3G handset price a challenge for manufacturers

Bhaskar Hazarika

NEW DELHI: With every mobile operator anxious about launching the 3G services, the biggest challenge would be for the handset manufacturers by offering affordable 3G enabled handset.

According to reports there are around 5 per cent handsets, which has 3G enabled feature in it and are not available in the low-end segment. This would be a stumbling block for the operators to offer the 3G services to the rural masses.

"To make 3G popular and affordable for the subscribers the handset cost is to be reduced. The ideal price for a 3G handset should be around $200," Dilip Modi, vice chairman and president, McorpGlobal said. Most operators are optimistic that the price of the handsets would fall in the next couple of years.

Currently the phones available in the market are priced from Rs. 14,000 and above which fall under the high-end category. Tata Teleservices has recently launched an EVDO-enabled Motorola Razr phone. In the GSM category there are a couple of 3G phones being offered by Nokia, Sony Ericsson and some other manufacturers.

India being a price sensitive market the price of the 3G services and the handset would determine the success of its launch.

Handset manufacturers admit that in order to reach the customer numbers the cost of the handsets should be decreased and new handset models should flow in the market. According to Yankee Group there will be 21 million 3G customers by 2010.

However, the operators are also planning to prioritize the rollout the 3G services in the metros to reduce the spectrum charges if the Department of Telecom (DoT) is follow the recommendations of the telecom regulator on pricing. According to Cellular Operators Association of India (COAI), high upfront charges for availing spectrum would lead to high end-user results.

This would mean that the services will initially be launched in the Delhi, Mumbai, Bangalore and Chennai looking at the subscriber numbers in these circles.

"With high base price recommended by the regulator it seems that most of the operators will launch the services initially in the metros to tap the cream subscriber segment. Bidding for pan-India spectrum will mean shelling above the Rs 1,400 crore base price for 3G licences, which will not be preferred by majority of operators," Industry sources said.

Meanwhile, N K Goyal, President, Telephone Manufacturers Association of India said that the prices of handset will come down once the volume increases in customer base. "Steps have been taken by the major handset manufacturers on the price issue. The first example is the Qualcomm apprised Himachal Futuristic Communications Ltd (HFCL) in India to manufacture CDMA handsets."

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