That includes audio. While mobile video is the star of wireless multimedia, audio--that is, music--may offer more tangible rewards. "On a worldwide basis, one of the biggest multimedia applications on phones is music," says Joel Espelien, vice president of strategy for PacketVideo, which supplies multimedia software for mobile handsets.

And streaming isn't necessarily the audio delivery system of choice. "For music, one of the very successful paradigms is to download it and have it on your device," says Espelien. Think of it as the cellular iPod model. A handset with 256 megabytes of memory can hold a couple of hundred songs, he notes--plenty for a lot of people, especially if they don't want to buy or carry two devices when one will do.

That's not to say that streaming has no place in music. Using streaming or progressive downloading (pseudo streaming) to the handset can create a radio-like service, Espelien observes. This approach is becoming popular in Europe and Asia. And it is increasingly relevant in light of expectations that satellite radio may pose a threat to portable music players. But streaming songs to mobile handsets remains the exception rather than the rule.

VIDEO STREAMING

Video is more likely than music to involve streaming, but there are still significant exceptions. Two basic types of services send video data to wireless handsets. The first is one-way service, delivering commercial video content from service providers to users. The second is two-way, sending video from user to user. Either type may or may not use streaming.

Mobile television, such as the appropriately named MobiTV service available to customers of Sprint and AT&T Wireless (now Cingular), is the highest-profile example of one-way video. MobiTV uses streaming technology to deliver commercial television programming, such as news, sports and weather, live to users.

Although offerings like MobiTV essentially repackage broadcast and cable TV programming, there's plenty of room for customizing specifically for mobile customers, according to Clint Wheelock, an In-Stat/MDR analyst.

"There will be a snack-TV approach," he says. "Mobility adds to people's flexibility. They're not going to watch a half-hour sitcom. They're going to watch five or 10 minutes of sports or news." In-Stat/MDR expects the number of mobile video subscribers to reach 273,000 (out of 165 million total wireless subscribers) by the end of this year, to exceed 1 million next year, and to level off at around million (out of a projected total of 207 million wireless users) by 2009.

As with music, there's a non-streaming counterpart to mobile TV. Cinema Electric, a Southern California startup, creates original video and other content that users can download the way they do ringtones and wallpaper. Targeting a youth audience and emphasizing fashion models and sports, it distributes eight channels with names like Electric Catwalk, Movie Messages, PocketGirls and Sports Action. The video clips and animation usually amount to no more than 90 kilobytes, according to founder and CEO James Robinson. That means they can download to phones quickly.

And there are other alternatives as well. RealNetworks, for example, offers news, sports, movie trailers and weather via Sprint PCS and AT&T mMode, which it streams to handsets on demand via short clips (rather than live.) There is also a less-advertised form of wireless video multimedia: The Yankee Group estimates that the . market for wireless adult content will reach $90 million by 2008, with a global market of $2 billion. Such content can include both still pictures and video, which can be downloaded to handsets by accessing WAP sites.

Two-way video between users may or may not require streaming. Video messaging, for example, can run over existing non-streaming technology such as multimedia messaging service (MMS), which lets users create, send and receive messages that include text, audio, graphics and video. But other services will happen in real time, such as mobile videoconferencing. This is what David Chamberlain, principal analyst of Alloy Research, calls "look where I am." The latter involves "waving the camera around" to show a friend what the user is seeing at the moment. Such live services will require robust streaming capabilities.

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SERVICE PROVIDER CHALLENGE

The plethora of possibilities leaves service providers facing a tricky balancing act. "The most important perspective is the end user's," says Adam Zawel, a Yankee Group director. "The end user sees the content rather than the delivery mechanism. Carriers need to clearly separate the technology from the services in the eyes of the consumer."

Choice of delivery technology has all sorts of direct and indirect consequences that service providers will have to deal with. The most obvious involves the demands and capabilities of the technology itself. Downloaded video can obviously tolerate less-robust networks, while real-time streaming applications require a minimum of latency.

Some issues have less to do with the technology than its commercial implications, such as pricing. "If you want to stream content to the handset only once, you might pay 20 cents," says Nitesh Patel, senior analyst for global wireless practice at Strategy Analytics. "If you want to keep it and view it more, you might be prepared to pay two dollars."

And that, in turn, affects another major issue: the cost and complication of acquiring commercial content from someone else. Here, too, service providers will have to deal with differences in the streaming and download models.

EVOLVING RELATIONSHIPS

One thing that may change over time is the relationships between content providers, carrier service providers and the people in between. "Some of the early players like MobiTV are content aggregators in addition to being technology platform providers," says Wheelock. "I think over time, the carriers and the content providers will establish more direct relationships that are more akin to what you see in the cable business, where cable networks have direct relationships with content providers, rather than going through content aggregators."

In fact, some content aggregators may not find the business all that appealing, particularly when delivering streaming content that people aren't able to keep, and so won't pay a premium for. Says Patel, "The problem with streaming is that the people who own the content are asking for such a significant share of the revenue, and the carrier wants their 30% retail margin, so that leaves very little for the guy in the middle that's providing the solution."

Of course, that shouldn't worry the wireless operators. They always win, according to Robinson. In fact, he says, "some greedy operators will dip in twice," getting paid once for the content service and once more for delivering the data.

A few issues service providers face have nothing to do with whether streaming or downloading is involved. Take critical mass. The one-way model, sending commercial video content from service provider to user, shares one advantage over two-way services, whether the delivery is by streaming or downloading. Either way, it takes a critical mass of just one user for the service to operate. Reaching profitability, of course, will require a much higher number and will ultimately depend on how much the operator is willing to invest and for how long.

By contrast, two-way services like video messaging, conferencing or "looking" require a minimum of two users to get the service started, and a lot more to make it useful. Thus, although messaging takes less infrastructure investment than the live two-way video services, neither can operate without a substantial number of users, no matter how much the operator is willing to invest.

Many analysts expect two-way video to be slow in coming. "We're talking about 2005 and 2006 for these to be really launched, and 2009 for video calls," says Dario Betti, an Ovum senior analyst.

As with other mobile technologies, the . lags the rest of the world. "What [Americans] really like to do is connect two phones and make one of them ring, and that's pretty much the whole thing," says Chamberlain.

However, Robinson sees a brighter future for mobile streaming.

"I think we're going to reach critical mass for multimedia phones around Christmas of 2005," he says. After that, he believes, mobile multimedia will "become a real business, and I think North America will go from being behind to being the leader."

Whoever is right, service providers should realize that for users, it is the content that matters.