Hong Kong's mobile telecommunications market is a showcase of modern technology, according to John Gilbertson, managing director of Ericsson, the Swedish multinational whose equipment runs 40 per cent of the world's mobile services. 'Hong Kong has shown the world it can accommodate every conceivable system. It is a showcase for mobile and Ofta is largely responsible for encouraging much of the competition,' Mr Gilbertson said. The company is keen to start supplying equipment to Hong Kong's latest generation of mobile systems, Personal Communications Services (PCS) as soon as they pass the hurdle of the Joint Liaison Group. By the end of the year, Ericsson hopes to be able to offer dual band handsets that work in both PCS and GSM (Global System Mobile) networks. PCS operates at a higher frequency than GSM but the two systems are similar enough to enable the development of a single handset. 'We are hoping to be able to market it to end-users at a small premium to the single mode version,' Mr Gilbertson said. Dual mode handsets are likely to be popular because they will offer subscribers greater flexibility. As PCS coverage grows, there will be advantages in opting to use PCS rather than GSM in some high-density areas, according to Kinson Loo, Ericsson's general manager, mobile telephone terminals. Another reason for using the PCS option would be roaming when Hong Kong subscribers travel. PCS roaming is already available in Britain and several Asian countries. One of Ofta's most visible achievements in the Hong Kong mobile market is seen in the sharply lower retail handset prices now compared with several years ago. A good handset can be bought for less than $4,000 compared with more than $10,000 previously. These are, of course, consumer prices and the change has had more to do with the attitude of operators than manufacturing costs. Falling handset prices in Hong Kong have had little effect on Ericsson's revenues in Hong Kong, Mr Gilbertson says, with the company's margins on sales to operators and outlets remaining unchanged apart from the added commercial pressure from operators as they become bigger customers. Ericsson's latest model GSM handset, the GH 338 - with advanced features including 35-hour standby time and 31/2 hours of speaking time per battery charge - sells to operators for more than $4,000. 'Anything below that is a subsidy. The dealers and small shops survive on the activation fees from the operators,' Mr Gilbertson said. For commercial and legal reasons, Ericsson signs all its China deals through its Hong Kong office. Hong Kong is one of the group's four operation zones in the China region, along with the north, south and central zones. The concept of Hong Kong as a mobile telecommunications showcase is important to Ericsson as a marketing tool in its China operations. The group's credentials in China are impressive. The company claims an estimated 60 per cent of the GSM market in China and along with Motorola it has set the standards for the analog systems, which still account for about half of the subscriber base. In Guangdong, which accounts for about a third of all China's cellular subscribers, Ericsson has supplied the networks to the whole mobile market apart from a small Siemens network in Shenzhen. Ericsson attributes its strong hold on the Guangdong market to the relationship it has developed with the provincial telecommunications authority since 1987 when it supplied the first TACS (Total Access Communications Systems) analog system to the province. The prospects for the future growth of business in China are more than bright, with even the conservative Ministry of Posts and Telecommunications (MPT) forecasting a mobile subscriber base of 18 million by 2000. There are about five million subscribers, up by 1.4 million in the year to date. There are only two official mobile operators in China, the MPT and recently introduced competitor Unicom, but foreign suppliers compete to supply, set up and maintain the networks. Foreign operators are specifically banned from operating telecommunications networks in China, leaving equipment supply as the main area of foreign involvement. About 90 per cent of China's switching equipment has been supplied by foreign or Sino-foreign ventures, a market worth more than US$4 billion.