is a preference for foreign brands, particularly at the higher end.”

Still, it’s too early to write off the home team. After all, almost no one took the locals seriously four years ago, and their success proved skeptics dead wrong. “They’ve made huge progress,” says David Nagel, chief executive of PalmSource Inc., which makes software for cell phones. “I wouldn’t be surprised to see in five years a few very sophisticated Chinese players.”

A new wild card is the transition to third-generation, or 3G, high-speed networks. Beijing is likely to award 3G licenses next year. Given the complexity of 3G handset production, the transition to the new technology will probably give the foreigners the advantage anew. That means Annie Chen could very well wind up buying another foreign brand the next time she misplaces her phone.

By Bruce Einhorn in Hong Kong, with Frederik Balfour in Shanghai and Andy Reinhardt in Paris

More than 300 million cell phones will be ringing in China by the end of the year–but there’s still room for the market to grow, according to a government agency.

The country’s Ministry of Information Industry, an agency that promotes the information technology industry, said that by the end of 2004, about 300 million people in China, or 24.5 percent of the population, will tote cell phones. Currently, around 295 million Chinese have phones. Approximately 2.7 million became cellular subscribers in the first four months of the year.

China has been the world’s largest cell phone market for a number of years and a driving force behind revenue for Motorola, Samsung and other exporters.

In recent months, the Chinese government has tried to slow the growth of the economy. But even with the slowdown, the cell phone market may continue to expand because of the country’s huge population, which is now estimated to be 1.2 billion.

In Europe, about 60 percent to 70 percent of the population uses cell phones, while in the United States the penetration rate is close to 50 percent. South Korea and Singapore have penetration rates of about 60 percent and 70 percent, respectively. In Taiwan, cell phones exceed people, as many carry more than one phone for personal or business use.

Still, companies will have to adjust their marketing and pricing to reach the rest of the population. Current cell phone users are mostly clustered around booming urban centers like Shanghai.

NTT DoCoMo - Japan

Japanese cell-phone operators have been searching for new sources of expansion abroad, as they expect a slower subscriber growth in the specific home market. In 2001, DoCoMo invested about $10 billion in AT&T at the height of the Internet and telecommunications increasing level, but later ended up registering huge losses from stakes in overseas cell-phone operators.

Tokyo-based DoCoMo has shifted its strategy since then to holding some minority stakes in Asian cell-phone Carriers to expand in international roaming and help procure handsets more cheaply.

Today, there are about 2point2 billion cell-phone subscribers worldwide. Experts are saying that the number will jump up to 3 billion by the end of this year, with much of the growth to come from new subscribers in countries like India, China, Africa and Latin America. As only about 1/3 of people in developed markets have a mobile cell-phone, providers believe there is a huge expectation for profits.

China Mobile

Officially established on April 20th, 2000, China Mobile Communications Corporation - China Mobile shortly, has a registered capital of 51point8 billion RMB yuan and assets of more than 400 billion RMB yuan. At the moment, China Mobile Limited is the largest among all the overseas listed Chinese companies and among all the telecom Carriers in Asia.

China Mobile provides not only basic mobile voice services but also value-added services such as data, IP telephone and multimedia. It has the right to provide Internet services and the international gateways, reputed for its brands like GOTOne, Easy-own and M-Zone, and provides services through network numbers of 139,138,137,136,135,134(0-8) and 159.

Nortel Networks(China)

In Asia Pacific, Nortel is a proved leader in delivering communications services that enhance the human experience, ignite and power global commerce, and secure and protect the nation’s most critical information. Nortel has a presence in the region for more than 30 years - making its first sales into China in 1972 and, in the early 80s, becoming the first foreign manufacturer chosen to supply network switching equipment to Japan. Today, Nortel provides network infrastructure and communications solutions to Carriers, service providers and enterprise customers across the Asia Pacific region.

