In previous years, 3GSM, the annual February get-together of the mobile telecoms industry, was a sizeable but niche event, based – like the film festival – in Cannes, France. It largely concerned itself with technical and political issues of a cellular nature, and the IT world barely took any notice.

But this year, something big happened. The event was switched to metropolitan Barcelona, a few hundred miles around the coast, on a surge of interest. The hotel rooms and flights were full to bursting, the tapas bars packed with mobile phone-touting executives, and the taxis, occupied but gridlocked, advertised strange wares like IMS and OMA.

Some 50,000 people from across the globe packed the huge halls, glancing between their state-of-the-art handhelds and the huge screens, where top executives from Vodafone, China Telecom, Google, Microsoft, Nokia, Sony Ericsson, Motorola, IBM, Cisco, and others made a bewildering series of product, strategy and alliance announcements.

The keynote speaker list goes some way to explaining just why this event has become so big. With its scale, chaos, entrepreneurialism and vibrancy, 3GSM is no longer about the closed world of 3G or GSM cellular services: this year, at least, it symbolises the convergence, if not the collision, of two huge worlds – IT (and especially the Internet) and mobile telephony. Packetised IP services, in particular, have opened up huge opportunities, but also opened the door to dangerous new competitors and business models.

All of the top executives at the event, including Steve Ballmer of Microsoft, Jorma Ollila of Nokia, Arun Sarin of Vodafone, and Wang Jianzhou of China Mobile, spoke positively about furthering the goal articulated by Craig Ehrlich, the chairman of the GSMA, the mobile industry’s trade association: “We have a vision in which mobile users can access a rich suite of services anywhere at anytime in a secure, reliable and intuitive manner.”

But the nagging question that troubled all operators: How could they achieve this vision and at the same time protect revenues from the incursion of the free Internet services, from the likes of voice-over-IP (VoIP) operators such as Skype and Vonage? The mobile industry may be booming, but it is haunted by the fear that the Internet will ultimately wreck its revenues and margins, leaving the operators with little to do but supply the pipes.

“With companies like Skype, Google, Yahoo and Vonage and so on, one can firmly say that VoIP has become the topic of the day,” said Kai Oistamo, head of mobile phones for Nokia.

New services

At 3GSM, one strong new messsage came through: In order to deliver on their vision without a financial crisis, most suppliers and analysts agreed, all telecoms companies must not only switch from a circuit-based to an IP-based network infrastructure, but they must also drastically overhaul their outmoded, proprietary and fragmented IT systems, putting in their place new, integrated management suites.

These systems, known as IMS (IP multimedia subsystems), have become a major pre-occupation of both the systems suppliers and their customers. Without these, it will not be possible to introduce or change services fast enough, or work effectively with partners in the fast changing, IP-based world.

Although executives and analysts talked up the ultimate impact of convergence, most agreed that it is still three to five years away. It is also dependent on the successful implementation of these expensive, integrated new systems. Meanwhile, the likes of Google and eBay are able to bring on new services at will, using the underlying bandwidth that the telecoms companies have put in place.

Most operators acknowledge that, like the fixed-line operators, they have a few years to change their models and build up new businesses before traditional subscriber call growth starts to fall.

Some analysts had reassurring words for the mobile operators, saying it would take at least five years before the underlying mobile bandwidth is available to support the more advanced IP services – such as collaboration, fixed/mobile integration, and unified messaging – at an economically viable price.

But some other observers argue that competition will begin to have an impact earlier than that, with mobile services diverted up the stack to Internet companies, and some traffic diverted, using converged technologies, onto cheaper networks, such as Wifi services linked to fixed-line backbones.

And 3GSM itself? Many attendees, complaining of overcrowding at every turn, acknowledge that, hugely successful as it is, 3GSM has a sense of living history about it. In future years, it seems almost inevitable that the energy of convergence will dissipate into the more general IT industry, and that the very technologies that these companies are introducing will consign events on this scale to history. But it may take a few years: book next year’s hotel rooms now.

3GSM at a glance

• Leading mobile operators including Vodafone, Orange, T-Mobile and Telefonica pledge to introduce interoperable instant messaging.

• Nokia and Motorola both showcase phones capable of switching seamlessly between fixed and 3G networks – with Nokia introducing seamless Wifi hotspot/3G switching for the first time.

• Vodafone is to start offering a "push email" service to its 3G subscribers from March in the UK, France and Germany, using Microsoft technology.

• Vodafone and Google announce initiative to put Google onto Vodafone Live, its 3G portal.