A communications revolution is creating unprecedented opportunities for small and medium-sized players, says TONY GLOVER

Several of the new trends that will revolutionise the world of telecoms and IT over the next year were firmly in evidence at 3GSM Barcelona, the mobile phone industry’s big annual event.

The increasing globalisation of the Global System for Mobile Communications (GSM) network, the growth of wireless broadband and new entertainment services were major themes. The star of the show was San Francisco-based manufacturer OQO’s hand-held PC. Little bigger than a mobile phone, the device has the full power of a wireless-enabled Vista laptop.

Waiting in the wings was a rival handheld computer from Micro-soft’s old rival Apple in the form of the long-awaited iPhone, due for release in Europe later this year.

Once again Bill Gates and Steve Jobs will be going toe-to-toe to decide who will dominate the next generation of computing. But the fact that the US computing industry’s major battleground in 2007 will be high-end wireless handhelds is testimony to the global success of the GSM network, the European Commission’s mobile communications standard. The number of people using GSM has mushroomed from around one million in 1993 to over two billion today, operating across 212 countries.

1. If there is one trend that will dominate in 2007, it is the globalisation of mobile communications. The mobile phone industry estimates that around 1.3 billion mobile phones will be sold in 2007, with the rapidly developing economies of India and China being the main engines for growth. Mobile operators in India, for example, are signing new mobile phone owners at the staggering rate of about a million a week.

The announcement that Vodafone is acquiring a controlling interest in Hutchison Essar, India’s fourth-largest operator, coincided with the launch of 3GSM Barcelona and signalled India’s entry into the world’s fast-growing communications network.

This represents a major new opportunity for European companies of all sizes to sell their services and expand their brands into new markets like India via the new wireless networks. The Indian sub-continent is becoming connected at a time when mobile communications are undergoing a revolution.

2. The second trend that will become increasingly apparent over the next year is the way in which mobile communications are becoming more sophisticated and relying less on basic voice services. Mobile operator O2, owned by Spain’s Telefonica, predicts that all phones will be email-enabled by 2010. This will effectively leapfrog consumers in markets like India and China from the 19th to the 21st century. They will be able to move from being without a phone or PC straight to the world of always-connected email and internet services simply by signing up for a mobile phone. Way before this happens, devices such as Apple’s new iPhone will have introduced users to high-definition mobile audio and video. Electronic gaming, music and even TV programmes will become available to millions almost overnight.

The companies that will initially benefit from this massive expansion of Europe’s mobile communications networks will be mobile phone industry giants such as UK-based Vodafone and the world’s biggest mobile phone maker, Finland-based Nokia. But Europe’s world lead in mobile communications means that other smaller players will also be able to use India’s increasingly affluent and English-speaking middle class to sell their services.

3. The third major trend that will start to affect European companies in 2007 is the continued convergence of IT and telecoms. Not only will mobile phones behave increasingly like computers, but telecoms operators like Deutsche Telekom and BT will also use their broadband services to supply services such as internet TV (IPTV) to customers. The process has already started with the launch of services like BT Vision. BT has recently struck a string of deals with content providers including Universal Music and Time Warner in order to be able to provide an ever-wider choice of on-demand entertainment. IPTV will be a brand new medium and, as such, will offer businesses massive new opportunities.

4. The fourth trend will see the rise of increasingly sophisticated forms of internet-based advertising as IPTV takes off. Microsoft is now determined to take Google’s ball away and run with it. It has, for instance, developed its own form of Google-style paid-for search that uses Microsoft’s vast database of personal information to allow advertisers to target specific demographic groups.

“Advertisers can see the age and sex of web surfers clicking on their ads as a result of information gathered by Microsoft properties such as MSN Hotmail, which requires those registering to submit their age bracket and gender,” says James Colborn, product manager at Microsoft’s adCenter research labs. He adds that advertisers do not have access to the names of those visiting their sites, merely a demographic overview of their age and sex.

According to Colborn, the adCenter labs on the Microsoft campus outside Seattle are about to release even more precise online advertising tools. Microsoft is launching a trial IPTV advertising service with an as-yet-unnamed major US retailer that will make a technological prediction made by Bill Gates last year a reality. Gates famously remarked that it would be great if TV viewers could use some sort of interface to click on products such as the clothes actors were wearing, the furniture or other items on the set, and be provided with links to the manufacturers’ websites – the system being trialled by adCenter will offer precisely that opportunity.

After the initial trial, Microsoft hopes to be able to offer the service to advertisers via the IPTV services of European telecoms operators such as Deutsche Telekom and BT. According to Colborn, this will give an unprecedented opportunity for European manufacturers of niche goods to target specific audiences.

5. The fifth major trend for the coming year will be the way in which all consumer IT devices, mobile and fixed, will become content guzzlers. The competition to acquire quality content will become intense, but ironically, the very technology providing consumers with the ability to access such a wide range of content will also make it increasingly difficult for major content owners to derive any revenue from their products.

6. This is a result of the sixth trend, which will be the proliferation of free services. The early years of the internet trained users to expect internet-based services to be largely free, and this has become a well-established trend. It will benefit small and nimble players with low overheads offering the kind of services capable of generating advertising.

Traditional entertainment giants like the Hollywood film studios will become increasingly vulnerable. Having been weaned on free music download sites such as Kazaa, many younger consumers now see nothing inherently wrong in using file-swapping services based outside the US to download copyrighted film and TV content for free.

7. The seventh trend will be the growing familiarity of the letters DRM – short for digital rights management – as traditional content providers such as the major Hollywood studios fight tooth and nail to protect their investments. New US laws designed to give long prison sentences to movie pirates are just the start.

8. The eighth trend to emerge this year will see European mobile operators such as Vodafone finally starting to accept that consumers will never use their handsets to access high-priced data services in the way these companies anticipated when they started to build their 3G networks at an estimated cost of €200bn. Instead, these operators will turn to business customers. Companies like Vodafone are already seeing business revenues rise as corporate users install 3G cards on their laptops.

9. This move to increased business mobility will be accelerated by trend number nine, as new types of mobile device from companies like Intel bridge the gap between mobile phones and laptops. Ultra-mobile laptops are shrinking, as evidenced by OQO’s Vista handheld computer. The key element to this trend is that the computing industry will finally abandon its one-size-fits-all philosophy. This will offer new opportunities for small and nimble companies to deploy mobile workforces and save money on the cost of centralised offices.

According to Intel, this revolution in portable computing will not merely be a question of physical dimensions. Portable computers will also be manufactured for specific environments such as schools and hospitals.

10. The tenth trend will be an extension of this kind of dedicated computing as machine-to-machine wireless communication becomes increasingly important. Machines ranging from in-car computers to heart monitors and other medical devices will be able to communicate with one another. It is estimated that by 2011 there will be over 100 million wirelessly connected devices.

The ten trends listed above will combine to create what will amount to a revolution in communications in Europe, creating huge opportunities for small, savvy companies.