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Forget handset snobbery - 3G customers want subsidised phones

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Operators are being forced to cut the prices of their top models, eroding the profit margins that such exclusive products offer

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Exclusive 3G handsets might attract the attention of potential mobile-phone subscribers, but operators continue to rely on old-fashioned subsidies to convince them to sign up.

Available exclusively from SmarTone Telecommunications is Sanyo's S103 slider handset, which boasts a 2.4-inch screen - among the widest available. This alone is not enough to lure subscribers as SmarTone is offering the handset for $4,900, picking up $800 of the phone's cost.

Larger rival Hutchison Telecommunications - which offers LG and NEC models on an exclusive basis in Hong Kong - continues to offer the most generous enticements. The latest NEC 338 is available free of charge for customers who agree to an 18-month package at $151 a month.

One analyst said offering exclusive phones on a subsidised basis was destroying any opportunity to enhance average revenue per user (arpu).

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'For Hutchison, its heavy handset subsidies offset the margin [that comes with handset exclusivity],' the analyst said.

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