The next generation of mobile phone services will be a huge success. Not an overnight success-much as the world's debt-burdened operators would like that-but a success, eventually, on the scale of television, the personal computer or the internet.

After last year's dismal Wap experience-which introduced subscribers to a slow and scrappy version of internet-enabled mobile telephones-third generation (3G) technology looks set to be the key to a broad range of internet services which will be delivered over the airwaves. It will be the essential link between the internet on the desktop and the increasing capabilities of mobile phones, personal organisers and other wireless devices.

The purpose of this guide is to explain the background to the development of 3G technology, to outline the opportunities that are expected to flow from the services (SMS) which it will make possible, and to raise a number of caveats about the timescale in which they are likely to be introduced.

In 'preparing for lift off' Fiona Harvey paints a broad picture of the possibilities. Subscribers will be able to use mobile devices quickly and easily to gain access to a broad range of information and entertainment. A flavour of what will be possible is today's short messaging services, now supporting billions of transmissions every year, or Japan's i-mode service, which allows a simplified form of access to the internet.

Michiyo Nakamoto and Dan Roberts attribute much of i-mode's success to the variety of content on offer including games, sports results and cartoons. Supporters of next generation mobile telephony argue that applications which we cannot yet envisage will become possible and increasingly popular.

The big question, however, is when these third generation services will take off in a big way. Japanese and US operators say they will begin service this year. Europe is set to launch in 2002. But the i-mode experience apart, there is no real sign that there is a latent demand for 3G services.

Most mobile phone users today, who still suffer poor or non-existent reception in some areas and dropped calls, would be content with a low-cost, reliable voice service.

So 3G is a gamble. Given that several operators have paid enormous sums for 3G licences, it is a huge gamble. Nevertheless, analysts believe 3G is going to be successful even if it takes much longer and emerges in a somewhat different form than currently anticipated. It is very much a technology whose time will come.

The first generation of mobile phones, based on analogue technology, was made possible by computers which managed the allocation of scarce radio spectrum within "cells" several kilometres wide. Only a few hundred thousand analogue handsets now remain in service as most subscribers moved to second generation phones in the 1990s.

The second generation system retained the cellular architecture but used digital technology-cheaper, more efficient and easier to maintain. Europe took a lead at this point through a far-reaching decision to mandate a single standard-Global System for Mobile Telephony (GSM)- across the European Union. At the beginning of 2001, of some 700m cellular subscribers worldwide, two thirds were GSM users-and the number is still growing. As Rod Newing points out the networks are beginning to creak under the strain.

The move to digital technology, however, opened up a new and intriguing possibility. Because information of all kinds is reduced to a stream of binary digits-bits represented by "0"s and "1"s in this technology-it would be as easy to send data over a mobile network as voice. The data could be of many kinds: text, images, even full-colour, moving video images.

This had broad appeal: to content providers who could envisage novel services that would make use of the new possibilities; to the operators, who could see that the market for voice telephony would eventually be saturated and who welcomed a new source of revenues; and to manufacturers, who welcomed the opportunity to sell new infrastructure and handsets.

New technology would be needed. GSM, operating at 9.6 kilobits a second, was too slow for the transmission of moving pictures. Even with the best compression techniques, which reduce the amount of information which has to be transmitted by 90 per cent or more, a speed of 2 megabits a second is generally reckoned to be the minimum for full-motion video in colour.

It was a golden opportunity to unite the world behind a single standard so a subscriber could use the same handset anywhere in the world. Political differences killed that possibility. Now the official 3G standard, known as IMT-2000, includes three incompatible modes: UMTS (Europe); CDMA-2000 (US); and w-CDMA (Japan). All are variants of CDMA (code division multiple access), a technology invented during the second world war and refined and developed by Qualcomm, a US telecoms group.

As I and William Bratton demonstrate, it is possible Europe will lose its lead in mobile telephony to the US or Asia. European manufacturers will be hard-pressed to deliver 3G systems on time for the launch date.

Meanwhile, the race is on to find novel services for this exciting new technology. Penelope Ody examines the development of mobile commerce while Andrew Fisher says that financial services, while not for everyone, could prove a "killer" application.

In practice, it is likely 3G will come in two variants: an all-singing, all-dancing, full-colour service delivered to laptop computers, personal digital assistants and other mobile devices; and a more limited service, perhaps lacking colour, suited to the tiny screens of mobile handsets. 3G may arrive later than anticipated but its impact on business and society will be no less marked for that.