The dawn of the PCS age in Hong Kong could mean a radical change in the sales pattern of one of the most complex pieces of communications equipment in the world, the mobile phone handset, according to Ericsson. The majority of existing mobile subscribers are encouraged to buy phones directly from the respective mobile network providers - Hongkong Telecom CSL, Hutchison Telecom, Pacific Link and SmarTone - because of handset subsidy incentives designed to commit users to future network time.The providers are also under pressure to keep subsidies alive, with other operators in the region, such as Australia's Telstra, selling a Motorola GSM phone for A$129 (about HK$781). This can be disconnected from the Telstra for a charge of A$200 plus the loss of the first month's connection fee. For anybody on a business trip to Australia, this delivers a competitive phone price close to $2,000. Daniel Marti, sales and marketing manager for Ericsson's mobile telephone terminals division in Hong Kong, said the attributes of the PCS market would enable a different breed of telephone network provider to emerge - an operator that would deal predominantly in telephone call management. 'It's a fact that it is not possible for network operators to make money on handsets any more,' Mr Marti said. 'Imagine a situation where a network doesn't want to handle the terminals [handsets] themselves but just pays a figure for a subsidy to another third party to sell the handset, as long as it was connected to that particular service. 'There are some big distributors, who on a worldwide basis would have enough buying power to engage in the handset business, and resell in Hong Kong in that manner.' Mr Marti said the PCS licensees initially would be interested in ensuring an adequate supply of handsets for people seeking connection to their networks. However, after the consolidation of PCS network technology, some operators would be tempted to concentrate solely on operating the network, he said. The handsets for the PCS network will be almost identical to the existing phones used for the GSM networks, with minor aerial fittings and internal differences. Ericsson demonstrated a PCS version of its GH337 phone for use to the 14 companies who placed bids for the PCS service (PH337) in mid 1994. The GH337 has since been replaced by the GH388 model Ericsson handset and Mr Marti said by the time the new networks were up and running, the PH388 PCS handset - a derivative of the GH388 - would be manufactured in volumes suited to the PCS market in Hong Kong.There was a mistaken perception in the consumer market that PCS handsets would be cheaper than GSM, Mr Marti said. 'From the handset point of view, it will have exactly the same complexity and there is nothing we can save on in assembling the phone. 'In fact it should be more expensive because PCS has a lower volume. But because it is almost the same phone as a GSM, we can take advantage of the economies of scale in manufacturing the GSM.' He said PCS would be cheaper more from the network operation point of view. 'They have identified the price of the handsets is an obstacle of convincing new subscribers to using a mobile phone,' Mr Marti said. 'Initially all the PCS licensees are going to have problems distinguishing their services and so it is the price of this handset that will be the best way to attract customers.' Existing mobile phone operators have a head start, but ultimately will have to concentrate on the call business, he said. Ericsson plans to release a dual-band handset, which could operate on GSM (900 megahertz) and PCS (1,800MHz) frequencies. This is different to a dual-mode handset designed to operate on either a digital or analogue, or a digital and cordless network. Mr Marti said the dual-band phone would enable a higher degree of flexibility in network management, call services and roaming availability.