Every two years leading figures from the IT industry gather to discuss some of the most pressing issues at the World Congress on IT (WCIT), an event attended by the national IT associations of around 45 countries. This time it was held in late February in Adelaide, Australia. Here, FT-IT correspondent Marcus Gibson sends a special report, exclusive to the FT-IT website.

For a series of articles on IT in Australia, please refer to the February 20 FT-IT website Other official links: www.itforum2002.com and www.worldcongress2002.org

Some serial event-goers become rather jaded with the inevitable repetition of discussions and views on IT, but the 2,000-odd attendees at the WCIT in Adelaide were given a veritable feast of new ideas, fresh information and exciting new evidence of a plethora of trends.

Perhaps the most pivotal event was the launch of the first 3G network in the southern hemisphere, which took place before a large audience at the Adelaide Convention Centre.

Launched by M.Net, a consortium of IT and telecoms companies including Australia's national telecoms provider Telstra, the 3G system is unusual in that it combined the services of traditional carriers with 802.11b wireless technology - in a bid to solve the problem of the broadband 'last mile'.

Mark Anderson, US IT pundit and founder of Strategic News Service in Seattle, was impressed with the format. "An aggressive new market player could get around the problem of the local loop by joining forces with providers using the unlicensed 2.4Ghz spectrum used by 802.11b, a technology also known as 'wi-fi'.

The 3G auction bidding process, which Anderson says removed a staggering $180bn from the world economy, has helped create an opportunity for mid-sized carriers able to link up with local providers. "They can come in with very low cost bases and with the best equipment," said Anderson, "and essentially have no legacy overhang."

He foresees a world in which the whole 3G world would become a wi-fi network and, "suddenly you have your laptop with a new card, a 3G card." Anderson thinks that once the word 'laptop' is mentioned in the context of 3G, then the whole argument changes from one about the difficulty of using small handhelds - to a convincing argument for using big screen devices at home and at work. We shall see.

Far removed from the ambitions of 3G telecoms giants was an event held immediately before the congress which displayed an outpouring of new technology - from a shoal of tiny companies.

Two days before the congress opened on Wednesday, February 27th, the organisers showcased 35 of Australia's best small IT companies - winners of a national SME competition that attracted 217 entrants. Indeed, most of the presentations were packed out.

To the surprise of most non-Australians, and to many locals, too, the standard of the companies was truly outstanding. Australia is renowned for primary products and a laid-back image, so the experience of witnessing first-rate entrepreneurs and scientists offer a range of excellent IT services, was novel for those who don't know how much Australia has changed over the past 20 years.

In fact, the home nation has developed - just in the past three or four years - what is perhaps the 'equal' 5th best collection of high-tech SMEs, after the US, UK, Israel, Ireland and alongside Canada. Few know that the state of Queensland alone is home to the largest e-security software cluster outside the US, according to the state's minister for innovation and information economy Paul Lucas.

"Big companies are always looking for small partners," he said, "because that's where a lot of true innovation takes place." He cites XtreamLok, whose software wrapper allows software that is being sent over the Web to become tamper-proof, and also prevents the software from being reverse-engineered.

Mincom, based in Brisbane, is the largest mining sector software house in the world. But Mr Lucas is adamant on one point: "Governments shouldn't pick winners - it should only support the candidates by playing a key role in fostering enterprise and furthering our general 'connectedness'."

Queensland has an ambitious A$100m Smart State Research Fund in place and, at the opposite end of the funding spectrum, a very early stage startup scheme named ISUS, with grants for proof-of-concept studies worth an average of A$80,000.

Back in Adelaide, home-grown high-tech companies have also thrived. This is due in part to the formidable presence of the national defence research organisation DSTO, located just outside the city.

eLabtronics, started by chief engineer Miroslav Kostecki, has patented a software tool that greatly simplifies the programming of the increasingly ubiquitous microcontroller, whose application has vastly increased as its unit price has dramatically fallen in recent years.

Fellow South Australian companies include DSpace, which integrates turbo coding into mobile satellite terminals, FourSticks, which pushes priority traffic down the telecoms pipe ahead of less critical data such as email, enabling modest bandwidths to cope with volumes of traffic, and finally Norwood Systems, which has built one of the first wireless voice and data comms systems for offices using Bluetooth technology.

From Western Australia came Secure Systems and its CTO Michael Hearn. It has devised an operating system that means data encryption and firewalls aren't required. Secure Systems issued a global challenge a few years ago which invited hackers to break its security network. No one has yet come back with the answer, said Mr Hearn. "We believe our system is unique and unbreakable," he said. The method prevents unauthorised reads and writes on to the hard drive.

But one Australian startup that may have the greatest influence long term than any of the others is eword development, founded by Christine Maunder and Wendy Bromwich. The company has developed Max's Sandbox, a learning program for 3-8 year olds to help them master Microsoft Office - via clever pics and a text-to-voice feature involving Peedy the Parrot, who talks back to children what they have just written.

