An important new creative business - delivering content to wireless handheld devices - is starting to take shape. But before it does there is much work to be done. The telecommunications industry and its content suppliers are hoping to avoid the problems that have beset the web and the early WAP phones. The web has never had a robust charging system built into it, and attempts to introduce pricing to web content delivery have been clumsy and unpopular.

WAP is a clunky system, and early services using it have had little success. Charging is based on time spent connecting to the service, which means you have to pay while waiting - seemingly forever - for the data to arrive. This is not the way to win business. And time-based charging gives high-value data the same price as trivia. Providers of valuable content have to fall back on subscription payments over and above the per-minute charge levied by the wireless network, which is unattractive to users.

The comparative failure of WAP is a good thing. It gives the wireless-content industry a chance to think again, and build its future around a more robust system of pricing, billing and payment. This is a prize well worth struggling for. Getting it right will allow the business to develop around a paid-for model, a sharp break with the free-content model of the web.

That will require an upgrade to 3G networks, better handheld devices, and interesting content tailored to use on the move. The industry is working on all three, and we should see the results over the next two years. But it will also require two other achievements, to which less attention is being given: a pricing mechanism that people are prepared to accept; and a billing technology that works.

These two requirements are closely related. There is no point in coming up with a pricing approach that is technologically robust if nobody wants to pay like that. Similarly, a pricing approach that customers and content providers are happy with is useless if the networks' billing systems can't cope with it.

Wireless network operators are well aware of the need to upgrade their billing systems, and some are already spending the money needed to do this. Others are lagging behind, held back by the industry's financial constraints.

In the long run, though, they have no choice. Before 3G can fulfil its content promise, the industry will need to make a big generational shift in its billing. In particular, it will need to shift from a traditional "batch" approach, where bills are run off once a month or so, to a real-time approach. After all, if a customer wants to watch a boxing match live on his handheld, there is no point in allowing him to do so only after the next bill-run has been made. But allowing him to do it now makes sense only if he is a customer in good standing - one who has not exceeded his credit limit.

At the same time, the new software must allow what Stephen Thomas - president of the European operations of Convergys, one of the big billing system companies - calls "event-based billing": charging for a discrete purchase of content, rather than merely by time.

Content billing also requires the passing of revenues to third party content providers. And all this complexity has to be achievable - for millions of transactions every day - at an acceptable cost to the network operator and the customer.

Some early experiments are already under way. Vodafone is using the SMS message service to deliver content, charging users per item and passing the price, less a commission, on to content providers. In Japan, NTT Docomo acts as billing agent for a group of favoured content providers, who deliver over the network's iMode wireless data service. It will soon be launching this approach in Europe, too.

The real power of the charging revolution will have to await the arrival of next-generation billing systems. But even if the networks install them in time to launch their 3G content services, they will still have to decide how to make use of their new technology.

How do users want to pay for content? Do they want to buy only the content that interests them, item by item? Or would they prefer an "all-you-can-eat" subscription, a bundled service from which they can pick and choose without incurring extra cost?

For years, content providers have had item-by-item pricing as a Holy Grail. The cost of providing it has always been prohibitive. But the dream is now achievable, taking advantage of telephone networks' huge economies of scale in billing and secure delivery of content.

Alas, I suspect that itemised pricing is one of those dreams that never quite make it into reality. There are some pieces of content for which customers will pay by item - that boxing match, or perhaps the very latest hit song.

But in general, the history of information and entertainment businesses is that once customers start to make frequent use of content - once it moves from a weekly or monthly purchase to a daily one - they prefer the all-you-can-eat approach.

For perfectly rational reasons: they like the certainty provided by a flat-fee subscription, and are concerned that if they frequently buy content on an item-by-item basis, they will get a large bill at the end of the month.

New billing systems will still be needed, to allow these services to be delivered and priced at all. But they will stop short of their full potential, since - special showbiz events apart - customers will end up buying their handheld information and entertainment by subscription.

If they buy it at all. The deciding factor there will be whether content providers and wireless networks can come up with handheld content that justifies a monthly subscription. The jury is still out on that: but at least the challenge is now clear.

Email Peter Martin at peter.martin@ft.com