The rationale is not only to ease congestion on its 2G networks around the world, but also ultimately to free up spectrum for what Schulte-Bokum called re-farming some 2G spectrum for 3G.
He was referring to the idea of using the 900MHz frequency band for what he called 900MHz W-CDMA services, where the propagation characteristics of the lower frequency vis-a-vis the current W-CDMA band of 2.1GHz would enable Vodafone to drive the penetration of 3G into suburban and rural areas.
To do so, however, the operator would need to migrate some of the voice traffic from 2G to 3G, where in any case spectrum utilization is more efficient, so the idea is to develop some low-end, voice-specific 3G phones for this purpose.
Schulte-Bockum was speaking at the carrier’s launch of the first two ultra-low cost (ULC) phones from its relationship with Chinese ODM vendor ZTE Corp, which are designed to ship with its brand only in countries, at least in countries where it has a brand presence, either with its own network or through partners offering services such as Vodafone Live.
The Vodafone 125 and 225 are 2G phones for voice and SMS, aimed at emerging markets, primarily in the developing world and Eastern Europe, where they should retail at $25-$45, the only real difference between them being that the first has a black and white screen while the second is in color. Both phones run the Infineon ULC2 chipset specifically designed for low-end phones that need a low bill of materials.
Schulte-Bockum said the devices will be launched in a number of Vodafone countries such as Egypt, Turkey and India and is in talks with 15 Vodafone affiliate companies who offer something from the Vodafone portfolio on their networks. He added that there is also the potential for third parties in countries where there is no Vodafone brand to launch the phones with their own branding as a means of driving scale for the devices.
Our View
The ULC market is a domain where Nokia and Motorola have made a lot of investments, with differing degrees of success in terms of profitability, but clearly Vodafone feels it needs to be in the market with an own-brand offering, and uses ZTE to provide the hardware for the purpose.
