Hold the champagne. Before you start celebrating America's global dominance in technology, you should know that in wireless telephony--which many analysts view as the hottest new trend in the tech world--the United States is lagging significantly behind Europe and Japan.

The reason for European and Japanese dominance is a stunner: They've been helped by coherent government planning, which established clear wireless standards early on. The United States, in contrast, has been hindered by a chaotic free market. That confounds the conventional economic wisdom of the 1990s, I know, but read on.

Wireless phones are still status items in the United States. The habitual users--those self-important busybodies with phones pressed against their ears walking down the street--are people we love to hate. But cell-phone angst aside, these little devices are on their way to becoming ubiquitous information appliances--as commonplace around the world as bicycles or radios.

Americans have actually been laggards in their adoption of wireless technology. According to the Strategis Group, which monitors the industry, about 30 percent of the U.S. population currently has a cell phone, compared with 69 percent in Finland, 33 percent in Western Europe overall and 41 percent in Japan. By 2002, Strategis estimates, penetration will have increased to 71 percent for Europe and 58 percent for Japan--but just 40 percent for the United States.

One reason for our slow adoption rate is that America has a confusing array of five different wireless standards--ranging from the patchy old "analog" phones that began the cellular revolution to the fancy new digital models. But even our digital future is confused, with AT&T and Sprint offering services based on different technologies, known as "TDMA" and "CDMA," respectively. (And don't ask what the initials stand for, because you'll just get more confused.)

Europe, in contrast, decided more than 10 years ago to implement a single digital standard, known as "GSM." This is a rare instance in which Europe's love of bureaucratic rule-setting and centralized economic planning--as opposed to American laissez faire--has been an enormous benefit. It gave the Europeans a uniform standard, which allowed wireless operators and manufacturers there to build out the technology quickly.

How much did standardization benefit Europe? Herschel Shosteck, a leading analyst of the wireless industry, estimates that because European companies can produce for a single standard, "they have economies of scale of four to one or five to one" over companies producing for the U.S. market. Shosteck predicts that America's current jumble of standards "will become technology islands," and will eventually be abandoned in favor of the European standard, which the Japanese have already embraced.

Thanks to Europe's head start, the leading maker of wireless phones today is Nokia, based in tiny Finland. Nokia sells more phones than any other company (it's well ahead of U.S.-based Motorola, the No. 2 company). And by some estimates, it has at least a year's technological lead over its rivals.

The wireless race is about to accelerate with the adoption of so-called "3G" (for "third generation") technology. It will allow transmission of data through the air at very high speeds, close to those achieved with broadband technologies, such as cable modems or enhanced "DSL" telephone connections. With these high transmission speeds, wireless phones (rather than PCs) are likely to be the way most people around the world connect to the Internet and its services.

Here, it's the Japanese who may have the lead--thanks again to government standards. We've gotten used to tut-tutting the sluggish Japanese economy and deriding the MITI bureaucrats who think they know better than the market. But Japanese regulators have boldly opted to build out a full 3G network, which will ready by 2002. That will give Japan at least a year's head start on Europe and up to three years on the United States, Shosteck estimates.

Other Asian nations will quickly embrace the Japanese standard, Shosteck predicts. "Asia will become the largest market for 3G services and equipment," he writes, and "Japanese terminal manufacturers are positioned to dominate it."

Japan and Europe will be the proving ground for 3G wireless technology, just as the United States provided a laboratory for the Internet. American companies such as Motorola, Cisco and Lucent will be players in this market, but the Europeans and Japanese will have home-field advantage. One lesson of the Euro-Japanese experience is that technology industries crave a single standard, around which designers can build their products. Indeed, that yearning for standards helps explain why there are so many horizontal monopolies in the tech world, including Microsoft's Windows operating system. Technologists want a common alphabet.

Europe and Japan won't win the technology race overall--America still has overwhelming strength--but they may give us more of a run than we expect. Wireless telephony is a cutting-edge industry--an early warning of the next "new new thing." Developments there should remind us that in a dynamic world, where technology is changing constantly, there's no such thing as permanent dominance.