Location based services were once touted as the ‘killer ap’ for mobile network operators. Location awareness was a facility that only the mobile Internet could offer — opening up whole new revenue streams which were denied to the fixed Internet. Yet this revolution hasn’t really materialised. Tony Dennis asks whether location still has a role to play in the services of the future.
The first thing to say is that expectations for location-based services (LBS) have changed noticeably. In 2001 Analysys forecast that location services revenues will grow from just over USD2billion at the end of 2002 to more than USD18.5bn by the end of 2006. Yet by 2002, the ARC Group said that the location-based services market will grow from around USD1bn worldwide in 2002 to an estimated USD15bn worldwide by 2007.
Part of the problem derives from the multiplicity of LBS technology solutions and legislative uncertainties. In the USA, there are three different technologies certified for the E-911 initiative for emergency services, while in Europe the E-OTD (Enhanced Observed Time Difference), TDOA (Time Difference Of Arrival), A-GPS (Assisted GPS) and Enhanced Cell-ID location technologies, were all considered for the equivalent E112 legislation. The decision by the EU to simply specify the technology which is ‘feasible,’ means that the ball is once again firmly back in the operator’s court when it comes to deriving revenue from LBS.
Direction suggestions
To offer some guidance, analysts, Global Information, drew up four scenarios of how European operators might benefit from LBS. In Scenario 1, it cited a French operator deploying A-GPS in 2004. The prediction was that the expected capital expenditure over five years would be USD100.6million (assuming 15% subsidisation and 25% A-GPS handset migration rate). This, they claim would result in annual LBS revenues of USD213.1m. Scenario 2 sees a German operator relying on Enhanced Cell ID technology installed in 2001. Here, the expected capital expenditure over five years would be USD36.4m, while the resulting annual LBS revenues would be USD52.1m. Scenario 3 moves to Italy where an operator deploys E-OTD in 2004. The expected capital expenditure over the same five year period would be USD60m, resulting in annual revenues of USD251.5m. In the final scenario, a UK operator deploying TDOA in 2004, could expect capital expenditure over five years of USD81.6m and annual LBS revenues of USD291.5m.
Overall the returns aren’t exactly suggesting that location technology will set the mobile world on fire. However, this does not necessarily mean that there is no market for LBS. It is more that the technology and applications are yet to truly converge into compelling services.
Successful alternatives
A good illustration of the difficulties operators are encountering when providing location based services is provided by examining the rival systems aimed at a core market — transport. In central London. identifying the exact location of customers phoning for taxis is a major problem. However, rather than relying on just one technology to provide location information, taxi companies are using multiple technologies to create a service.
For example, taxi cab manufacturer, Manganese Bronze Holdings, is offering Zingo which enable the consumer to call a national rate number from a mobile phone. Using cellular-based location technology to identify where the customer is, the system then switches to GPS satellite technology to identify Zingo taxis in the vicinity. The customer is then connected to the nearest cab driver by voice to provide more precise location information. In effect Zingo uses two LBS services plus voice to do the job.
In partnership with The Location Network, Netsize is offering the alternative London Taxi Point service by installing physical signs at popular locations in the capital. Customers text the numbers written on the signs and this correlates to their exact location. The system then once again takes advantage of GPS terminals fitted to the taxi cabs to send the nearest taxi. It may not be that advanced technically but it does meet the market demand.
“Many existing location based systems use Cell ID technology to locate an individual based on the position of the handset against base stations. However, many of these systems can be inherently flawed,” argues Craig Barrack, UK manager with Netsize. “In a highly dense urban environment such as Central London, a single cell can cover many buildings and may not be accurate enough for a [location based] service.”
Location Network’s CEO Davis Ward-Perkins, agrees adding, ” For those location-based services that rely on accuracy, many look to user-input as a means of fixing an individual’s position. This may come in the form of entering a postcode, or in the case of London Taxi Point, referencing a four-digit code that is unique to a designated location.” With regard to Cell ID technology, Ward-Perkins says, “It certainly has its applications and in time, when the accuracy improves, we will see a great deal more services that rely on its ability to fix an individual’s position. In the meantime, a positive user-experience is vital to the continued success of [LBS]. For London Taxi Point, there is no room for error. The taxi either arrives in the correct location or it doesn’t. If it doesn’t, then the chances of the customer using the service again are minimal. With physical signs and location codes the element of doubt has been removed.”
Matching the technology with a user benefit is vital to generate revenue and, according to Joe Barrett, director for industry marketing with Nokia Networks, this can be achieved by operators staying closer to their natural environment. He argues that network operators will employ LBS in the battle to capture voice minutes from the fixed line operators.
In Germany, for example, mmO2 has employed 1800MHz technology to offer its Genion service which provides GSM handset users with cheaper voice calls when they are within their ‘home zone.’ Barrett argues that by taking this principle and enhancing it with location technology, operators can offer a really valuable service. The handset would automatically recognise it is within a ‘home zone’, but it will not merely offer lower cost calls but will change a whole variety of parameters. Vitally, these would include its advertised presence so that the user is only visible to friends, family etc. Indeed, the use of presence will mean that as soon as a user looks at the handset’s address book, it will be possible to tell whether a particular contact is at home, work or travelling.
However, according to some, mobile operators have already missed the LBS boat. Ann-Louise Palm, CEO with Appear Networks suggests that the real opportunity can be found in the already location-specific environment of WLAN hotpots, “The numbers of [Wi-Fi] locations and connected users are growing daily.” she states and this provides a good base. However, she is well aware that it is services that count, “I’m not talking about PDA users being bombarded with advertising as they walk into shops…In reality, really useful contextual geo-localised services should be available for professionals. “Imagine a machine in front of you, capable of instructing you how to operate it, even able to transfer an educational video to your mobile terminal. Or imagine walking into a conference and having instant access to the floor plan of the conference venue, the conference programme and speaker presentation files. Well, this is not science fiction, Appear Networks made this possible [via Wi-Fi] last year [2202] at the Stockholm Challenge held in Stockholm City Hall.”
User appeal
Appear also believes that LBS is relevant for other kinds of workers besides travelling executives and office clerks. “This is also useful for blue collars — a maintenance worker, for example, can plan where to lay cables on a building site. A security guard can locate video cameras in his/her field of surveillance. Appear Networks’ technology today makes it possible to tune positioning within a radius of a couple of metres,” Palm claimed. “As transport workers, security guards and hotel personnel don’t all require instant access to the same kind of information, it is vital to know a person’s specific profile. It’s about services. Users are not buying the technology (GPRS, UMTS, Wi-Fi), they are buying functionality.”
One of the greatest drawbacks to any LBS offering is consumer concern over privacy — a fear that ‘Big Brother is watching You’ through such facilities. An excellent example of this kind of reaction was provided in the Iraq war where US military authorities demanded that journalists surrender their Thuraya handsets through a fear they were transmitting vital location information to the enemy. Of course this was only a remote danger even if the GPS capability was switched on (and it defaulted to off). This incident illustrates just how vital it is for users to be able to understand how they can disable positioning services or severely restrict how much information is revealed.
“The industry has done well to push location-based services and I don’t think we have been victims of too much hype. It certainly isn’t letting the user down in the same way that WAP did in its infancy,” commented Ward-Perkins. “The technology is maturing daily, but until location-signalling phones are used by the bulk of the population and the accuracy increases there will be a place for user-input based services particularly for applications that want to pinpoint a user down to an exact building.”