The search for new revenue opportunities to take advantage of mobile data technologies has highlighted the potential for personalised, location-based services. The key attributes of mobiles as data devices, as distinct from PCs, are that they are always with you and always on. They are also small, of course, which makes for both advantages and disadvantages. As a result, the theory is that they are ideal for displaying relatively small amounts of highly targeted information tailored to the needs of the handset owner. Further, because the mobile system knows where you are, that information can be even more closely personalised.

Mobile operators, equipment and content providers are now investing in implementing such services that effectively integrate mobile communications with location technology and the Internet. But are users really interested in these services and, crucially, are they willing to pay for them?

Where's the money?

There are essentially four categories of location-based services:

·      Location based information

·      Tracking

·      Location sensitive billing

·      Emergency services

Of these, the first two seem to have the most revenue-generating potential. The third, location sensitive billing, is really an opportunity for individual mobile operators to set preferential tariff zones for their subscribers depending on where they are when they make a call. If near to home, for example, they could be set to a low level to compete directly with the home (fixed) phone. Similarly, emergency services have limited potential although they may increasingly become mandatory for mobile operators to provide. In the US, for example, the FCC has mandated that by October this year all mobile operators must be able to provide a certain amount of accuracy in pinpointing the location of mobile users who dial the emergency services.

Location based information usually centres on the question “where’s the nearest?”.  There are many examples of this. Vodafone recently launched a service that directs mobile Internet users to the nearest bank, petrol station or pub by automatically identifying the caller’s location. The service works by identifying the network cell the user is calling from and mapping it to a postcode-based business directory.

Other ideas include requesting a map outlining the shortest route between two locations based on real-time traffic conditions. More like wishful thinking perhaps is the idea that those trying to hail a cab in a busy city centre could instead simply type “taxi” on their cell phone, sending a signal to a local cab company to send a driver closest to that location. 

Tracking comes top

Tracking is a large category that includes everything from customised fleet applications to enabling e-commerce. It is also reckoned to be where the most money could be made in the future. Fleet applications typically entail tracking vehicles so that the owning company knows the whereabouts of its vehicles and/or operators. Why would they want to know this? One company uses it to monitor the status of its refrigerated lorries. Any fault in the plant causes an alert indicating the nature of the fault and current location of the lorry, thereby helping to reduce the risk of spoilage of perishable products and with it the insurance costs. Other applications include courier services sending the closest representative to collect a parcel, and so on. This type of service could make all the difference in gaining new delivery contracts, for example, and therefore have much greater revenue impact than for the service itself.

Tracking also includes helping people to find things they’re looking for. I want a particular book. I want the device to help me find it and also navigate me to a bricks-and-mortar store where I can buy it now. I could equally easily be a car part – say a fan belt that has just broken. More contentious is the idea of advertising to entice mobile phone users into shops, restaurants, etc. by offering discounts to anyone in the local vicinity. Last year a Starbuck’s coffee ad – of a shopper receiving a coupon for fifty cents off a double non-fat latte on his mobile while walking past the shop – was used to show how relevant location-based advertising could be. However, privacy-industry representatives then used the same example to show how intrusive it could be.  This illustrates the importance of user control over the information and advertising he receives. By indicating what he’s interested in and explicitly giving permission to send him adverts on those only, such adverts should be more closely targeted and therefore fewer in number for any individual. Sounds good – but who’s going to input all that personal information? And could it be misused?

Market researchers seem generally to agree on where the money will be made. Although not dramatic by overall telephony standards, most estimates suggest that location-based services are likely to reach $5bn to $7bn in revenues by 2005 in Europe alone – which optimistic given the current market situation. Tracking services are generally expected to account for up to 60% of this. A far cry from the $180bn spent across Europe on 3G licence fees, though.

A further problem is which technology to base these services on.

Technology teaser

There are a variety of location technologies available. This not only complicates standardisation, thereby increasing the difficulties faced by application developers, it also makes operators more cautious – and delays implementation. First, there is the cell ID method which, although not the most accurate, is comparatively cheap to deploy because it is already an integral part of the system. By identifying just the cell the caller is in, the accuracy of his location will be between 500 metres and five kilometres in the UK depending on the density of base stations in the user’s location. 

Then there is the so-called time of arrival (TOA) technology, which relies on having cell sites fitted with location measurement units (LMUs). By measuring the signal from the mobile phone, the LMUs (from at least three cell sites) can triangulate the user's position. While far more accurate than cell ID technology, it is expensive because of the large number of LMUs required. Another method is observed time difference (OTD), which, although similar to TOA, is less expensive because it requires fewer LMUs.

The last main category is assisted global positioning services (A-GPS). A-GPS can be very accurate (up to ten metres) but is expensive for the end-user as he or she would have to invest in a GPS-equipped handset. Another drawback is that the GPS handset would need to be in sight of three or more satellites  - not an easy task in built-up areas and virtually impossible to accomplish indoors.

What do users think?

In a recent survey of users, respondents rated wireless e-mail as the most useful mobile data service. Routing assistance was rated the second most useful. In fact, while respondents regarded routing assistance as the most useful of the location-related services, traffic information for the user’s location or route was the service they felt they would use most frequently – on average three times a month. Other services that scored, but lower down, included directions to destinations, sales information and electronic discount coupons from nearby retailers, location of nearby ATMs, favourite restaurants or retailers and locating friends or relatives in the vicinity (who may also be mobile – an extension of buddy lists).

So, the answer to both questions - are users interested in these services and are they willing to pay for them? – appears to be yes. But in true post Internet bubble style, a relatively guarded yes. Most observers agree that location-based services will make money, although they won’t make a fortune. Only so long as operators make up their minds about which technology to implement though. They could easily stifle proposed services if they don’t.

It is also clear that there is no one killer application. A wide range of services need to be tried out. Many of the initially highest rated services can be linked to car travel. Hence the urgent activity at present among the car makers to build new services into their top-of-the-range models. However, it is clearly very early days yet and applications will need to evolve through use before they are likely to become truly popular.

© e-principles 2001

Robin Duke-Woolley

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