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Consumers fell in love with smart phones this year, as handset makers churned out waves of stylish new devices that pack more computing power than Thursday's personal computers.

Brand-name manufacturers won consumers' hearts with rich and novel features that include everything from three-megapixel cameras and GPS receivers, to MP3 and video players.

But the phone companies that provide the wireless data service to bring the features to life were playing hard to get. Relatively few people have been willing to pay the telecoms extra monthly fees to realize the full potential of their fashionable devices. Individuals remain reluctant to adopt wireless data features the way they have embraced wireless voice services.

To really drive on-the-go data into the mass market in 2007, phone companies need to cut prices and simplify services, analysts say. But it's not clear how ready the North American telecoms are to do that, given that the nascent market is growing well and awarding fat profits.

In Canada, mobile data use is in the early stages. In terms of who is using data services “very frequently,” about 15 per cent said they text message, 11 per cent download ring tones, 7 per cent use e-mail, 3 per cent download music, and 3 per cent said they watch TV or video, according to a recent IDC poll survey of 4,640 people.

“There's still a lot of work to do in terms of market development and education,” said Tony Olvet, an IDC Canada analyst.

The newness of mobile services has led to a lot of experimentation by some consumers. But the early adopters may be surprised to see what the novelty features are costing them. And later adopters will not be as willing to spend as freely on the technology, he said.

“This is one of the few industries where at any given point in time you're never certain what you're paying,” he added.

In the U.S., IDC recently polled more than 2,500 consumers about their wireless service and found that during the third quarter nearly 75 per cent didn't send any form of data other than text messaging, the cheapest data service.

“It's clear from the survey results that many people just want to use their mobile phone to make calls,” said IDC analyst Lewis Ward.

“Someone has to get less greedy and more volume oriented than price oriented. But right now I don't see any signs of inadequate demand,” said Rob Sanderson, an analyst with American Technology Research.

Wireless data use is definitely on the rise. Telus Corp. says the average revenue per user (ARPU) it generated from mobile data rose 79 per cent in the third quarter from a year earlier. But the figure still only amounted to $5.11 a month, 8 per cent of total ARPU.

A Merrill Lynch report this year estimated that, on average, Canadian carriers generate 9 per cent of ARPU from data and U.S. phone companies generate 12 per cent. In contrast, European and Asian phone companies, which offer more affordable data plans tailored to individuals, derive much more of their revenue from data services (19 per cent in Germany, 21 per cent in China, 22 per cent in Britain, and 28 per cent in Japan).

For now at least, Canadian carriers appear content with the balance they have achieved between prices and rates of adoption. High data prices are not hurting demand, said Robert McFarlane, Telus's chief financial officer. “It's not a question of data adoption happening. Data adoption is exploding.”

He said falling prices for smart phones are helping to drive more customers to data services. Telus and other phone companies will lower their prices “over time,” he said, but with data use growing more than 100 per cent annually, any cuts could be a while coming.

Arguably, no company has had a bigger role in creating the wireless data market than Research In Motion Ltd.

This past fall, the launch of the BlackBerry Pearl, which includes a camera and media player, positioned the Waterloo, Ont., company into the consumer space for the first time.

RIM has repeatedly talked about the untapped potential for data on the carriers' networks. Chris Umiastowski, an analyst with TD Securities Inc., says RIM would like to persuade the telecoms to bring down the monthly costs of using a BlackBerry.

“We see a trend developing, whereby RIM and its carrier partners are co-operating to reduce the cost of BlackBerry on a customer's monthly bill,” he said in a research report. “We want to see RIM and the carriers co-operatively reduce their fees. Why? Because it will drive more subscriber growth and therefore more hardware sales.”

Even though RIM makes less profit selling BlackBerry devices than it does from its software and service fees, the handsets still add to the bottom line, Mr. Umiastowski said.

RIM declined to comment on its pricing strategies with the carriers. The company has established partnerships with more than 200 phone companies around the world through which its BlackBerrys are sold and operated. RIM collects a fee from the carriers for running the BlackBerry wireless traffic through its network operations centre. Two years ago, it charged more than $10 (U.S.) per user per month. Today that amount has fallen to approximately $8, brought down by lower rates charged to consumer users (about $5-$7).

Mr. Umiastowski floats a model in which phone companies target the mass market by charging consumers just $10 a month for BlackBerry service, compared with the $20 to $30 fee charged by U.S. carriers today. RIM in return would need to agree to lower its fee, to perhaps $2 a month, he said.