Ericsson believes companies will be able to make 3G mobile phones for as little as $70 (£36) next year as component makers step up their efforts to simplify the handsets.

The low-cost 3G handset would likely allow users to browse the internet and use messaging and voice services, according to Sean Gowran, president of Ericsson Taiwan. The $70 would be the cost to make the phone and not the price to end users, he noted.

Low-cost handsets have been a buzzword in the industry for the past few years as a way to tune more people into the existing global GSM (Global System for Mobile Communications) wireless network. GSMA (the GSM Association) has even launched a contest to inspire mobile phone makers to create a low-cost 3G handset, an idea similar to their contest a year ago aimed at producing a GSM handset for under $30. Motorola won that contest.

Demand for the low-cost GSM phones has been brisk in emerging markets such as China and India this year, where mobile phone use is growing at a frantic pace.

India recently announced its strongest month ever for wireless subscriber growth, at 6.71 million people in October. The figure brings its total to 136.22 million subscribers, up from 75.9 million at the end of last year, according to the Telecom Regulatory Authority of India.

Ericsson believes that efforts to reduce costs have had a big impact on the mobile phone industry. Cheaper and fewer components will be vital to efforts to develop a $70 3G handset.

The difference between a low-cost 3G handset and a high-end one will be huge. An advanced handset with all the latest features, smartphone computing capabilities, the latest digital camera functions, multimedia applications with plenty of memory and the ability to use push mail and mobile TV will still be more expensive, at around $500.