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No heavy subsides for 3Gdate: April 11, 2002 Telecommunications analyst with the 3G non-believer, told industry participants in the Australian Mobile Telecommunications Association conference that capital markets would not allow the heavy handset subsidies that had driven GSM growth through the '90s, and without those subsidies consumers would not be able to afford $500-plus 3G phones. They claimed GSM handsets were launched into the market at $500 to $600 but took off only after aggressive subsidies brought prices down to the same level as the $70 analog handsets they were replacing. But the same thing would not happen again. "Aggressive handset subsidies are a thing of the past" said, Ms Lynn Canalese, telecommunications analyst "The big change during 2001 was that the market stopped rewarding on a subscriber number basis, but [moved to] a revenue basis." While 3G proponents are pushing a richer "user experience" via handsets packed with new functionality such as video and high quality audio, JP Morgan claims significant handset volumes are only ever generated when consumers pay less than about $70. In the short term, that means 3G functionality will have to be reduced to little more than is offered by so-called 2G/2.5G handsets, already coming on the market. JP Morgan predicts 3G's early adopters will represent less than 8 per cent of Australia's population.
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