The location has shifted from Cannes to Barcelona, and the number of attendees could swell by up to 50%, to 50,000. Gone are the beloved party yachts that lined the port of Cannes -- replaced with a seemingly endless series of tapas feeds all over Spain's second-largest city. But one thing won't change: The 3GSM World Congress is still the most important mobile phone event of the year.
Sure, there are other telecom shows. But none offers the sheer concentration and intensity of 3GSM, which brings together operators such as Vodafone (VOD), Orange (FTE), T-Mobile (DT), and NTT DoCoMo (DCM) with a who's who of equipment and handset suppliers such as Nokia (NOK), Motorola (MOT), Samsung, Ericsson (ERICY), Alcatel (ALA), and Nortel (NT).
The giants mount huge exhibits and throw lavish parties, while celeb CEOs like Nokia's Jorma Ollila and Motorola's Ed Zander press the flesh with clients, analysts, and the media. What really brings 3GSM alive are the hundreds of ambitious small companies proffering the latest breakthroughs in mobile software, services, and content.
UNTAPPED POTENTIAL. What are the hot trends at the 3GSM 2006? Continuing the theme of recent years, it's all about data, data, data. Half a decade after the tech bubble burst and Europe's mobile operators nearly went broke buying licenses for speedy third-generation (3G) mobile services, the over-hyped "wireless Web" is finally starting to happen.
Most major operators now offer good 3G coverage throughout their most populous regions, and 3G handsets have become sufficiently cheap and attractive to lure average buyers. That's breathing life into nonvoice services such as downloadable mobile games, streaming and downloaded digital music, and the racier fare of mobile gambling and adult entertainment. It's also helping drive a surge in mobile e-mail from providers like BlackBerry-maker Research in Motion (RIMM) and rivals like Nokia, Seven Networks, and Visto.
Still, there's no question 3G has been a huge disappointment so far for the industry. According to researcher Gartner, 3G handset sales amounted to just 46 million units last year -- less than 6% of the industry's record-setting total of 812 million phones. Worse, only about 3% of mobile customers are actually using 3G services, says telecom researcher IDATE of Montpellier, France.
FASTER, EVER FASTER. Now, thanks to lower prices and a richer array of services, customers may finally turn to 3G in earnest. Gartner figures that by 2009, 3G and more advanced handsets will make up 41% of an annual market approaching 1.1 billion units. By 2010, adds researcher Informa Telecoms & Media, nearly 20% of all mobile customers, or 640 million people worldwide -- will be using 3G.
The only wrinkle is that it turns out 3G isn't really fast enough to handle all these bandwidth-hungry activities. So before it has even taken off, equipment makers and operators are already rolling out an enhancement with the unappealing name of HSDPA (high-speed downlink packet access), which will kick into gear this year. U.S.-based Cingular has already started trials of limited HSDPA services, and the first handsets to support it are reaching market. (Gartner figures sales this year will hit about 2.1 million units.)
At 3GSM, companies including Nortel and Alcatel also will demonstrate an even faster version of HSDPA capable of zapping to mobile phones at 3.5 megabits-per-second -- faster than many wired broadband connections. "The arrival of HSDPA will, for the first time, make broadband Internet access a truly mobile experience," says Gavin Patterson, principle analyst for Informa, which also runs the 3GSM show.
TAPPING THE POTENTIAL. The rapid move to HSDPA is fueled, in part, by unexpected competition. In the decade since 3G was dreamed up, an unanticipated upstart rival called Wi-Fi has taken the world by storm. Most mobile carriers have now gotten over their denial about Wi-Fi and are sorting out ways to co-exist with it. Some, such as T-Mobile and Swisscom, have added hotspots into their service portfolios. Others have struck deals with hotspot operators to offer customers bundles of mobile and Wi-Fi services on a single bill.
The next battleground is an emerging, even-faster wireless alternative called Mobile WiMax. A kind of souped-up Wi-Fi boasting higher speed and longer range, it's being heavily pushed by Intel (INTC) and, now, Nokia. Unlike the current generation of WiMax, which was designed for stationary use -- analogous to a wireless DSL -- the new mobile version will work even when customers are moving around. Mobile WiMax won't hit the market in earnest for several years, but companies are expected to show early versions at 3GSM.
Of course, all this wireless bandwidth isn't good for much if there's nothing to do with it. That's why carriers, equipment makers, and media companies are pushing as never before into digital media.
RIVAL RESPONSES. Nokia will showcase its N91 music phone, which is shipping this quarter and holds up to 3,000 songs on a 4-gigabyte internal hard drive. Motorola got a black eye with its underpowered ROKR phone -- the first to include iTunes software -- but it has recently rolled out the SLVR L7, which looks more like its popular RAZR phones. No. 5 handset maker Sony Ericsson Mobile Communications has hit pay dirt with its Walkman-branded music phones, including the new satin-black W810 model.
Along with all the new hardware is a raft of music services. Most major carriers now offer pay-as-you go music downloads, though none has so far made a dent in Apple's business. 3G and faster wireless hookups will also make possible streaming services where consumers can use their handsets like a portable radio. The rise of mobile music is attracting big names into the mix. MTV Networks (VIA), for instance, plans to showcase three new mobile music channels at 3GSM.
At the same time, one of the biggest topics at 3GSM will be Mobile TV, a catchphrase for a handful of competing technologies and business models that could transform the entertainment business. Nokia and others are backing a scheme called DVB-H, which uses modified versions of the conventional digital-TV signals now available in many Western countries. Qualcomm (QCOM) has its own solution, called Media FLO. And Korea has taken the lead with a rival called digital mobile broadcasting, or DMB. Says Informa principal analyst David McQueen: "DMB will be the technology of choice for the next couple of years in a number of markets."
A WORLD OF GROWTH. All these approaches are controversial among carriers because they eschew 3G networks, instead beaming digital TV signals directly to handsets from broadcast transmitters. Conventional mobile operators are more inclined to schemes that let them send digital video over their 3G or future networks. But some are straddling the fence, figuring they could become players in both types of transmission.
Will sexy services like digital music and TV be enough to drive hundreds of millions of customers to higher-speed mobile networks and higher monthly bills? Carriers and equipment makers are hopeful, but even the long-awaited wireless Web isn't yet stemming the trend towards sagging prices for handsets and services.
That's why so many industry players are counting on red-hot growth in the developing world to help lift their results. Informa figures that carriers worldwide will add an eye-popping 343 million new customers this year -- 41% of them from China, India, Russia, and Pakistan alone.
EVEN CHEAPER. One recent change helping spur growth in poorer areas is the development of handsets selling for very low prices. Under the tutelage of the GSM Assn. trade group, Motorola developed a $40 handset, and then a $30 version. Nokia also offers an assortment of ultra-cheap models. Now, says GSM Assn. CEO Rob G. Conway, "the $20 handset is on the horizon." Such products are helping drive record sales in the developing world.
As they chow down their tapas in Barcelona, the assembled throngs of mobile-industry insiders will be well-served to remember that the global revolution they've helped unleash produces not just profits but also power to the people.
Paris-based BusinessWeek correspondent Reinhardt is in Barcelona for the 3GSM confab
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