A market leader in many countries throughout the Asia region, Nortel counts the majority of Asia’s tier 1 Carriers among its key customers - Japan’s NTT and KDDI, PRC’s China Telecom, China Netcom and China Unicom, Korea’s KT and SK Telecom, Taiwan’s Chunghwa Telecom, Singapore’s SingTel, Australia’s Telstra and Optus, India’s Reliance Infocomm and BSNL, and Hong Kong’s PCCW.

eMobile

Japanese eMobile is the last mobile cell-phone operator to enter the South-East Asian ultra competitive market.Their cell-phone catalog is pretty thin. It includes the Sharp EM One, an Internet tablet with a dual slider keyboard, which among some other features, will support voice-calls once connected, and looks for VoIP calling clients.

MANILA — The Philippine Embassy in Moscow reported to the Department of Foreign Affairs that the Philippines has emerged as the leading country for investment for mobile operators in the world for the period 2008-2012, based on survey results for the first half of 2007, recently released by the telecommunications arm of one of Russia’s biggest private equity and investment companies.

The Philippines led Indonesia and Vietnam in findings of the Mobile Development Index, announced in London on 07 November by Alfa Telecom International Mobile (Altimo). The telecoms investment group of Alfa Group Consortium is one of Russia’s largest privately owned financial-industrial conglomerates.

The Company gave the Philippines an unmatched 1.04 rating in its eponymous index, an international research project undertaken in collaboration with Cambridge University, the London Business School, and the New Economic School (Moscow), to evaluate the relative investment opportunities in the world’s mobile telecom markets.

Despite a relatively low level of GDP per capita, the Philippines obtained its stature due to high EBITDA (Earnings before interest, Taxes Depreciation, and Amortization) margins of 2.32, and unusually low Average Revenue Per Customer (ARPC) of – 1,01. In comparison, Indonesia obtained 1.03 and Vietnam 1.00 in the ‘Altimo Index’.

Based on Mobile industry and macroeconomic data (such as expected growth in ARPU, EBITDA margins, GDP growth, etc) from Q3 2006 to Q2 2007, Altimo and its partners have generated an index which attributes investment ratings to 77 markets globally.

Other countries in the index were China (4th), India (7th), Russia (13th), Thailand (17th), Malaysia (22nd), US (23rd), Germany (24th), Cambodia (27th), Hongkong (28th) and Japan (49th). Chile, Uganda, and Iraq took up the last three places in the survey, only the second since its inception last year.

According to industry sources, the Moscow-based Altimo is considering buying into Philippine mobile operators.

The study also concluded that South and Southeast Asia are the key regions for short-term investment mainly due to expanding economies, growth in mobile spending, and rising market penetration.

Eastern Europe, Western Europe and North America are flagged as areas of low return for mobile investment, owing to high penetration levels, stable earnings streams, and modest growth prospects, while Africa and Latin America are in a similar situation owing to poor economic growth prospects.

According to the study, the world’s overall cellphone penetration rate is still low (approximately 45 % at present) and the mobile industry’s growth is set to continue at least until 2010-2011.

Altimo is the primary vehicle used by Alfa Group for making investment into telecommunications assets in Russia, the CIS, and other promising emerging markets. Its first survey, released in April this year covering the second half of 2006, ranked rapidly growing markets for mobile telephony in Asia and the former Soviet Union, with their relatively low mobile penetration levels.

Altimo currently has significant investment in cellular communications providers VimpelCom (traded on NYSE, symbol: VIP) and MegaFon – Russia’s second and third biggest operators – as well as Kylvstar, a leading cellular provider in Ukraine.

Moreover, Altimo invests into fixed-line and internet provider Golden Telecom (traded on NASDAQ, symbol: GLDN). Also, Altimo manages Alfa Group Consortium’s investment in Turkcell, a leading GSM operator in Turkey (traded on NYSE and Istanbul Stock Exchange (IMKB).

The Alfa Group, co-founded by Russian businessman Mikhail Fridman, one of the most influential business leaders in Russia, has interests in oil and gas, commercial and investment banking, asset management, insurance, retail trade, telecommunications, media, technology, as well as other industrial-trade and special-situation investments

By Rodrique Ngowi, Associated Press

NAIROBI, Kenya — Amina Harun, a 45-year-old farmer, used to traipse around for hours looking for a working pay phone on which to call the markets and find the best prices for her fruit. Then cellphones changed her life.

