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This magical $100 figure is the benchmark that has been set by the 3G community in its latest push to increase levels of 3G penetration. A sub-$100 3G handset is seen by many in the industry as a key to unlock the untapped developing world markets. In many developed economies, 3G subscriptions are rising steadily, but they remain stubbornly below the levels that 3G service providers would like. In both types of market, pre-paid subscribers are vital for increased 3G penetration, and pre-payers are very sensitive to the price of the handset. (Interestingly, they seem less concerned over the fact that they often pay more for their usage of voice and data services than users on post-paid contracts). Cheaper, unsubsidised low cost handsets are needed for prepaid packages, to appeal to lower income users in developed economies. In developing countries, ultra low cost handsets - nearer to the $50 mark - are also seen as important to assist uptake of 3G services from their current low or non-existent levels of penetration.

Informa Telecoms and Media brought together some of the 3G community's big hitters, at a two-day conference in London recently (13th - 14th March), to discuss the prospects for a sub-$100 3G handset. One of the main premises of the conference was an assumption that sub-$100 handsets (retail) are an essential element in achieving mass-market penetration of 3G.

The consensus among the delegates was that, given the current reductions in component and software prices, low cost 3G handsets are feasible. We can expect them in the shops - probably associated with pre-paid 3G packages - during 2008. The GSMA industry association recently ran a competition for handset suppliers to produce a low cost 3G handset. It was won by LG's KU 250, with Nokia's entry coming second. So the technology and the cost structures are already in place for the industry to start churning out low cost handsets.

Opinions were far more divergent on the subject of whether 3G is the right focus for the current drive to low cost devices. Delegates from developing economies, such as Brazil and India, were more concerned with the availability of low cost 2G and EDGE-enabled 2.5G devices. These are seen as having far more potential to drive mobile penetration and overall teledensity in the next two years than 3G ever could. Indeed, many developing economies currently do not possess 3G networks.

Some delegates were concerned at the cellular industry's habit of over-engineering handsets, cramming them with every feature imaginable. If 80% of the functions in a typical 3G handset are never used, this represents a massive wasted investment (and 3G has form in this area, if one recalls the early spectrum auctions). But who is picking up the bill for all this unused functionality? Why, the end user, of course.

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