The challenge for the industry is to make handsets for - and deliver services to - the "next billion" users, while persuading people in wealthier markets to upgrade to a newer, smarter phone and spend more on mobile services.At the 3GSM World Congress in Cannes last week, Motorola unveiled a low-cost phone designed to boost uptake in emerging markets. The main conference centre halls featured dozens of firms developing content or software for the latest 3G handset models - all marketed with a view to persuading subscribers to spend more on entertainment services. But the industry finds itself at a crossroads.In the rich nations, particularly in Europe and such Asian countries as Korea and Japan, the market for mobiles is saturated. ARM, the UK company that designs processor chips for much of the market, estimates that there is, on average, more than one mobile per person in the UK, as high-end users pick different models for work and for leisure.But at the other end of the spectrum, they remain out of reach for more than half of the world's 4.7 billion people. Digital phones offered new services, like text messaging, and went on to sport colour screens, cameras and, with 3G, support for video calls and live TV content.At the end of last year, figures from the GSM Association showed that just under 1.7 billion people worldwide owned a digital mobile, and this could top two billion by next year. Twenty years ago, the telecoms industry offered its customers a simple, if costly, proposition: buy a phone and make calls from more or less anywhere you like.

What they got was a device quickly derided as a Yuppie toy: bulky, expensive and designed with function rather than form in mind. Today's mobile phone market could not be more different. The move towards the digital GSM standard, in 1992, gave manufacturers the scope for far greater innovation. The move was welcomed by the City but the group still has much to do to shore up its trading performance. Pre-tax profits are expected to slide 16 per cent to £345m.As for overseas results, in keeping with the laid-back start to the week, there is little of interest Stateside, although retail giant Gap is reporting. Capita has a strong track record for growth, and pre-tax profits are likely to rise from £121m to £150m. However, some analysts are doubtful this can be maintained in the long term.Services group Rentokil Initial is one of the City's favoured break-up rumours, while earlier this month there was some actual news when Doug Flynn was named chief executive.

However, Sir Martin continues to tread a cautious path, and is likely to reaffirm his belief that industry growth rates will slow this year.Other companies to look out for include Capita, which operates the London Congestion Charge, and Rentokil Initial. This is not to say you should be buying shares in Sanatogen, Saga and Stannah stair lifts. It is more to do with the decreased savings rate as people move from working to spending the money they have put away during their working life, as well as the increased level of home ownership as people age.But the pensions problem will also have a bearing on this. Indeed, the young and single Mr Laty was invited to the Ruddock household for Christmas lunch, but found himself unable to attend as a result of moves to expel him.The story, featuring headlines such as "The spy and the minister's daughter" and "The strange case of the disappearing diplomat", has Australians agog.The government dismisses the friendship with Ms Ruddock as irrelevant, but the affair - which has blown up on the eve of a visit by Moshe Katsav, the first Israeli President to come to Australia for 18 years - is causing it severe embarrassment.To make matters worse, it has been confirmed that the man appointed to replace Mr Laty was embroiled in a child sex scandal in Brazil five years ago. Aryeh Scher, who was allegedly photographed in the nude with young girls, has been forced to withdraw his candidacy.Mr Laty, in his early 30s, was a second secretary, with responsibility for consular matters in Australia and New Zealand. He lived in a fashionable Canberra suburb and was a well-known bar-hopper, favouring venues patronised by journalists, political aides and civil servants. One acquaintance, it's true, described him as "a bit of a dork".