The Future Is Finnish

Risto Linturi is in his big, gleaming kitchen, puttering around with some voice-recognition software. But when his words come up a bit garbled on the monitor above the breakfast table, his interest quickly shifts to another topic: why talking on mobile telephones resembles telepathy. It's not hard, he says, to imagine the next step. One tiny chip implanted in your throat to monitor your vocal chords and send a signal, 30 minutes of practice speaking silently (try it, it's easy) and another chip in your ear. Who would want to do such a thing? Perhaps nobody--but don't rule out the

local teenagers. They're already completely nuts for mobile phones, and obsessed with staying in touch as only teens can be. When the group's out and about, says Linturi, the father of two teenage girls, "there are endless calls. 'No, no, it's changed--we're not going to this place, we're going over here. Hurry!' It's like a school of fish."

Ah, it's a great time to be Finnish. Not just for Linturi--who, besides being master of this cybershowcase of a home on the Gulf of Finland, is director of technology for Helsinki Telephone--but for most everyone in this nation of 5 million. Business people, civil servants, academics, ordinary workers--all are on much the same wavelength, swimming with the world's economic current at their back. Their goal is success in the digital age, and they have more than a few reasons to believe they're getting there. The list starts with the country's flagship company, Nokia, which this winter captured the No. 1 spot in mobile communications, powered by sales that grew 51 percent in 1998, to $15.7 billion. And it goes on: Finland leads the world in both Internet connections and mobile phones per capita--and in determination to remain among the leaders even as the likes of Microsoft, AT&T and Sony keep picking up the pace in the effort to network the world. The national commitment is manifested in everything from teen slang to a typically Nordic web of public-private partnerships to a recent budget speech by Prime Minister Paavo Lipponen. Combined government and corporate R&D spending is an ambitious 3 percent of GDP--and even mighty Nokia uses some public money. Software and Web-site companies are blossoming, funded in part by government-provided venture capital. Free, high-quality education through university level has produced a technically capable population. English--the language of the Internet--is widely spoken. The government even issues something called an Information Technology Driver's License.

Not all the lights are green, of course. Nokia is now so big--telecom contributed 1.5 percent of Finland's 5 percent GDP growth last year, with Nokia accounting for most of it--that other businesses have a hard time competing for qualified staff. And heaven help Finland if Nokia should seriously falter. It's not yet clear how effectively government venture capital can substitute for the private kind, which remains in short supply. Or whether the national R&D drive will pay off in products and profits. But if there are any insurmountable obstacles, you won't find them in the stacks of Information Age manifestoes and backgrounders cranked out by phone companies, government agencies and think tanks. If nothing else, the brochures are keeping the forest-products industry (Finland's largest exporter until electronics passed it in 1997) humming along.

Yet who could fault Suomi (as the country calls itself) for feeling optimistic? In this land of long, dark winters, things have never looked quite so bright. Having lived under Swedish rule until 1809, under the tsars until independence in 1917 and then in Moscow's shadow for nearly 50 years after World War II, Finland was, with the collapse of the Soviet Union in 1991, finally free to be itself. And though the immediate effect of the Soviet collapse was severe recession (unemployment is still at 10 percent), it didn't take the Finns long to figure out who they really are. They are Europeans; alone among the Nordic countries, they adopted the euro, the new single currency--an important advantage for Finnish business. They are self-reliant and a bit self-deprecating. ("One Finn is worth 10 Russians," goes the joke in the country's many bars, where World War II battles against Stalin's troops are still refought. "Right," comes the response. "And what do you do when the 11th shows up?") Most of all, the Finns are techies--and proud of it.

That pride has been stoked by the success of Nokia, a company that in the late 1980s was still better known for making rubber boots than mobile phones and the base stations that make them work. Like its Swedish rival Ericsson, Nokia benefited greatly from the establishment of the Nordic Mobile Telephone standard back in 1981. Mobile phones took off in Scandinavia. After all Europe settled on the digital GSM standard in 1987, Nokia's new young CEO, Jorma Ollila, bet big on it. The payoff began in late 1991 when Radiolinja, one of Finland's mobile-service providers, launched the world's first GSM network and became a sort of field laboratory in which Nokia's engineers built their knowledge of what today is the world's most popular mobile-phone standard. Nokia got rich--and Finland, which now has a cell-phone penetration rate of 60 percent, got a pattern it aims to repeat.

Yet the national affinity for technology--especially communications technology--is not something that sprang up, serendipitously, in the past decade. "We're lucky," says Yrjo Neuvo, director of research and development for Nokia. "We have to admit that. But we also started quite early." Tsars Alexander II and III get some credit for that. In the 1880s they figured that the telegraph lines were the key strategic asset--the one requiring state control. The newfangled telephone was thought of as a local-communications device. So why not let the Finns start a few phone companies? By the 1930s Finland had an amazing 815 of them, and an early understanding of how to blend competition with cooperation in a networked world. There was, to be sure, consolidation, to the point where two operators now dominate: Sonera, the former state company, still only partly privatized, and Helsinki Telephone. But the legacy of those early entrepreneurs is apparent in the likes of Linus Torvalds, designer of the celebrated Linux operating system and a key figure in the open-systems movement. And in the thousands of other young people now emulating him at Helsinki Technical University and the University of Tampere, where Neuvo taught for 18 years before joining Nokia.

The Finns may be no more diligent about preparing their kids for the future than most nationalities. But they do seem to do it with an unusual degree of conviction about what's going to be important--one big reason they buy their teenagers mobile phones and foot the monthly bills of about $40. A study by the Information Society Research Center at the University of Tampere (sponsored by phone company Sonera, Nokia and Tekes, the government agency that promotes technology and doles out development capital) concludes that parents see a mobile phone as a "key to the information society." Keeping tabs on the little rascals may be just an ancillary benefit--and maybe not even a benefit, if Heidi, a 15-year-old in Leena Nordman's English class at the Haukilahti School in suburban Helsinki, is to be believed. "My mom's always calling me," she says, rolling her eyes.

