Skip to main content
Finding new markets

Finding new markets

The world got along fine without mobile phones for 100 years ... but it wasn't to say people didn't want one. After all, who knew they wanted a car, computer or dishwasher.

The arrival of the truly individual telephone with its own special number was a revolution - and one that changed people's attitudes to keeping in touch. But for the revolution to take hold, some sweeping changes and innovations were required.

Digital mobiles developed (1991) : a digital futureStartac cellphone

The advantages of digital transmission over analogue are well known today - these include clearer speech and more consistent data transmission. But in 1980, when the first cellular trials were made in Britain, digital technology was still in its infancy. The original Cellnet (now 02) and Vodafone networks both began as analogue systems.

The future was clearly digital however and an international consortium of network operators and equipment manufacturers made plans for a universal digital cellular system known as GSM - Global System for Mobile Communication.

In 1991 the vision became a reality, when Vodafone launched its digital (GSM) mobile phone service, the first in the UK. Handsets cost £1,000 each and were in short supply. Other operators held off until customer equipment was more widely available and cheaper, with Mercury One-2-One ( now Cable and Wireless) coming to market in 1993, Cellnet ( now 02) in 1994 and Orange soon after.

By early 2005, the GSM system was being used by a billion people on more than 200 networks worldwide.

The price factor : the falling cost of mobileThe high cost of a mobile phone in the late 1980s.

Mobile telephones have always had two price components - hardware cost and network tariff.
The hardware cost was the price of the handset - and how much it would cost to replace or upgrade.

The tariff is the cost of connection and call charges.

Over the years, both components have changed drastically.

Hardware costs have shown the biggest change. The first analogue handsets cost £2,895 at 1985 prices - and even by 1993 the first GSM handsets still cost around £1,000.

By the late 1980s, entry-level handsets cost around £250.

Now only top of the range mobiles cost more than that. At the other end of the scale models can cost as little as £10. In some cases you can even get them for free if you sign up to a certain type of package. The price of mobile phones has fallen so much in recent years they are now cheap enough to be impulse buys in high street shops as a birthday or Christmas present.

New pricing models : the mobile tariff revolutionBT Cellnet 'pay as you go publicity', 2000

At the beginning of the 1990s the average mobile user paid £700 a year on calls and charges, using a telephone that most likely cost around £250.

By 1995 the cost of airtime had fallen to £15 a month (calls extra) and a handset could cost as little as £10.

Today, you can get a number of different packages from your chosen mobile operator, including a set amount of free calls and texts for around £30 a month - and in some of the packages operators even provide the handset for free to lock you into their network. Another alternative package for mobile users is the pay as you go option.

It provides an alternative approach for budget users keen to contain the cost of calling.

And it means a mobile can be given as a present - because there is no contractual responsibility for the calls.

Pay-as-you-go has allowed young people to have mobiles.  Moreover, statistics from international research consultancy Mobile Youth point to  the fact that more and more youngsters are owning mobile phones. They say that during 2005 the number of under-16s in the UK owning a mobile phone will grow to 5.5 million - an increase of nearly half a million on 2004.