TV embraces wireless with trepidation.

While games and ring-tones are the current entertainment-based money-makers in the wireless universe, industry experts predict that cross-marketing for, and consumer interactivity with, television and film content will become the next important revenue growth areas. However, they "woefully" lament that the U.S. is behind Europe and Asia in implementing these new technologies.

Elizabeth Sherman, vp, business development for Endemol USA said: "We're still at the point of teaching people and trying to change viewers' habits. Beyond that, some of the problems with trying to implement interactive elements between television programs and wireless platforms are on the wireless carrier's side, with dead zones and dropped connectivity." She added that "when this happens, the consumers don't get frustrated with the carrier, they get frustrated with the program, so it's an area of concern for producers. But as competition increases, we need to find new ways to engage the audience on the content side."

Mindful of the dotcom bubble that burst because the industry lacked a cohesive business model, the experts noted that the entire wireless industry was more carefully trying to advance a business model for an interactive medium that is all about building a dialogue with the end-user. Jack Philbin, president of Vibes Media commented: "It's really mass-scale marketing on an individual level and as such is very powerful."

Referred to as "text-messaging" in the U.S. but "short message service" (SMS) internationally, U.S. users send more than 2.5 billion text messages each month. Of the more than 163 million mobile phones currently in use, 85 percent are text-messaging capable.

Verizon reported that their 39 million users send, on average, 60 to 70 messages per month. The cost of SMS is either included in the monthly fee or is charged a la carte, usually the equivalent of about 10 cents. In Europe, SMS has become an important revenue stream for companies. "Conservative estimates are that mobile marketing spending by brands looking to capitalize on the first truly 'out-of-home' direct response medium will pass the $5 billion per year mark within the next few years," said Jim Manis, global chairman of Mobile Marketing Association.

Television producers and Hollywood studios are assessing potential applications to promote their series and films via a variety of applications; including voting, coupons, games, contests and sweepstakes. While breakthroughs in cross-messaging interoperability between wireless carriers and record growth in text messaging in the U.S. are factors in this new strategy, what caught Hollywood's attention were the 13.5 million text votes AT&T handled for the final episode of American Idol.

Shows such as Survivor and Joe Millionaire, as well as networks such as Fox Sports, have used mobile promos to strengthen one-to-one audience relationships. But Hollywood is looking to share in the wireless financial windfall they have seen generated for phone carriers through SMS interaction, with TV shows like Big Brother.

Multimedia Messaging Service (MMS) has the ability to send messages that combine text, sounds, images and video to MMS capable handsets. Common Short Codes (CSCs) are 5-digit numbers wireless subscribers can use to send address text messages to someone on a different service provider. CSCs can be leased by media companies and content providers to create a simple way of interacting with consumers for cross-media tie-ins with television and live online events.

Hollywood executives are calling this evolving strategy the "third screen" for content monetization, which they envision will include everything from ring-tones to multimedia video and gaming applications.

Early results from Europe have reinforced the wireless potential. In Norway, for example, Premium SMS, where companies charge consumers to enter into competitions or voting polls, is already out-earning Internet advertising.

"The media companies are really starting to try some new things out," said Carl Williams, an analyst at Denmark's Strand Consulting. "In the weeks that Big Brother ran in England, it generated more than 13 million SMS messages from voting and quizzes. And they were all premium prices."

Just how to divvy up the revenue remains a potential battleground between wireless carriers and Hollywood. In general, mobile operators take up to half of the revenue being generated by the SMS messages, with content providers such as MTV getting 24 percent. The rest of the profits go to the companies that provide the technology.

"The television stations are looking to get a higher percentage of the transaction," said Williams. "They are getting good results from these programs, setting the mobile operators up with the right demographic and financing all the development themselves. They're starting to complain that they are not getting good enough deals."

Endemol's Sherman also pointed to the obstacles presented by rights issues. "As soon as you get a handset manufacturer and carrier involved, you open up very complicated rights issues."

On the music side, those rights issues have proven thornier. Ralph Simon, chairman of the Mobile Entertainment Forum, expressed frustration with U.S. record labels, whom he claimed "have been placing onerous conditions for their content usage as a way of asserting their providence. But in the process, they are killing the goose that could lay them a golden egg in the future." He explained that "The reason places like Japan are so far ahead of us in this technology is that the Japanese copyright organization did everything they could to facilitate rights and licensing. Record labels should not see this as a land grab but should find communion with aggregates to advance this technology."

Sherman called on U.S. companies to put their money behind the new technologies. "Content providers, carriers, handset manufacturers and mobile platform providers must be willing to invest wisely. If they do, there will be a positive shake-out in the industry, which will leave behind strong companies who will move forward, so that wireless is not the bubble that bursts."