When Nordman tells her students that they're allowed to get their phones out one spring day, they all proudly do so. Some of the boys immediately start playing the games built into the small, colorful devices. But Heidi and a few other kids are eager to tell a visitor about their obsession. First of all, the thing is not a phone. It is a kannykka (a little hand), a luuri (a transmitter) and sometimes a kapula (a stick). Or just a Nokia. The gizmos are very personal; a lot of them are in colorful custom cases, and many have special ringing tones that their owners have downloaded from a Sonera Web site ("theme from 'X Files'," says one boy). One girl says she sleeps with her kannykka by her pillow, the better to use the alarm-clock function.

Most of these fairly well-off kids have computers at home, and enjoy visiting chat rooms. But like other Finnish teens, they really get a charge out of the relatively cumbersome e-mail capability available on their phones. There's a 161-character limit, the inconvenience of a telephone keypad--and the thrill of gossiping, flirting or just bombarding each other with smiley faces, all for less than the cost of a voice call. Eija-Liisa Kasesniemi, who ran the Information Society Research Center study, says the kids have their own vocabulary here, too. They tekstata--text-message--their friends. And when they're feeling romantic, they sekstata them. Is mobile text-messaging just for kids? Wireless-operator Radiolinja might have thought so when it debuted a service shortly before Christmas one year. But when half of Helsinki realized that last-minute electronic cards are more convenient than paper ones--and crashed the network--Radiolinja understood that it had something bigger on its hands.

It is out of such crashes, of course, that killer apps--those must-have services-- are born. So the Finns experiment avidly. Radiolinja now offers more than 100 different mobile information services in its ASKIT line. Among them: bus schedules (when it's minus 25 degrees Celsius, you really want to know when the next one is coming along) and chat sessions conceived by Mato Valtonen. (You remember Mato: he's the leader of a rock band called the Leningrad Cowboys, who celebrated the fall of the Soviet Union by hiring the Red Army choir to sing backup for them in Helsinki's Senate Square in 1993.) Risto Linturi is leading a project for Helsinki Telephone called Virtual Helsinki--a detailed model of the city in cyberspace, built to hone skills in navigation and positioning. Someday soon, the thinking goes, a traveler will land at Heathrow, pull her mobile communicator from her bag and call up maps, transport information--you name it. And Finnish companies will have a nice piece of the business.

Or will they? Has anybody besides Nokia yet made a world-class splash in the information industries? Not exactly. MeritaNordbanken, a Swedish-Finnish bank that is the Nordic region's largest, excels at delivering online banking services. Some 40 percent of its customers bank that way, and Finns love to pay their bills online and by cell phone. But this is a regional bank, not a European one. Jukka-Pekka Mattila, a tall, hearty former powerboat racer--his office walls are decorated with pictures of a sleek craft bearing the famous FINNSCREW logo --runs RTS, an international industrial-automation company. He and Antti Raunio, his 22-year-old partner, outline some interesting plans to build their new-media offshoot, RTS Networks, into a European power. But it's early days for them. Most accomplished, perhaps, is software house Data Fellows, which has 150 employees developing data-security products in both Helsinki and San Jose, California. Founder and CEO Risto Siilasmaa says the company, which got seed capital from Tekes, will do $18 million in sales this year, selling to clients such as NASA, Yahoo! and Boeing. Since the company's still private, there are as yet no stock options for the engineers. Siilasmaa keeps them motivated by letting those who've had a good week feel like James Bond by driving around in one of the company's two BMW Z-3 sports cars.

For now, though, much depends on Nokia's ability to maintain its successful mix of engineering innovation and consumer marketing. In Nokia House, the huge new glass headquarters that the company (which hired nearly 10,000 people last year) has already outgrown, Yrjo Neuvo is asked which companies stand to reap most of the profits as computing and networking capability migrate away from the desktop and out into the world. "The rules of the game are not set yet," he says. "Who will have the position in 2005 will be interesting to see. Microsoft, Reuters, AOL..." And Nokia? "We have the volume," he says. "Annual sales of mobiles are faster than cars and PCs combined. And we have the personal connection--the phone that's an extension of your personality." The technology is falling into place; the Symbian joint venture (with Motorola, Ericsson and palmtop maker Psion) gives Nokia a powerful operating-system alternative to Windows CE, Microsoft's entry in the mobile world. The wireless-application protocol supplies the basis for deals with content providers, such as the one Nokia recently struck with CNN in Asia. Nokia president Pekka Ala-Pietila is currently based in San Jose, adding to a string of acquisitions the company has made to increase its Internet capabilities.

The battle is heating up fast. Many of the services Nokia hopes to support will start coming into view as the world's operators build the first of the so-called third-generation digital networks. Not surprisingly, Finland became the first country to issue licenses for third-generation networks last March (though it's a toss-up whether Finland or Japan will see such services first). Already Sonera, Radiolinja, other service providers and all manner of media and information companies are working to develop services that will attract Heidi and her classmates in a few years. Of course, this being Finland, there are a lot of other things going on as well. For example, with voice traffic increasingly going to mobile phones, Helsinki Telephone (main owner of Radiolinja) is spending tens of millions of dollars to turn its fixed-line business into a system that enables nearly anybody to narrowcast TV pictures. It's very egalitarian, very Finnish--and, of course, Risto Linturi's idea. He has a lot of them.