As the mobile telephony industry stands poised to embrace (or be embraced by) the Internet, thousands of representatives from suppliers, operators and content providers gathered at the annual GSM congress in Cannes last week to hear leading figures discuss where the industry was going. In the end it came down to one question: "Who owns the customer?"

The annual event which features a conference on the industry and an exhibition of the companies involved, was attended by more than 9,000 delegates. Although a record, it is perhaps unsurprising, considering mobile handset sales rose 65 per cent to 283 million last year according to research by Dataquest. The widely predicted figure of one billion mobile phones worldwide - one for every six people - by 2003 is not looking wildly optimistic any more.

But few in the world of GSM, the most widespread mobile technology, were resting on their laurels. Two developments, the recent launch of crude Internet access using the wireless application protocol (WAP) and the pending adoption of new technologies which will provide faster data access, have thrown up big issues which fundamentally question the future role of today's mobile operators.

As mobile Internet access takes off, operators want to control the content, but several in the industry say operators should stick to what they know best: delivering bits and bytes of information over the air.

Among those telling operators this unpalatable message was Ms Jane Zweig, executive vice-president at US-based telecoms consultancy, Herschel Shosteck Associates.

Ms Zweig said content would come from third parties, that operators would use content not for profit but to leverage market share, and that ultimately operators would profit more from selling airtime than from selling content.

As increasing numbers of non-phone devices connect to the Internet using wireless interfaces, such as games consoles and personal digital assistants (Palm Pilots for example) she argued that their users would neither want nor require operators "getting in the way". Operators would inevitably become pipes, she concluded.

Other speakers at the same session, which was chaired by Eircell chief executive, Mr Stephen Brewer, were more upbeat about the value of content. Mr Hatim Tyabji, chairman of Saraide, a mobile data service provider predicted people would pay for content that was optimised for the wireless environment based on customer identity, location, time of day, and suitable for small screens.

Mr Mitch Lazar, CNN's vice-president of new media business development in Europe agreed. "We believe users will pay for relevant content - nothing is free in life," he said.

Eircell's Mr Brewer hedged his bets, saying he might want to provide content for free to keep other operators out, but on the other hand he wanted pizza suppliers which sold via mobile phones to pay the operator which provided the new channel. In a later session, Esat Digifone chief executive Mr Barry Maloney echoed the widespread sentiment that operators did not want to become bit-pipes.

Like other operators at the conference, Mr Brewer identified the expense of subsidising WAP phones as a big challenge for existing operators, particularly as new operators would only be subsidising later, higher-technology phones as they entered the market. Future mobile phones will progressively support new technologies such as GPRS (general packet radio service), which allows data services such as WAP to be delivered via packets and charged by data volumes rather than by time spent online. It will also support EDGE (enhanced data rates for GSM evolution), which will significantly increase data speeds. GPRS/WAP phones will be available later this year.

Ms Monique Moulle-Zetterstrom, CEO of GSM operator Mobilix A/S in Copenhagen, called for more attention to be given to data services using existing technologies. She too wanted to avoid subsidising WAP, then WAP over GPRS, then WAP over GPRS with EDGE. To demonstrate that current technology can generate data revenues for operators, she cited the example of a service called Chat TV in Denmark, whereby users send SMS messages to a broadcast TV text page.

Another operator perspective was also negative about adopting new technologies, this time from Mr Alexander Gelderman, senior media and telecoms banker within Rabobank International and board member of Dutchtone N.V. of the Netherlands. He said third-generation licensing had come too early, adding: "Nobody has convinced me we need this licence, but we'll go for it."

Mr Gelderman said he would like manufacturers to become equity investors in operators, to encourage them to subsidise handsets. He was optimistic that future revenues would come from content, and singled out video downloads of soccer matches to mobile phones as a hot application. He added that operators expected to be paid to display content, and cited the example of Vodafone AirTouch's recently announced joint venture with Vivendi, under which, he said, the operator would get 100 per cent of access revenue and 50 per cent of content revenue.

Another financier, Mr James Golob, managing director of Goldman Sachs telecoms research team, explained Vodafone AirTouch-type consolidation in terms of big multinational operators being more likely to own portals, while smaller operators would tend to outsource. He said providing data services would give a value uplift of 25 to 50 per cent over voice-only operators.

On content exclusivity, whereby operators sign exclusive deals with content providers, various speakers said mobile subscribers might bypass operators' portals in favour of independent, fixed portals. However, Mr Golob pointed out that operators had customer details and location information which allowed them to offer more location-specific and personalised data than fixed portals. He described this as the "glue" keeping subscribers stuck to the operators' portals.

On this topic Mr Lazar said CNN never liked exclusivity, but he carefully avoided stepping on operator toes by adding: "We believe ownership of the customer belongs to the operator."

But the message was different from the king of the Internet portal business. Mr Jesper Vissing Laursen, European wireless producer, Yahoo! Europe said: "In the new economy no one owns the customer". Comparing the relationship to a dating game, he said the customer chose the content provider, and that this choice was the key. Like everyone else he agreed personalisation, localisation and transactions would be the killer applications for mobile Internet, and forecast that mobile Internet penetration would surpass that of PC-based Internet access. Appropriately, given this week's announcement of AOL Europe's links with Nokia and Ericsson, he forecast new partnerships too.