Korean mobile phone manufacturer LG is understood to have beaten off larger rivals Nokia and Motorola to win a crucial contract designed to bring the next generation of mobile phone services within easy reach of the mass market.
At the 3GSM mobile phone conference in Barcelona next week, 12 of the world's largest mobile phone operators - who collectively serve 620 million people worldwide - are expected to award LG a contract to produce a cheap 3G handset.
The deal is a significant step for LG as it tries to gain market share from rivals such as Nokia. LG ranked fifth in the world over the third quarter of last year, according to industry expert Gartner. LG shipped nearly 15m phones, helped by sales of its Chocolate phone, giving it a 6% market share, behind SonyEricsson at 7.7% and Samsung on 12.2%. Market leader Nokia sold more than 88m phones while second-placed Motorola shipped nearly 52m.
LG's appointment is the culmination of the "3G for All" programme launched by the GSM Association last summer.
Though there are more than 2.26 billion mobile phone users across the world using phones that operate existing - or GSM - technology, there are only 100 million users of 3G phones.
The 3G for All programme asked handset makers to submit proposals for a 3G mobile phone that can support advanced services, such as internet browsing, mobile TV and instant messaging, while costing significantly less than $200 (£102).
The 12 operators hope that cheaper 3G phones will boost sales. Two years ago at the 3GSM conference, the association launched a similar programme to produce cheap mobile handsets using existing GSM technology.
The contract to produce phones for under $40 and then a year later for under $30 was awarded to Motorola. The US mobile phone group, the UK's second largest maker of phones, expected to ship over 20m of its handsets priced under $30. The market for a cheap 3G handset could be just as large, if not larger, according to industry experts.
But just because the LG phone has been given the seal of approval does not necessarily mean that it will come to dominate the bottom end of the market. Motorola's cheap GSM handset created a brand new segment of the market with many rivals launching their own versions. The same is expected to happen in the 3G market.
The 12 operators that decided who would win the 3G for All crown included Vodafone, Telefonica - which owns O2 - Orange, 3, T-Mobile and Cingular Wireless of the US. They looked at a range of cheap handsets from makers believed to include Nokia, Motorola, Samsung and a number of Chinese vendors. Prices ranged around the $100 level.
The winning LG handset is understood to include a mega-pixel camera, short-range Bluetooth technology and a web browser. It was not, according to insiders, the cheapest handset in the competition but represented the best value for money. Several operators are believed to have already placed orders.