The program has already been distributed to 440 schools in South Australia this spring - or rather this autumn down under - and is soon to be sold widely in the UK, starting in Scotland.

Hal Josephson, San Francisco-based business development guru and boss of advisory firm Mediasense, and veteran himself of several startup ventures, told a group of executives from the Australian SME community after the presentations that there was around $100bn waiting in unused capital in the US.

"The flight to quality by the venture capital industry meant that many highly regarded Australian SMEs could expect a welcome if they journeyed to the West Coast, especially those 'with products in the post-research and development phase, with a six- to 12-month cycle to break-even and profitability'," he said.

In the US, he added, "there is a lot of interest in looking at companies that are a lot further away, geographically, than they are used to."

When the conference began, two themes predominated: IT security, and the hot issue of whether the IT sector was truly delivering the productivity gains promised.

On the first issue, the calibre of speakers assembled was exceptional - and very well informed. Pindar Wong, chairman of Hong Kong-based security company Verifi said a recent report by security consultants Riptech (www.riptech.com) revealed for the first time some of the metrics behind e-security breaches. The study is claimed to be 'the first large-scale study to analyse Internet attacks based on actual empirical attack data that has been consistently collected and analyzed over an extended period of time'.

The average corporation, he said, receives 25 attacks each week, of which 91.5 per cent successfully entered the site, 41 per cent viewed critical material, and in 12.5 per cemt real damage was done. Hottest recent targets, warned Mr Wong, were firstly power generation sources - much to everyone's surprise - followed only then by the finance sector and the hitech world.

"Probes, autoprobes or scans, packet sniffing, denial of service, account data and exploitation of trust were the commonest type of increasingly harmful intrusions," said Mr Wong.

Most scary were his revelations on passwords. Most alphanumberic passwords - a mixture of letters and figures - could be broken in under three minutes, using free password-breaking software on the Net. "Choose from all 120+ characters on the keyboard," he advised.

"Just one weak PC in your company can allow a hacker to break into the rest of the organisation - and also break into other companies' networks, too," he added. "And don't keep the default settings - as this gives hackers an easy ride."

Next up was Phil Reitlinger, of the US Defense department's cybercrime unit, who said e-crime very often had an international element to it. He emphasized that "the best e-security in the world, though needed, is not sufficient."

Organisation, he judged, was equally important, to the hard business of tracking, pursuing and prosecuting e-criminals across the world. The G8 nation's High Tech Crime subgroup, which until recently he chaired, had organised a 24/7 point of contact network - an International Organisation for Computer Evidence - to locate and secure evidence in external jurisdictions, and to follow criminals individually.

Broadband, he said, would create a heaven-sent one-to-millions opportunity for multiple fraud, for which national borders would not even act as 'speed bumps' for criminal activity.

"Crimes must be reported," he urged, conscious that many companies often reported computer crime in inverse proportion to its seriousness. "We need to follow the breadcrumbs, and the chronology," said Mr Reitlinger.

A much awaited speaker was Howard Schmidt, vice chairman of the US President's Critical Infrastructure Protection Board, which was established in Oct 16 last year as the senior inter-agency group responsible for overseeing security performed by the 26 different national agencies.

He started by saying that security had never been taken seriously in the IT sector. "Naivete is plastered all over the Internet," he said. The Simple Network Management Protocols were, he said, the 'defective' gene in the genome of the Internet, and this weak code had been replicated into millions of operating systems worldwide and software programs.

Schmidt amused his audience by lamenting the rapid growth of the Internet. "We built this plane while it was flying." he quipped. He pointed out that while the CIPB was a government agency, some 80-90% of critical infrastructure was privately-owned. However, he insisted that the US Government had a duty to clean up its own act first.

The key task of the board, he said, was to keep open the 'e-shipping lanes', locate the pinchpoints and those comms conduits that were not duplicated, and left networks vulnerable to failure. Recently, he said, a fire at a tunnel outside Washington DC destroyed some cabling and brought much of the e-traffic of the north east of the US to a halt - because only a single link existed.

The board was now busy advising key sectors such as oil and gas, transport, telecoms, health and welfare, to share security knowhow, even between staunch competitors.

Mr Schmidt asked companies to avoid 'trench' mentality, which often resulted in one department having excellent security, but it maintained few dealings with another in the same company, which may have a poor track record. "Not every server or program is critical," he pointed out.. "So don't bother trying to secure every piece of the network."

And how did the White House address the often-raised issue of privacy, so dear to the hearts of many Europeans? "Without security you have no privacy," he snapped, with a somewhat weary tone.

Mr Schmidt also announced that in the planning of the US Government's proposed secure fibre network GovNet - designed to provide unbroken communications in emergencies - the General Services Administration had received 167 responses from interested parties to construct it.

On September 11 - Schmidt himself is a part-time special investigations agent for the US Army - he was unable to report in as requested as the phone lines and mobile networks failed.

