01 Nov 1999

The big telecom exhibition in Geneva only happens every four years, and with 200,000 people attending last month's extravaganza, the exhibitors splashed out.

The Alcatel 'booth' was more of a building, with four stories of demonstration areas and meeting places showcasing the French equipment firm's wares.

Finnish mobile phone maker Nokia had papier mache, life-size figures using ropes to 'hold down' its booth, a nod to its soaring share price? By contrast, a tiny stand housed a company that is wielding more influence in the new Web-powered world of telecoms than a lot of the big companies put together.

It is called Phone.com and it makes micro-browsers that translate Web material to a format that can be received and read on mobile phone screens.

Before going public in July, Phone.com was called Wireless Planet and its founders had knocked on a lot of big telco doors and gotten nowhere.

But Ericsson cottoned on that standardising this technology could be a key to giving European mobile phone companies the next leg up in the race to 'wireless' the planet. The standard is now called WAP (wireless application protocol), and it and Phone-com are hot.

Here is the formula: wireless meets Internet and the result is hyper-growth. The reason is simple. People love their mobiles. Forecasts say there will be one billion of the things in service by 2004, which means there will be more wireless phones than there are phones hooked to wires.

Add to that the Net, which has lots of cool and useful info. And remember that technology is such that mobile devices from personal digital assistants (PDA) such as Palm Pilots and phones are getting smaller and more powerful.

Add WAP and they are increasingly useful. Strategy Analytics estimates that WAP-enabled phone growth will be huge: 525 million of them globally in five years.

What is interesting about this nascent Web phone business is how fast it has come about. A banker friend of mine tells a story that sums it up, and takes the mickey out of one of the supposed 'digerati'. The story goes that earlier this year Bill Gates of Microsoft dismissed the idea that data and video on mobile phone screens was going to be the next big thing. According to my source, the world's richest man could not work out how you were supposed to hold the mobile near your head to talk and look at data or video coming across the screen at the same time. Someone handed the man who loves PCs one of those hands-free earphone cords. To help Bill out of this hole, it is true to say that mobiles and their accessories have been much slower to catch on in the US than in Europe and parts of Asia.

The reason for this is that Europe has one GSM standard and the US has four different 'standards' for mobiles. Added to the rule that the callee, not caller, pays for calls, has meant that less Americans own mobiles and if they do, they tend to turn them off to keep their bills from ballooning out of control.

Capitalising on its mobile lead in equipment, European firms are also leading in mobile consolidation. This year, the UK's Vodafone paid $60 million (£36.3 million) for US Airtouch, then signed up Bell Atlantic (soon to be Bell Atlantic - GTE) to boost its US presence. In the last three months, Deutsche Telekom has paid €10 million (£6.4 million) for control of UK operator One 2 One, while Mannesmann is to spend a whopping $30 billion for another UK operator Orange.

In the US, MCI Worldcom's chief executive Bernie Ebbers - long a mobile snob - recently got the wireless bug and paid $115 billion for long-distance operator Sprint, a deal that crucially included mobile unit Sprint PCS.

Vodafone/Airtouch is a nearly pure-play mobile company, but most companies are doing 'combination' plays. France Telecom is the clearest example.

It recently increased its mobile footprint, buying the German wireless company E-Plus, and it has invested in cable in the UK (with NTL) and in the Netherlands (buying Casema).

In the same week that Mannesmann agreed to buy Orange, France Telecom announced it will bid for a UK third generation mobile license. Third-generation licenses will, in the next two to three years, allow very fast multi-media content to be delivered to hand-held devices. What France Telecom and others see is that all these networks will have a common thread: personalised content. Basically it means co-ordination of e-mail across all platforms - mobile, TV, PC, PDA - as well as tailored information.

Mobile phone providers realise that the current service they provide - a network, competitive airtime prices and roaming - is becoming commoditised.

The way to stand out is to offer 'sticky' services that add value and secure customer loyalty. So for example, my service provider will wake me up in the morning with a customised set of info, possibly including weather and news headlines, as well as details about my day's schedule.

Orange sees this info coming into a wireless voice-activated 'phone' that fits discreetly in your ear. The first WAP-phones are coming out for Christmas. With bigger screens than current mobiles, they are meant to be a first step towards enhanced content in your hand and on the move.

But, the content game is wide open, thanks to our friends at phone.com. Customised content is also the focus at pay-TV companies from NTL to United Pan-Europe Communications (UPC) to France's Canal+. It is no mystery why broadband service provider @Home purchased Web company Excite. It is also no great leap to understand the link-up of European broadcaster SBS and producer Endemol to create a Dutch portal: it will leverage and extend their assets onto the Net and into other devices beyond traditional TV.

And, after a jerky start, Microsoft seems to have jumped on the bandwagon. Working with BT, it is developing hand-held communications devices that will use a stripped-down version of its Windows software to tap into multi-media content from the Net. The good news for those worried that Microsoft will own another market, is that others have taken the lead. Nokia and 3Com will use software from Palm Computing and European software venture Symbian, both rivals to Microsoft in handheld computers.