World’s Cheapest Smartphone Set to Launch in India: Fact or Fiction?

Indian firm Ringing Bells has astounded the market with the launch of the world’s cheapest, $4 3G smartphone, but is it fact or fiction?

In February, a little-known Indian mobile manufacturing firm, Ringing Bells, astounded the market with claims that it was set to release a 251 rupee, or $3.80, 3G smartphone.

Called the Freedom 251, the, what would be, world’s cheapest smartphone runs with Android, and is equipped with a 4 inch touchscreen display, 1.3 Ghz quad-core processor, 3.2-megapixel primary camera, 0.3-megapixel front selfie camera, 1GB RAM, and 8GB of internal storage that can be expanded up to 32GB via a microSD card. Baffling industry insiders, the handset was launched by a leading member of the BJP, Murli Manohar Joshi. And within three days, millions had ordered the phone for delivery in June 2016, with 30,000 paying upfront.

India is the world’s second-largest mobile market. But it also has a stark urban-rural divide, with poorer Indian states such as Bihar, where 85% of the population live in rural areas, seeing telephone connection penetration as low as 54%. The Indian market for budget smartphones is therefore huge. To fill that market, over the last decade the price of a 3G smartphone in the country – largely Chinese imports – has dropped to as low as $34. But is a $4 phone, about 1% of the price of the latest iPhone, fact or fiction?

Reports of fraud surface

Although the story sounds positive for India, both in its ability to democratise access to technology and raise the profile of Indian domestic production, damming reports of fraud surfaced almost immediately following launch. And as the wider market questions the possibility of such a smartphone at such a price, the company has suffered accusations of relabelling an existing handset to Apple copyright infringement, faking ties with the government, and being a Ponzi scam.

Ashok Chadha

Ashok Chadha

Indeed, some weeks after launch, Ringing Bells – an online company set up just in September 2015 – actually admitted to purchasing demo Adcom Ikon 4 handsets from Chinese low-cost smartphone maker Advantage Computers (Adcom) and rebranding them as the Freedom 251 handset; although the company insists that this was only to give the media an idea of what the product would look like. Ringing Bells President Ashok Chadha said, the Adcom handsets were only handed out as “samples” to select media. And he assured the public that the sample handset utilised unique internal components, with “only the body and touch panel coming from Adcom”. Adcom has since announced that it will take legal action against Ringing Bells.

Amid the backlash, the company has reportedly refunded the 30,000 customers who pre-paid for the phone. And the company website now lists all of its phones, including the Freedom 251, as unavailable for immediate sale. In an official statement, Chadha said: “The company has decided that we will, henceforth, offer cash on delivery mode of payments for those who have placed an order for the Freedom 251 smartphone. This will ensure further transparency and clear any misgivings”.

India government agencies keeping watch on Ringing Bells

But the steps have not alleviated concerns, and several Indian government agencies have started keeping watch on the company. Indian Minister for Communication and IT Ravi Shankar Prasad, has said: “The government, through various departments, is taking steps to protect the interest of consumers.”

A team from the Serious Fraud Investigation Office has made an inspection of Ringing Bells’ books, and has submitted a request seeking information from the Registrar of Companies. The Directorate of Enforcement is investigating the company for alleged contravention of the Foreign Exchange Management Act. An internal committee working on behalf of the Department of Electronics and Information Technology (Deity) is reviewing all issues related to Freedom 251. And the Corporate Affairs Ministry has also ordered a review of the company’s books.

The company has also come into criticism for faking ties to the Indian government, falsely marketing an association with Prime Minister Narendra Modi’s Make in India and Digital India initiative. Indian Secretary of the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Amitabh Kant, confirmed on Twitter that Ringing Bells, and the Freedom 251, have nothing to do with Make in India or the Indian government.

Finally, following a complaint lodged by BJP MP Kirit Somaiya, who claimed that the Freedom 251 was a Ponzi scam intended to cheat buyers, the Noida police have also registered an FIR against the Chadha and the company’s promoter Mohit Goel under sections 420 of the Indian Penal Code (cheating) and Information Technology Act. “All those who are involved in the scam should be punished. Now their office is closed, their call centre is not responding and nobody knows how much money they have collected. All this should be investigated,” MP Somaiya has said.

We’ll have to wait until June to see whether an original handset does indeed go out for delivery. But for now, it seems that a $4 smartphone is still a piece of fiction.

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