WHEN Ari Virtanen, a manager at Nokia, moved from Finland to California's Silicon Valley, he experienced a peculiar and unexpected form of culture shock. Like many Europeans, he is used to communicating with friends and colleagues via short text-messages sent using his handset. So he was horrified to discover that in America, text-messaging is almost impossible. Whether it works or not depends on the specific combination of the sender's and receiver's handsets, operators and so on—a telling illustration of the gulf between America and Europe in wireless communications.

For while the mobile telephone has quietly been assimilated into European culture, in America it has been held back by industry fragmentation and a quagmire of conflicting standards. Around 45% of Americans own a cellphone, compared with 75% of western Europeans.

This is largely a result of differing regulatory approaches. Europe's governments agreed in 1987 on a single standard for mobile telephony, known as GSM, that now accounts for around 65% of the world's mobile networks and allows users to roam from one country to another and to exchange text-messages with other operators' customers, even in other countries.

In contrast, the Americans chose to let the market decide on a standard. Unfortunately, the market was indecisive: five incompatible standards emerged. This meant that prices were higher, since operators were unable to benefit from GSM's economies of scale in network infrastructure and handsets. Many Americans ended up using different handsets in different parts of the country. Text-messaging was a non-starter. And in a country where local calls are free, having to pay both to make and receive calls on a mobile phone seemed unreasonable.

The prospect of “third-generation” (3G) mobile phones—which will supposedly offer advanced services such as Internet browsing and video—looked like Europe's chance to capitalise on America's wireless confusion. Once again, European governments agreed on a standard, known as UMTS. To prepare for the transition, European operators started rolling out an intermediate technology, called GPRS. And they splashed out more than $90 billion on 3G licences.

But things have not gone to plan. UMTS, like GSM before it, turned out to be harder to implement than expected. Handsets have yet to materialise. Having paid a fortune for their 3G licences, operators have been hamstrung by huge debts, and have delayed building their 3G networks. This week Nokia gave a warning of weaker-than-expected sales of base stations and networking equipment as operators postpone their expansion. And Lucent, another telecoms-equipment maker, said sluggish sales might delay its return to profit until 2003. The shares of other infrastructure and handset vendors slipped in response. After repeated postponements, nobody now expects much sign of 3G in Europe until 2004 at the earliest.

Meanwhile, America has been catching up. Several operators have adopted GSM, albeit on a different radio frequency from that used in Europe; but anyone equipped with a “tri-band” telephone can now use it on both sides of the Atlantic. Three operators—AT&T Wireless, Cingular and VoiceStream—are collaborating to provide nationwide GPRS coverage. And several large operators have agreed to pass text-message traffic between their networks.

The absence of a centrally imposed standard has given American operators more freedom of action. One operator, Verizon Wireless, has rolled out a new high-speed network in some areas using a technology called CDMA-1X that has been hugely successful in South Korea and is regarded by its supporters as a form of 3G (though it is incompatible with UMTS). Another operator, Sprint PCS, plans to launch a similar network in the summer.

Paradoxically, even the regulatory chaos surrounding spectrum allocation in America, which has yet to allocate new spectrum for 3G, has had an unexpected benefit. Unlike their European counterparts, American operators have not paid vast sums for the right to enter an uncertain market where profits are years away.

Furthermore, it is American rather than European firms that seem to be benefiting from the convergence of mobile telephones with the Internet. Over the past two years venture-capital firms have invested three times more in North American wireless start-ups than they have in European firms, calculates Rutberg & Company, an investment bank in San Francisco. A host of American firms is pursuing innovative wireless technologies, including smart antennae, Internet-like “mesh” network architectures and devices that bridge the gap between computer and handset. Tellingly, it is an American firm, Qualcomm of San Diego, that owns the key patents for the radio techniques that are common to all the 3G standards.

The move towards Internet standards also plays to the strengths of American companies, argues Rich Wong of Openwave, a Silicon Valley firm that provides software for many of the world's handsets. He predicts that America's web-aware consumers will adopt new wireless-Internet services, once they become available, more quickly than Europeans.

Moreover, American firms have deployed e-business technology—such as supply-chain management or customer-relationship management systems—far more widely than their European rivals. As a result, they are already leading the adoption of wireless data services in business. Witness the success of the BlackBerry e-mail pager, made by Research in Motion, a Canadian firm. Already hugely popular in the United States, it is only now starting to take off in Europe.

Bottom-up v top-down

The late arrival of 3G means that Europe's wireless lead has evaporated. But if and when UMTS technology gets going, and its economies of scale make themselves felt, the result could look eerily familiar: an innovative but fragmented market in America, and a more coherent and interoperable market in Europe and elsewhere. By adopting technologies such as CDMA-1X, in other words, American network operators may gain an advantage in the short term, only to end up outside the world standard.

But things could be different this time around. UMTS may not prove as successful a standard as GSM, and the Internet will in any case make it easier to glue incompatible wireless-data systems together. Marty Cooper of ArrayComm, a wireless-data firm, argues that the “one size fits all” approach of UMTS is wrong-headed. It is far better, he says, to have a variety of competing standards that appeal to different market niches: “Yes, there's chaos for a while, but users choose.”

A standard that supports international roaming, he says, appeals more to Europeans than Americans, for example. The advent of wireless data will, he argues, show that the top-down approach of the traditional telecoms world has had its day. (Mr Cooper's views count: he pioneered mobile telephones while at Motorola in the 1970s and is known as “the father of the cellular phone”.)

That, ultimately, is the difference between the American and European approaches: a laissez-faire, individualist attitude on one side of the Atlantic, versus a centrally planned, consensual attitude on the other. And that, you could say, is a microcosm of the difference between America and Europe.