“We can easily link up with customers, brokers and the market,” she says, sitting between two piles of watermelons at Wakulima Market in Kenya’s capital.

Harun is one of a rapidly swelling army of wired-up Africans — an estimated 100 million of the continent’s 906 million people. Another is Omar Abdulla Saidi, phoning in from his sailboat on the Zanzibar coast looking for the port that will give him the biggest profit on his freshly caught red snapper, tuna and shellfish.

Then there are South Africans and Kenyans slinging cellphones round the necks of elephants to track them through bush and jungle. And there’s Beatrice Enyonam, a cosmetics vendor in Togo, keeping in touch with her husband by cellphone when he’s traveling in the West African interior.

As cell-phone relay towers sprout on the slopes of Mount Kilimanjaro and the Serengeti plain, providers are racing to keep up with their exploding market.

The numbers are staggering.

Cellphones made up 74.6% of all African phone subscriptions last year, says the U.N.’s International Telecommunication Union. Cellphone subscriptions jumped 67% south of the Sahara in 2004, compared with 10% in cellphone-saturated Western Europe, according to Mo Ibrahim, the Sudanese who chairs Celtel, a leading African provider.

An industry that barely existed 10 years ago is now worth $25 billion, he says. Prepaid air minutes are the preferred means of usage and have created their own $2 billion-a-year industry of small-time vendors, the Celtel chief says. Air minutes have even become a form of currency, transactable from phone to phone by text message, he says.

This is particularly useful in Africa, where transferring small amounts of money through banks is costly.

“We are developing unique ways to use the phone, which has not been done anywhere else,” says South African Michael Joseph, chief executive officer of Safaricom, one of two service providers in Kenya. For an impoverished continent, low-cost phones make “a perfect fit.”

And cash-strapped governments which have had to give up their monopoly on land lines are looking to reap huge revenues from license fees, customs duties and taxes on calls.

“We all misread the market,” Joseph said.

The mistake, providers say, was to make plans based on GDP figures, which ignore the strong informal economy, and to assume that because land line use was low, little demand for phones existed.

The real reason for weak demand was that land lines were expensive, subscribers had to wait for months to get hooked up, and the lines often went down because of poor maintenance, floods and theft of copper cables.

Cellphones slice through all those obstacles and provide African solutions to African problems.

Wildlife researchers in Kenya and South Africa have put no-frills cellphones in weatherproof cases on a collar that goes around an elephant’s neck. The phone sends a message every hour, revealing the animal’s whereabouts.

It cuts the cost of tracking wildlife by up to 60%, said Professor Wouter van Hoven of the University of Pretoria’s Center for Wildlife Management.

“You don’t have to walk around the bush searching for the animals,” he says. “I have sat around in Europe and was able to monitor animals in the mountains using a cellphone that had access to the Internet.”

Saidi, the Zanzibar fisherman, can now check beforehand whether prices justify him sailing his catch to the Tanzanian mainland, while Wilson Kuria Macharia, head of the traders’ association at the Nairobi market, says he no longer has to spend two to four weeks at a time roaming across Kenya and Tanzania in search of fresh produce.

“A few mobile phone calls take care of what used to be the most grueling part of the business,” said Macharia, 61.

Cellphones also make traders more competitive, meaning better prices for farmers, he said.

People who don’t own a cellphone can use public telephone centers linked to cellular networks, creating badly needed jobs.

Across the continent, in Nigeria, privately run cellphone services arrived in 2001 and started out charging $150 just to sign up. Nowadays four companies vie for customers by offering free sign-ups and introductory air minutes.

The number of subscribers in the nation of more than 130 million has jumped from about 700,000 to over 10 million, and hawkers make a living selling air time cards to motorists trapped in traffic.

On the downside, however, bus passengers on cross-country journeys have to turn off their cellphones because criminals are known to use them to coordinate highway robberies.

Inevitably, cellphones have become status symbols. “If you do not have one, your friends will laugh at you and say that you are outmoded,” says Akpene Rose, a 23-year-old hairdressing student in Togo, a tiny West African country where every sixth person is estimated to have a cellphone.

And just as inevitably, there are those who wish they had never been invented.