Finally, South Australia's Police Commissioner Mal Hyde stepped forward in full uniform to talk about the challenge of policing the electronic frontier. Despite a welter of interesting information, one tip stuck in everyone's minds. To emphasize how far behind the law had fallen in dealing with electronic developments, Commissioner Hyde said: "You can pay with a credit card in a brothel in South Australia but not with cash the law has yet to catch up!"

He pointed out that it was essential to "design crime out of products" which ID chips capable to disabling such items as stolen laptops, cars and TVs.

The second main theme of the congress - was the extent to which IT was succeeding or failing to deliver on its promises, especially bottom-line productivity, and this provoked much greater levels of disagreement. David Murray, MD of Australia's Commonwealth Bank and one of the most senior business executives in Australia, made a stinging attack on the IT industry.

A month earlier, the bank had suffered a two-hour outage on its Internet account and online broking networks, linked to its IT supplier and telecoms giant EDS. In responmse, an angry Murray had ordered that a daily review of IT operations be instituted to ensure stability of service.

The Commonwealth Bank is utterly dependent on its networks, he added. Its online broking arm Commonwealth Securities has 2.5million users, and NetBank, its online bank, has 1.5m users and undertakes 27m transactions a month.

But Murray had scarcely warmed to his theme.. Microsoft entered his sights next, and he let off both barrels. He lambasted the recent technology blueprint submitted by Microsoft to the Federal Government in Melbourne, which stated that the world IT industry was going to lead world economic growth.

"Well let me tell you" started Murray, "that the IT industry in the US has singlehandedly wrecked the world economy because the promises were large...and by the time they were turned into investor promises at the casino end of the equity markets, the investments were entirely unrealistic." Wallop.

Murray went on to state that several large IT projects at the bank had failed hopelessly due to a mixture of cost and complexity - what was promised just couldn't be delivered, he argued, gritting his teeth.

The use of e-mail formed his next target. "[E-mails] create enormous legal risk because if we have a conflict with anybody that is the subject of discovery in the court.. all of those e-mails can be accessed."

That afternoon came the IT industry's 'defence' to the charges. Adelaide-born Doug Elix, head of Global Services at IBM, stepped forward to give a quiet, brilliantly measured but impassionated plea for patience.

His company was at the centre of the e-revolution - with 232 data centres worldwide and 200m web pages online. Global Services, he said, was a $35bn business, and supplied nearly half of IBM's revenues. He acknowledged that the integration of the Internet with business processes had proved incredibly complex, even for a relatively simple system.

"People are often unable to find the root cause [of problems] and then lose patience," he conceded. Some 40% of all IT spending went on integration, "so nearly half of what we spend is not spent creative value", was his concession No.2.

He insisted, however, that - overall - US labour productivity had risen 3% a year in the 1990s, an increase due largely to IT investments. But as yet less than 10% of US businesses had integrated the Web and e-commerce into their business operations.

Help was on its way, he promised. "Above all, new technology must manage itself," he agreed, "and become more like the self-regulation of the human body. We have come a long way, he insisted. "Deep Blue, the computer IBM created to beat Gary Kasparov - had the computing power equal to the brain of a lizard... and Gary didn't like being beaten by a PC with the brain of a lizard!"

Secondly, mega-capacity storage technologies would, by 2006, be able to hold 'the equivalent of every word ever spoken on the planet'. But, added, "to keep these new systems running, some 200m extra IT workers would be needed - the population of Indonesia."

Elix acknowledged that he and other IBM-ers were mere practitioners. "I leave it to my learned friends in academe to see if all this works in theory," he joked.

On the last day of the conference John Gage, chief scientist at Sun MicroSystems, gave a fascinating talk of the future commercial potential of a system which unified 3G with high-level storage and GIS mapping techniques linked to real-time satellite observation.

Mr Gage took the audience on a spectacular aerial ride across different points on the globe. From San Francisco airport ('tailfins are clearly readable'), to a house in the Los Angeles suburbs ('you can tell the grass in the backyard needs watering.. or if your daughter's boyfriend is staying over..'), to Ground Zero in New York and to the Vatican, using visualiation technology supplied by Keyhole Inc., which builds software for US Defense spy satellite network, much of it with accuracy down to three metres.

Mr Gage forecast that soon such enormous amounts of data would allow planners, estate agents and any number of interested parties to view the current state of any point on the globe, using these highly detail aerial shots, and eventually all in real-time.

But most engagingly, Mr Gage later told BBC World that the firmest evidence of whether IT was delivering or not, came from the Third World. "In countries where female workers have been given access to IT skills," he said, "we are now seeing a true social and economic transformation. Income levels have risen, population increase rates have fallen sharply, and families have enjoyed tremendous benefits.. Besides.. all these benefits can be achieved with a mobile phone... no need for huge spending on outdated copper wire infrastructures. The Third World can catch up much quicker than we think... It's called 'leapfrogging'." A fine sentiment on which to end a congress - the next of which takes places in 2004 in Athens.