BARCELONA -- European venture capitalists are bullish that the surging popularity of wireless phones and devices -- and the simple payment systems behind them -- will drive consumer online purchases.

Attendees of The High Tech Forum 2000, held here last week, agree that the architecture of the so-called "fixed-line Internet" does not offer the most ideal billing mechanism for online transactions. It is difficult to persuade consumers to fill out forms and submit credit-card details.

But those problems may be solved with the emergence of the wireless Internet. "Wireless has an efficient billing platform -- the most efficient billing platform ever invented -- and it will allow a quantum leap in the revenue stream of the Internet," says Franco Barnabй, chairman of Franco Barnabй & Company, an Internet investment holding company. "Mobile phone payments do not require any forms or credit cards. You just flip open your phone and dial up a transaction."

HIP TO THE HYPE

Mr. Barnabй isn't another Internet hype-ster. He is well versed in the business fundamentals of the old economy, having served as CEO of Eni, the world's sixth-largest oil company.

Esther Dyson, chairman of Edventure Holdings and organizer of The High Tech Forum, says that the fixed-line Internet is inefficient because consumers are asked to use a different billing system for each site they visit. "Using a single device with a single meter is a very convenient way of billing people," Ms. Dyson says. "The telcos are paying these huge amounts in the European auctions for third-generation [3G] licenses because it is clear that the mobile carriers and service providers will recoup their costs."

The European venture capital community is excited by the prospects of real revenues from mobile commerce, or m-commerce. Western Europe is up to three years ahead of the United States in the deployment of 3G networks, which allow the delivery of data as well as voice services to mobile devices. This is largely due to the fact that European mobile networks all operate using the global standard for mobile (GSM), whereas U.S. networks are based on a hodgepodge of incompatible standards.

WIRELESS WISHES

Wireless investments remain high up on European VCs' wish list. "It's a much shorter step to broaden an existing billing relationship on the wireless Internet than to create a new billing relationship on the fixed-line Internet," says Doug Alexander, CEO of Internet Capital Group Europe.

Digital Bridges, a mobile entertainment company, recently attracted funding from Apax Partners and Argo Global Capital. Kevin Bradshaw, the company's CEO, says that micro-payments are the key to billing applications on the mobile Internet. "Mobile network operators already have billing systems in place for voice services," he says. "The next step is to extend this architecture into lots of different types of services beyond voice. ... Billing per minute is a good model that already works on mobile phones."

Other VCs are skeptical as to whether wireless is going to solve the Internet commerce problem. "Until you have mobile service applications which have real value to customers, the only thing the mobile Internet gives you is a billing engine with nothing to bill," says Marc Goldberg, chief technology officer of Reuters Venture Capital. "We're still waiting to see those killer applications. All we have today is SMS messaging, and on the WAP [wireless application protocol] side we are still searching for anything useful."

In addition to a shortage of exciting applications, the wireless Internet is still burdened by problems of small screens, bad connectivity, and bandwidth limitations. The challenge for entrepreneurs and venture capitalists will be to create high-quality data delivery services and bridge the gap between the vast content available on the Web and the more limited offerings currently available through mobile devices.

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