By Jane Wakefield BBC News Online technology staff

Picture messaging is likely to be one of the big issues when mobile operators meet in Cannes in the south of France for the annual 3GSM World Congress.

Among the cocktail parties aboard the yachts lining Cannes harbour will be some serious talk about the way the industry is going.

The next 12 months look rosy for mobile firms, as a new wave of camera phones reignite a stagnant market.

Multimedia messaging services (MMS) will be one of the buzzwords on the lips of party-goers and unlike previous conferences it is now a concrete reality rather than just an idea.

Vodafone, mmO2 and Orange have all launched multimedia phones and services across Europe.

Picture phones

What will future phones look like

According to Trevor Brignall, business development director at consulting firm Gap Gemini, the mobile firms are surpassing even their own expectations.

"Take-up is way above internal projections. Even if the number of subscribers is slowing, the really good news is that revenue per users has increased," he said.

Jupiter Research estimates that by 2007 40% of European mobile phones will be MMS-enabled.

Jupiter analyst Olivier Beauvillain is more cautious about how quickly operators will make money from MMS services.

"It is too expensive to grow that quickly and I don't expect a transition from conventional phones to the new handsets in a year," he said.

What customers want

Mr Brignall believes Cannes 2003 will be more realistic in tone compared to previous conferences - less about the ideas of the future as about looking at what is working in the here and now.

The culture is very different in Europe where everyone has PCs and people are not used to data-enabled phones Paolo Pescatore, IDC

There will be much more customer focus, he believes, looking at how customers use the new handsets and what they want in terms of future services.

And there will be plenty of case studies presenting lessons to be learned and the success stories of operators which have already made the transition to data.

Leading the pack will be NTT DoCoMo, the operator that experienced such phenomenal success in Japan and which has now launched services in Germany, France and Holland.

IDC analyst Paolo Pescatore believes one of the lessons to be learnt from DoCoMo is that services do not necessarily travel.

"The culture is very different in Europe where everyone has PCs and people are not used to data-enabled phones," he said.

3G round the corner

While much of the talk at Cannes will be how to make existing data services appeal to customers the real buzz will still be around third generation mobile phones.

3G networks and services are tantalisingly close with Hutchison planning roll outs in the UK and Italy next month and other operators promising services by the end of the year.

"3G is on everybody's mind," said Mr Pescatore.

M-commerce, another buzzword from conferences gone by, will again be on everyone's lips as operators seek to make paying for content on phones as easy as possible.

While the UK, Germany and Italy are taking the lead on mobile services they will also be looking to Scandinavian innovations such as allowing people to order taxis and pay for parking via their mobiles.

Location-based services, finding the nearest restaurant or cinema, will be back on the agenda as operators scrabble for services that will really appear useful to customers.