Page 130 - ITU-T Focus Group Digital Financial Services – Technology, innovation and competition

ITU-T Focus Group Digital Financial Services
Technology, Innovation and Competition

1 Overview 1

The mobile phone evolution over the past few years has, to some extent, blurred the previously distinct lines
between the “traditional” device categories namely, basic phones, feature phones and smartphones.

While the developed world moves rapidly past a feature phone era to a smartphone-centric era, countries in
the DFS markets still maintain significant use of basic and feature phones. The predominant types of mobile
handsets in DFS markets, serving those at the bottom of the pyramid (BOP), are basic phones and feature
phones. Some DFS markets are showing increases in smartphone penetration. The GSMA estimates that while
basic and feature phones are currently around 50% of developing world markets, by 2020 the percentage of
these connections will drop to 30%. 2
Mobile phone prices in 2016 have dropped significantly across all handset categories in spite of the fact that
subsidies from mobile network operators are largely falling away:
3
• The cheapest basic phone found was the Kaliho K204 at US$4;
• The cheapest feature phone found was the Vitel 105 at US$7; and
• The cheapest smartphone found was the Micromax Bolt A24 at US$33.

These price drops are largely due to the expiry of early mobile phone and GSM network technology patents
and the introduction of all-in-one ‘System-on-a-Chip’ (SOC) technology where the major components of a
phone have been squeezed onto a single chip. This has led to a flood of cheap phones and connected tablets
from new manufacturers.

While a number of new and emerging brands such as Tecno and Oppo, are gaining market share in emerging
markets, Samsung at 17%, dominated handset ownership in many African markets during 2016. BlackBerry
penetration, which has held steady at 6% penetration, is expected to rise to 16% in 2017. 4

2 Phone types

Basic phones – also called ‘low-end’ phones - are devices with limited feature
sets, limited or no factory-installed or user-installable value added third party
applications, and no or very limited data connectivity.

The ‘basic’- or ‘low-end’ - appellation is a throwback to the early days of the
emergence of GSM mobile technology, where only basic functionality - such as
call functions, SMS, USSD v1 functionality, and a phonebook - were needed (and
available) to communicate.
These device types can, however, for the most part, access DFS platforms through
use of basic Unstructured Supplementary Service Data (USSD) and SIM Toolkit
(STK) feature sets.

1 Data in this study from Perlman, L (2010) Mobile Money, Mobile Money Conference at Columbia Business School; Perlman, L
(2012) Legal and Regulatory Aspects of Mobile Financial Services; Perlman, L (2015a) Security Issues in Digital Financial Services;
Perlman, L (2015b) Technologies Used in Mobile Financial Services, Perlman, L (2016a) Risks in Digital Financial Services; and
Perlman, L (2016b) CFI/Accion: Access at The Frontier (working title)
2 GSMA (2015) ibid
3 Local and import taxes may increase street pricing.
4 IT News Africa (2016) Study reveals African mobile phone usage stats, available at: http:// www. itnewsafrica. com/ 2015/ 04/ study-
reveals- african- mobile- phone- usage- stats/

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