Live wires: as the wireless revolution continues, Latin America moves into video, data and more.

Technologists often talk about the "leapfrog" effect, where emerging economies benefit from the latest technology before developed countries, often because non-existent or poorly maintained infrastructure is more cheaply replaced by something completely new.

For Latin Americans, for instance, that means checking on distant family no longer means travel--just a modestly priced text message from a prepaid cellular phone. Cellular phone penetration in Latin America is set to continue its explosive growth, to 49% in 2007, according to Pyramid Research.

"One of the areas that is fueling the growth is this substitution of fixed-line phones with wireless," says Mayra Luis-Castillo, Latin America vice president of business development for Canadian equipment supplier Nortel. "We also see potential for robust growth because a lot of the markets are underserved based on their gross domestic product."

Telecom also spurs development. World Bank research suggests that telecom spending in developing countries returns 20% on investment. To succeed, aggressiveness and rapid innovation needs to be combined with a willingness to cooperate with competitors.

"Every year wireless is always under-forecasted," says Carlos Bivera, vice president of business development for Latin America at San Diego, California wireless technology firm Qualcomm. "In five years Latin America will absolutely be doing TV on the phone. There is no question in my mind that this will be for the masses."

Once the music and news industries understand the broadcast opportunity in so-called third-generation cell phones, ones that connect to the Internet and have computer graphics, they'll want in too, Rivera says. MediaFLO, a Qualcomm service, has already looked into beaming television channels to cell phones in Brazil and Mexico. The seeds already are planted in Argentina. According to a survey by Finnish handset maker Nokia, 58% of Argentines read news from their cell phones.

Nevertheless, just talking is still expensive in Latin America. "The cost per minute in many Asian countries, where the gross domestic product per capita is half of what it is in Latin America, is one-tenth the cost," says Paul Murdock, vice president of sales and change management for Nokia Latin America. A million text messages sent a day in Latin America helps revenue, but in most places they can only be sent to subscribers of the same carrier. "The regulatory environment has to change," Murdock says.

Service providers, too, are still focused on voice. "Latin Americans like to talk; we're more emotional," says Patricia Ramirez-Valdivia, spokesperson for Mexico's America Movil, part of the telecom empire of billionaire Carlos Slim. Besides the major markets, America Movil wants to target low-penetration regions like Central America, Bolivia and Peru.

Nevertheless, text messaging is picking up. In Mexico, 11% of America Movil's revenue came from data services. A pivotal point in shifting focus away from voice is when countries hit 50% penetration, Ramirez-Valdivia says. America Movil is offering third-generation cell phones in some countries to give people a taste and build consumer demand.

Evolving. While consumers seem to choose cell phones, fixed-line is targeting businesses. The fixed-line market, although growing more slowly, is also evolving, offering Internet services for business efficiency and faster Internet. Traditional companies are slashing long-distance prices by converting voice calls to data and allowing people to talk over the Internet. Yet fixed-line providers will see "vegetative growth," says Germano Ramlow, general manager for fixed-line business for Germany's Siemens in Latin America.

By next year, Ramlow says, fixed-line companies in Brazil and Mexico will offer video rentals downloaded through wireless Internet. "This is the future of fixed telephones," he says. "It's called Triple Play; that is video, voice and Internet."

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ALEXANDER V. RAGIR * MIAMI