GSM World Forum: Wireless future discussed

This week wireless companies from around the world will gather in Cannes, France to talk about integrating the Internet with mobile phones, new high-speed wireless standards and other flashy technologies. But a more fundamental question will be on everyone's minds: does the wireless industry have a future?

Telecommunications companies may be headed for a financial meltdown, according to many experts, because they've paid billions of pounds and have committed to paying billions more to offer next-generation wireless services that consumers may not really want. The question of how third-generation, or 3G, services will pay for themselves will be foremost at this year's GSM World Forum, starting Monday.

The forum is centred on issues related to GSM (Global System for Mobile Communications), the wireless standard used by most markets outside the US, but topics such as the wireless Internet and the advent of 3G are fairly universal in scope. (AT&T has said it will bring GSM into the US.) Most major wireless and mobile computing companies will make an appearance, with attendance expected to at least equal last year's 15,500 people.

The most pressing matter at hand is expected to be the impact of 3G licences, which since last spring have cost telcos such as British Telecommunications, Vodafone, Deutsche Telekom and France Telecom billions of pounds. By the time all the 3G licences are sold off, European telcos are expected to face a bill of up to 120bn euros (£76bn), according to Forrester Research. Building the networks and marketing the services is expected to cost another 100-200bn euros, Forrester says.

As a result, telcos' debt burdens have grown so large they are unable to raise the funds for other business transactions, such as mergers and acquisitions. Many are expected to float off divisions to raise cash, despite a market that isn't very interested. France Telecom last week floated UK-based mobile company Orange, only to watch it drift below its offer price on the first day of trading.

3G, or UMTS (Universal Mobile Telecommunications System), won't start to pay for itself for several years. No one is even sure the services -- basically a high-speed, always-on wireless Internet connection -- will turn out to be something consumers want. "One problem is the amount operators will be able to charge for services," says Forrester analyst Lars Godell. "There are so many other technologies, and UMTS is just one of them."

Other hot topics will be GPRS (General Packet Radio Service), an emerging precursor to 3G, and Bluetooth, which lets all sorts of devices connect wirelessly to peripherals and to one another.

Several companies are trialling GPRS now, though Sweden's first nationwide rollout has failed to interest the public. If it is successful, some believe the relatively inexpensive system could eliminate the need for 3G entirely.

The first Bluetooth products have emerged since last year's Congress, but the standard seems caught in an endless beta-testing phase. Embedded Bluetooth chips are still too expensive to be plentiful and there are nagging compatibility issues, experts say.

But Bluetooth is on track and will appear in millions of devices, say its proponents. "There are always issues with technologies coming to maturity," says Tom Wright, chief operating officer of Psion Connect, which last week announced its Bluetooth line. "We are getting to the point now where Bluetooth is about to become a reality. We should see this period as the starting point."

Ultimately Bluetooth could link mobile devices to a nearby high-speed Internet connection, providing another cheap alternative to 3G. "It is clear Bluetooth will provide competition for the UMTS players," says analyst Godell. "Everybody can be an operator with Bluetooth."

A recent revamp of the Bluetooth specification has eliminated many compatibility problems, and products are expected to become widely available in another year or so.

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Guy Kewney has seen the future, and he thinks it is going to be slow! The future of wireless isn't simply a question of technology. It is the systems integration that is stalling us as we struggle over the threshold of the 21st century; and Guy reckons it is going to be next to impossible to find people to do it. Go to AnchorDesk UK for the news comment.

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