Mobile Players Descend on Barcelona

At 3GSM, the wireless industry's annual meet-and-greet, expect talk of everything mobile—from TV and location services to advertising and operating systems

by Jack Ewing

Unless you're part of the mobile-phone industry, next week is not a good time to visit Barcelona. If you do work in the mobile-phone industry, chances are you have no choice. Some 60,000 people who make their money in one way or another from the wireless business are expected to descend on the Spanish city from Feb. 12 to Feb. 15 for the annual 3GSM Congress. They will monopolize hotels and restaurants and generally crush everything in their path.

The event mirrors the explosive growth of the mobile industry in general. Attendance at 3GSM is up from 50,000 last year and 24,000 in 2002. Among the 1,300 exhibitors will be giants such as Nokia (NOK) and Motorola (MOT) as well as hundreds of small startups hoping for at least a tiny slice of a burgeoning industry. "For us it's the No. 1 event. At 3GSM we meet our target group," says Jan Volzke, senior marketing manager for the mobile unit of Santa Clara (Calif.)-based McAfee (MFE) which sells products designed to protect mobile networks from hackers.

For Volzke and thousands of other executives, the Congress means four days of networking and salesmanship that will begin at dawn with power breakfasts and end after midnight at one of the many company-sponsored soirees. Amid the frenetic activity, a few big themes are likely to emerge. Here's a rundown:

Mobile TV. Wireless industry companies such as Vodafone (VOD) or Deutsche Telekom's (DT) T-Mobile, desperate to generate new revenue as the cost of voice minutes falls, have been hyping mobile TV for a while. At 3GSM, Bollywood starlets, independent filmmakers, and even a few porn stars will be on hand to promote small-screen entertainment.

Fact is, mobile TV has yet to take off, partly because users have found the transmission quality uneven or the services too expensive. Could that change? Industry sages say new technology should provide better reception, and operators are starting to experiment with advertising-supported programming to encourage more viewers.

Still, many industry watchers are waiting to see the money. "I think mobile TV is going to be a big topic, I'm not sure it's a big business," says Falk Mueller-Veerse, managing partner at Munich-based Cartagena Capital, a boutique investment bank specializing in the wireless industry.

Location, location. "Location services" is another buzz phrase that's been around for a while, but it will see new impetus this year. Nokia announced Feb. 8 it is making its smart2go mapping and navigation software available for free. For people with properly equipped phones or an add-on global positioning device, the software provides guidance around a strange city and highlights points of interest. Operators hope to generate revenue by, for example, steering users to the nearest McDonald's (MCD), which would pay an advertising fee.

The concept is not new, but it may be inching closer to reality. "It seems now to be economically feasible to put GPS into phones. That's a tipping point," says Martin Garner, director of wireless at market researcher Ovum in London. However, he doesn't expect location services to generate much revenue until GPS phones are commonplace.

Emerging markets. For handset makers, grabbing a share of fast-growth markets such as China or India is a huge priority. The number of wireless subscribers in India alone, already more than 100 million, will hit 265 million by 2010, says Scottsdale (Ariz.)-based market researcher In-Stat.