Yes, the [increased] capacity advantage and contained tariffs mean that their margins are higher than with GSM. Okay, fair enough they have to get some payback for the intial license fee and the 3G build out. But 3G is not a short-term proposition, no shorter than GSM ever was. So the notion of UMTS-only handsets cannot be too far away, measured in perhaps months rather than years. With that I would expect the design and engineering costs of handsets to fall also - more margin increases for the manufacturers. Some of this will pass on to the consumer - and so the £7.49 handset could become routine.

Dare I say that we could even see truly disposable handsets bought like a packet of ciggies from a vending machine. Environmentally these would not be too much of a good thing - recycling electronics is EU regulated these days. So that challenge will have to be overcome - perhaps by putting a returns value on them (like Coca Cola bottles of old).

It'll be interesting to watch, but I rather fancy that £7 handsets will be immensely popular on 2G and 3G with the masses.