Wireless commerce has a credibility problem and Wap is a big part of that problem. Wireless Application Protocol is the technology that once promised to catapult Europe into the digital age by bringing interactive services to a potential market of more than 250m owners of mobile phones.

But this vision of wireless commerce has failed to take root and Wap has taken much of the blame. Only 12m Europeans had Wap phones at the end of 2000, according to Durlacher, the London-based investment bank. Worse news still, once the novelty has worn off, these people rarely visit any of the 10,000 Wap-enabled websites or 7.8m Wap pages that exist today."Whilst most of these end-users will use their Wap browsers, we do not expect that their usage will be high," says Durlacher. A survey of Swedish Wap phone owners found that only 6 per cent use the Wap functionality regularly. T-Mobil, Germany's largest mobile operator, reports that its Wap users spend only 17 minutes online per month.This creates a vicious circle: if usage stays low, it makes little sense to spend large sums creating content for Wap, particularly given today's more cautious investment climate. So what has gone wrong with Wap?

Experts say the technology should not be held solely responsible. "Wap is just a simple protocol and it's not fair to just blame the technology," says Tomas Franzén, chief executive of AU-System, a Swedish company that developed the Wap browser used by Ericsson and others. "There were just too many expectations placed on technology."

The Wap protocol is not the only way to handle data on mobile devices. In Japan, NTT DoCoMo has created a market of 20m with its rival i-mode technology. In the US, the popularity of wireless devices such as the Palm VII organiser has led many developers to use HDML, another rival standard."Wireless commerce should not be seen as Wap-centric," says Karl Andersson, vice-president of m-commerce for Scandinavia at Cap Gemini Ernst & Young, the IT services company.

Just one of many standards

The Nordic region has the highest wireless penetration in the world and many m-commerce services are available - Helsinki even allows its motorists to pay for their parking space using their mobile phone. However, most of these services were developed using SMS, the simple text-only messaging technology that is built into every mobile phone. "There are many examples of text-based services that are generating revenues for operators," says Mr Andersson.Despite the success of SMS, i-mode and other alternatives to Wap, the future of Europe's fledgling wireless commerce market has become inextricably linked to Wap. So, when users complained that early Wap services failed to live up to expectations, the Wap standard got much of the blame. Most complaints centred on the achingly slow speeds when accessing Wap services over today's GSM networks.

This problem may be solved with new, higher-speed, cellular networks based on GPRS technology, and then on third-generation UMTS telephony. The first GPRS mobile phones will be available this year, but many operators and handset manufacturers have got cold feet over GPRS and it may not become widely available until 2002. UMTS will not appear until 2003-2004.

Other complaints have focused on difficulty in viewing content such as web pages on the diminutive screens of Wap phones. In a study carried out by the Nielsen Norman Group, a US research firm, people who had used Wap services for a week were asked whether they were likely to still be using a Wap phone one year later. A resounding 70 per cent answered no. "Wap is not ready for prime time yet, nor do users expect it to be usable any time soon," concluded Marc Ramsay and Jakob Nielsen, authors of the report.

The drubbing given to Wap has poured cold water on the feverish expectations of Europe's m-commence industry, which once had a vision of Wap opening a cornucopia of revenue-generating services such as stock alerts, ticketing or wireless banking. Wireless Commerce (WCL), a Finnish start-up, believes there is still a bright future for these types of service, particularly in Finland, where mobile phones already outnumber fixed lines. But Wap is unlikely to be part of that future."We are not often asked for Wap services by the operators as Wap is not used very much in Finland," says Hannu Vähäsaari, managing director of WCL. "The thinking behind Wap is very good but it was just too early."WCL has developed various m-commerce services, including a travel alert service for Railtrack, the UK train network operator, and mobile auctions for eTori, a Finnish website. These services were developed principally for SMS, which Mr Vähäsaari believes is sufficient to handle most if not all of the data services that operators want to offer today.

Compared with the sophisticated graphics capabilities of Wap - soon to be enhanced with colour - SMS may seem basic, but that is part of its attraction, according to Mr Vähäsaari. "SMS is a very robust way to do wireless business today," he says. SMS works well, whereas developers of Wap applications have to contend with multiple versions of the Wap standard and idiosyncracies in how Wap is implemented by the handset manufacturers.Jinny Software, an Irish start-up, is another fan of SMS. It has created an SMS-based banking service for AIB, the big Irish bank, among other customers. "SMS is blooming all over Europe and you can do some pretty clever things with SMS," says Ciazan Carey, head of m-commerce at Jinny. Earlier this year, Jinny was acquired by Acotel, an Italian company, for $14m (£9.7m) in cash. Acotel plans to use Jinny's SMS technology to develop and host SMS applications for Telecom Italia Mobile, which means a potential market of 35m GSM users in Italy and around the world.

Wireless commerce continues to generate great interest in Europe, as this deal demonstrates. However, the Wap backlash has had its effect and companies are turning to SMS, an established and trusted technology, to unlock the market's potential, at least for the next couple of years."In contrast to SMS, Wap has not built up goodwill because its benefits currently simply do not outweigh its inconvenience," says Durlacher.There could be 72m Wap-enabled phones in Europe by the end of 2003, predicts Durlacher, but it will be SMS, not Wap, that produces most of the data and content revenues that these users generate.

gnairn@europemail.co