Ayi Aime, a 60-year-old Togolese, says both her school-age daughters have cellphones. “I do not know how they got them. I do not mind,” she says. “But the persistent noisemaking, constant ringing, has become a nuisance.”

By Nicole Itano, The Christian Science Monitor

JOHANNESBURG, South Africa — Cell phones are already used for music downloads, text messaging, and video games. But here in South Africa, they are beginning to perform another function: personal piggy bank.

With the new technology, a grandmother in rural area can receive money from her son, working hundreds of miles away, with the beep of her cell phone. A teenager can buy groceries with a few punches of keys. Not a coin need change hands.

It’s a high-tech solution designed to help poor people here who never have had access to banks, cash machines, or credit cards. And it’s another example of using digital technology to fast forward development in remote areas.

Earlier this month, one of South Africa’s main cell phone networks and one if its largest banks launched a new cell phone banking system that they hope will bring millions of poor South Africans into the official economy for the first time. The venture hopes to build on the rapid spread of pre-paid cell phones to create a whole new banking system, one designed for low-income users that have long been under-served or ignored by traditional banks.

“There’s a large number of individuals who are unable to access banking services because conventional banking is expensive, relative to their income. And physically we don’t have banking facilities in remote areas,” says Herman Singh, director of technology engineering at Standard Bank, which has partnered with cell phone company MTN Group on the project. The goal, he says, was to create a form of banking “that would be very easy to register for, and that we could run at a low cost.”

MTN Banking replaces a physical bank with a system that uses a patented security mechanism, and requires only a phone call and a government-issued identity number to subscribe. There are no monthly charges, only fees for each transaction.

Each account is linked to an ATM card — upgradable to a MasterCard debit card — that can be used nationwide, and that can be used to deposit and withdraw money. The founders also envision the creation of a network of traders who will be able to make transactions in remote areas. The government will also be able to use the accounts to deposit millions of dollars in monthly pensions and grants, helping the elderly receive needed funds without long walks to disbursement centers.

For many poor South Africans, the system offers a first step into a world that can help them save, send, and receive money. With a few key punches, they can send money to a relative or pay for goods without ever seeing a paper bill — a benefit in a country with a high crime rate.

And if cell phone banking works in South Africa, the two companies hope it will help change banking throughout Africa, much of which remains a cash economy. “We believe that this very simple but very well-designed product has the potential to revolutionize banking on the African continent,” says Mr. Singh.

Nationwide, fewer than half of South Africans have access to a bank. Traditional banks are often located far from poor South Africans, or require documentation to open an account, such as proof of income and address, which many lack. Bank fees in South Africa are also some of the highest in the world.

Without access to a bank account, many poor South Africans are stuck in the informal, cash economy. They can’t save securely, borrow money, except at very high interest rates from microlenders.

“A transaction bank account is a key to getting access to the [financial] system more generally,” says Jeremy Leach at the FinMark Trust, which works to make financial services more accessible to poor people in the region. “There’s a misunderstanding that the low-income people do not need financial services because they’re low-income. That’s an incredible myth.”

He hopes easier access to banking will encourage people to save more, and to put their saving — often kept in cardboard boxes under beds or invested in informal groups known as “stokvels” — to better use. South Africa currently has one of the lowest savings rates in the world.

Nearly 80 million Africans now have cell phones, more than twice the number that have land lines, according to the International Telecommunication Union. In Ingwavuma, a rural town in a remote corner of South Africa’s KwaZulu-Natal province, there are two ATMs. The nearest bank is a 90-minute drive away.

News of the new initiative hadn’t reached here yet, but many say it would be welcomed. “I think people will use it if the fees are low enough,” says Ali Fikak, as he repaired a phone for a waiting customer in his small shop. “This area is poor, but even here lots of people have cell phones.”

TARMO VIRKI

Reuters

October 25, 2007 at 4:09 PM EST

HELSINKI — Robust demand from emerging markets in Asia and Africa lifted third-quarter sales of all major handset vendors from the previous quarter, with companies expecting another sales boost from holiday shopping ahead.

