In February, the famed Sundance Institute, the organization created by actor Robert Redford to support independent artists, teamed with the GSM Association, a trade group that represents more than 700 mobile-phone operators and manufacturers, to create five short films for wireless devices. The experiment, while modest in scale, illustrates how the entertainment, telecommunications and technology industries are acting on each other to produce hybrid mediums able to accommodate digital "content," that potent elixir, in its many forms.

As Bill Gajda, head of business development at GSMA and a key driver behind the Sundance mobile film project, makes clear, that shift is a response to major changes in how, when and where people consume entertainment.

As these new markets coalesce, wireless carriers, technology developers, and entertainment and media companies stand to benefit. That is, assuming they figure out how to produce films and other content not only for cinema screens and in-home viewing, but also for mobile phones and future generations of wireless devices.

For venture investors, corporate acquirers and other dealmakers, the picture is murkier, with business models only beginning to solidify around these convergent technologies.

Gajda spoke recently to The Deal about the Sundance-GSMA mobile film project and about its implications for the entertainment and telecom industries.

The Deal: How did your collaboration with the Sundance Institute come about?

Bill Gajda: A group I belong to was invited by Bob Redford and the Sundance Institute to talk about ways to revitalize the Sundance brand. He talked about his love of short films and the fact that there's no commercial market for them. And in those discussions we came up with a mobile short film festival.

Roamware [a San Jose, Calif., provider of mobile telecom software] and [Dutch chipmaker] NXP sponsored the program. We made these films available at no cost to mobile carriers.

Why did GSMA choose to partner with Sundance on the project?

It was to demonstrate to wireless operators, vendors, media analysts and the creative community that mobile could be media in its own right.

We know already that mobile devices are used to show movie trailers and to watch regular programs on TV. We wanted to demonstrate that you can get short films on mobile.

As a platform for showing their work, what does mobile telecom offer filmmakers?

Right now short films aren't being monetized. Once they're shown at these festivals, they just end up in the archives.

Mobile has the potential to create careers. I think there are going to be some individuals or studios created that optimize the process for making short films.

So how would you characterize the possible impact of cell phones and other mobile devices on the entertainment business?

As a distribution channel, mobile has huge potential for the entertainment industry. Our habits have changed. We're incredibly on the move. More than $7 billion was spent on ringtone downloads last year even though on average it takes 20 clicks on your phone to access a ringtone. That tells me there's a huge appetite for entertainment on mobile if we can make it easy for end users and offer compelling content.

How important are partnerships between the mobile and entertainment industries to enable this sort of convergence?

They are vitally important, and they are starting to happen. Both sides recognize the importance of mobile. This has to be a partnership where the big players sit down and say, "How can we improve things for the end user"?

The partnerships will be between the people who own the content -- the record labels and studios and cinema companies -- and ideally the association representing mobile operators.

Mobile telecom and computing is still in its infancy. How much does that limit the technology's utility for film studios and other entertainment companies?

Every day is less of a technology issue and really more a matter of developing compelling content, and that takes time. And then the partnerships we talked about need to be formed.

It's more and more about business models and business development channels. It will take time to capitalize on the opportunity from those partnerships to understand how mobile works.

What challenges lie ahead for the entertainment industry in seeking to profit from the mobile telecom boom?

Three things. First, understanding how mobile works vis-à-vis their own distribution channels. Second, working with mobile operators to help them understand how people want to consume content across other distribution channels -- marketing music or film is different than marketing voice or data services, which is what the operators have traditionally done.

Finally, we have to sort out the business models and content rights. We haven't developed a good mechanism to clear rights and figure out how rights are assigned for mobile telecom. That's not as clear for mobile because you're talking about little bits of content.

How closely is your organization working with entertainment companies to promote the idea of distributing films, TV programs and other content over mobile devices?

The whole media and entertainment space is a new one for us. At the same time we're working with Sundance, we're also working with EMI Music and are in discussions with Warner Music Group. We're looking at mobile cinema, music, gaming and videos.

How quickly are such companies ramping up to offer sophisticated forms of mobile content?

Some large media and entertainment companies, such as CBS, have teams now dedicated to develop a mobile product and mobile strategies. And the music labels all have mobile teams now.

So where does GSMA go from here, and how do you expect this collision of mobile telecom and entertainment to look like in five years?

We're now in discussions with Sundance on how we can expand the program -- how do we go from five to 100 films, and what are the different business models to distribute these films?

Our first task is to have enough films for a wireless operator to look at, and then choose a suite of five or 10 or 50 films to put on their portal. We're also talking to other film festivals about how to replicate this program.

As for convergence, it will vary a little bit between cinema and gaming and other services, but mobile will be a very strategic part of every big entertainment player's strategy in three to five years. There are over 1 billion computers in this world, but almost 2.5 billion mobile subscribers. There are more cell phones with browsers in the world than there are computers. In terms of mobile as a serious media to reach customers, this will be very, very big.