NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

The announcement yesterday morning was buried deep inside most newspapers: a WiFi capable cell phone that, for $20/month extra, enables T-Mobile subscribers to access the company’s 7000 HotSpots across the US. The Mobile Gadgeteer has a good description of how the whole thing works. It also enables users to call over their own wireless modem at home (if they have a broadband connection). The bait is that phone calls over WiFi links (via Voice over Internet Protocol) are not charged by the minute–its all you can eat for the $20/month, saving your cell-phone minutes for when you are out of range of the hot spot cloud. The service appears to be targeted to a younger, price-sensitive mostly student market, who are already abandoning fixed-line phones. The multi-mode phones (with a WiFi radio chip in them) will cost about $45.

What’s interesting about this, to me, is that it may well be the template for phone service (and Internet service) for many of the BOP, probably with a slightly different business model. The rural connectivity platform we have been exploring and will soon pilot in rural Vietnam is a VSAT-WiFi-VOIP model, which will use WiFi phones as the end user device and for which the core user costs are likely to be about $1 per household per year (essentially, the cost of a VSAT broadband link for each commune).Long-term, however, I think that the key device is a WiFi-enabled mobile phone–that will work on urban cellular networks, and on much less expensive rural WiFi networks. In particular, such a model will let rural users access text messaging and soon-to-come mobile phone-base financial services. Is T-Mobile prescient here? That’s how it looks to me.