All handset vendors combined shipped 285 million mobile phones in the July-to-September quarter, with strong demand in Asia and Africa lifting sales 12 per cent from a year ago, research firm Strategy Analytics said on Thursday.

Top cellphone providers said they envisage that the market will grow more than 10 per cent in the holiday sales-fuelled fourth quarter, but analysts said component shortages are starting to cap growth.

Strategy Analytics said the shortage could cut sales by around 5 million phones in the quarter and the problem could, to some extent, continue into 2008.

“We understand that at least four of the world’s top five vendors currently have component-shortage issues, mostly in LCDs and front-end components,” said Strategy Analytics analyst Neil Mawston.

“Our latest channel-checks indicate an easing of supply constraints toward the December-January time frame,” he said.

The main gainer from the robust demand on emerging markets was the world’s largest handset maker, Nokia, which sold more phones than its three closest rivals combined.

The Finnish company has a strong lead in emerging markets including China and India.

With about 8 million new clients signing up for mobile telephony each month in India alone, the world’s leading cellphone makers are falling over each other to woo first-time buyers with low-priced handsets.

But Nokia, the clear market leader in the ultra cheap phones, reported superior profit margins when compared to its rivals.

Nokia’s profit margin from cellphone business rose to 22.2 per cent in the quarter, while Samsung and Sony Ericsson’s were at 12.3 per cent and 12.6 per cent, respectively.

Motorola made another loss from handset operations, while the world’s number five, LG Electronics, had a profit margin of 8.3 per cent.

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Versions of this warning email have now been circulating for several years. The warning may have been originally derived from an August 2004 Indian news report that describes the electrocution death of a man who answered his mobile phone while it was charging. According to the report, 31-year-old K. Viswajith “was electrocuted when he attended a call on the mobile phone that was put for charging.”

In 2005, another report identified the victim as a Nigerian man and used very similar wording to the example quoted above.

While the original report of Mr. Viswajith’s death is probably true, details about the incident are quite vague, and I could find no subsequent reports that confirm the actual cause of death. Even if the charging cell phone was the cause of death, the incident does not mean that using a mobile phone while it is charging always represents a significant risk of electrocution. This is clearly untrue. Of course, any device that is connected to mains power is potentially unsafe if the device is faulty or is used inappropriately.

If an inherent risk of electrocution were present during normal battery charging, mobile phone manufacturers would almost certainly ensure that customers were aware of it. They would not expose themselves to multi-million dollar legal actions by neglecting to make users aware of this potential risk. There would also be well-publicized warnings from government authorities and various consumer groups. Moreover, the media would certainly not remain silent on the issue.

When describing the incident, the message states that “after a few seconds electricity flowed into the cell phone unrestrained” and thus electrocuted the user. Obviously, this is not what is meant to happen, and would only occur if the charging and battery system were not working as intended. An article about battery charger cubes on Howstuffworks.com explains how such cubes transform normal household AC current down to a low voltage DC current. Thus, if the charger is working correctly, no high voltage charge should ever reach a person using the device.

Notably, the U.S. Consumer Product Safety Commission does not identify using a cell phone while it is being charged as an unsafe practice in its article about Cell Phone Battery Safety.

This warning may also be fuelled by numerous incidences of exploding cell phones. There have been a number of well-documented reports about mobile phone batteries exploding and these explosions have injured some people. In the majority of cases, faulty, counterfeit or damaged batteries cause the explosions. It should be noted that these battery explosions do not only happen while the phone is being charged. Phones have exploded while in the pockets of users or while being used in the normal way, not just while they were plugged into chargers.

Thus, the information in the email could be considered true only to the extent that there is potential for mishap whenever an electrically connected device is used. To reduce the risk of electrocution due to a faulty mobile phone charger, or dangerous environmental elements, it might be a good idea to foster the habit of unplugging the charger before using the phone. Having said that, I do not believe that a correctly connected, non-faulty phone charger is as inherently dangerous as is implied in this email.

References:
Exploding cell phones prompt warnings
Cell Phone Batteries: CPSC, CTIA Working Together to Keep Consumers Safe
Don’t answer your phone when it’s plugged into it’s charger (?)

Write-up by Brett M.Christensen