Wireless location-based services have been talked about for years and few carriers have deployed them, but reality should begin to set in within the next few years.
The Federal Communications Commission’s revised enhanced 911 rules released in September have put carriers on notice that decisions and deployments will have to be made soon. Carriers have just 11 months to declare which location technology-handset-based or network-based-they intend to use.
“Most carriers have not decided how they will address the FCC mandate,” said Stephan Beckert, senior consultant with The Strategis Group in Washington, D.C. “However, they’re going to have to make their decisions very quickly. If a carrier chooses a handset solution, they have only 18 months before they have to begin deploying that technology.”
Analysts believe it is too soon to tell which technology most carriers will choose, although there are indications Code Division Multiple Access carriers may favor handset-based solutions and Time Division Multiple Access carriers may be leaning toward network-based solutions.
Beckert, however, said he believes both technologies will be deployed, with network-based solutions used primarily in urban markets where infrastructure costs can be spread among more subscribers and cell sites are dense enough to support triangulation. Handset solutions are expected to be incorporated into 95 percent of digital handsets by 2004, according to Strategis.
“We’re forecasting there will be deployments of both network-based and handset-based technologies because there simply is no one-size-fits-all solution out there,” said Beckert.
As for when deployments will begin, analysts expect limited deployments next year with deployments beginning in earnest the following two years, especially as handset-based solutions begin to be deployed as mandated by the FCC in 2001.
“That in and of itself is going to put a lot of location-capable phones into the market,” said Clem Driscoll of C.J. Driscoll & Associates. “The question is, if you are going to do 911, are you also going to do other services?”
Commercial services
“Of course, we’re aware of and working toward the FCC mandate to support E911,” said Michele Gipson, director of strategic technology at BellSouth Cellular Corp. “That’s really the principal focus right now of our efforts.”
Gipson said the company has looked at a variety of solutions and hopes to announce trials within the next few months.
“In terms of new services, the jury is still out on that,” said Gipson. “We haven’t found that killer service yet that we’d say we would go do location even without the mandate, although we’re always looking for things that the customer might be able to gain more value from having a cell phone.
“Everybody can anecdotally point to interesting ideas,” said Gipson. “What I don’t think we truly understand is what the broad market is willing to pay for such things.”
In a survey of 600 people-300 wireless users and 300 non-users-Strategis found consumers were interested in a variety of services. Emergency roadside assistance generated the most interest among wireless users with 54 percent of respondents showing interest. Location-sensitive billing followed with 39 percent, traffic and navigation with 29 percent and enhanced 411 services with 23 percent. Interest in location-sensitive billing was particularly noteworthy, said Strategis, because a significant proportion of respondents said they would consider switching carriers to get such a service.
Among non-users, there was somewhat lower interest in location services.
Consumers that showed interest in location services also indicated a willingness to pay for such services. Strategis projects emergency location services could generate $2.9 billion in revenues by 2004, followed by location-sensitive billing at $2.3 billion, enhanced 411 with $1.2 billion and traffic and navigation services with $539 million.
Driscoll-Wolfe Marketing & Research Consulting found similar high interest in location services. In its recent survey, emergency 911 services ranked highest with 66 percent of wireless subscribers and 44 percent of non-subscribers indicating interest. Roadside assistance followed with 63 percent of subscribers and 31 percent of non-subscribers showing interest, followed by stolen vehicle tracking with 52 percent and 24 percent respectively. Traffic alerts appealed to 37 percent of subscribers and 11 percent of non-subscribers and routing assistance appealed to 33 percent of users and 11 percent of non-users.
Driscoll said consumers showed a willingness to pay for such services, but only to a point.
“I believe, based on our research, that if carriers introduced these services, there will be good consumer acceptance of some of them and somewhat limited use of others,” he said.
However, Driscoll noted carriers must consider deploying location services, because not only does it provide a revenue opportunity, but it could provide a competitive advantage.
Telematics
While carriers wrestle with E911 services and technologies, auto manufacturers have already created a lucrative market for location services via telematics.
Strategis’ Beckert said telematics represents the most widely available location-based service today, with about 130,000 subscribers as of September. Beckert also said telematics probably will remain the primary location-based service at least for the next year.
Auto manufacturers, like General Motors Corp. and Mercedes, have begun to aggressively incorporate telematics into their vehicles. OnStar, a division of General Motors, in August said it expected its telematics products to be included in nearly 1 million GM cars and trucks within the next 18 months. OnStar is in its fourth model year and has nearly 100,000 subscribers to date, with installations on 29 GM models.
The prevalent services in telematics today are emergency and roadside assistance services, some concierge services and navigation, said Brian Gratch, director of marketing at Motorola Inc.’s Telematics Communications Group, which develops telematics systems for auto manufacturers. Other services include remotely unlocking doors and providing remote diagnostics on car systems, he said.
In the future, said Gratch, traffic services, information services-like news, weather, stock quotes and sports scores-as well as entertainment services like books on tape, on-demand music and audio games, might emerge. E-commerce and e-mail services also could be incorporated.
According to Gratch, information and entertainment services appeal to a younger demographic in the 18-to-35 age group. Productivity products like stock quotes, news and navigation appeal to the 30-to-55 age group, and safety services appeal to all age groups.
Dave McNamara, manager of multimedia and advanced electrical electronics systems at Ford Motor Co., said Ford provides telematics services on some of its vehicles. Among Ford’s future focuses for telematics is ensuring drivers aren’t overloaded with information coming into the vehicle, said McNamara.
In addition, Ford is working toward integrating telematics features into the car’s audio system for a variety of reasons including, making content more audio-centric than visual and thus less distracting to drivers.
McNamara said navigation assistance has received high praise as a tool in rental cars and for people whose driving routes are unpredictable. Other services in which customers have expressed interest include traffic, weather and emergency services as well as entertainment services, he said.
Driscoll said most, if not all, auto manufacturers have some plan to incorporate telematics products into their vehicles. He projects the telematics market to grow to about 1.5 million subscribers by the end of 2003.
“In our proje
ctions we see the growth of telematics continuing to grow strongly, but it will probably slow a little as location becomes available f
or portable phones,” said Driscoll.
Driscoll noted consumers showed strong interest in a single system that would incorporate car-specific location features, such as automatic crash notification, and portable location services offered on handhelds.
While telematics systems have been deployed mostly in high-end vehicles, some auto manufacturers, like GM, have begun to push telematics into the realm of the mid-level vehicle. Analysts expect that as prices continue to fall, more and more volume vehicles will incorporate telematics systems.
“The basic security feature is going to be in the majority of cars in the near future,” said Strategis’ Beckert. “Whether or not they manage to get a high-revenue device with a lot of advanced features is an entirely different matter.”
Motorola’s Gratch also believes telematics will become a common feature on vehicles.
“I would say it is wholly realistic that in two or three car model years, you could expect to see this migrating rather rapidly to the volume vehicles like (Ford) Taurus, (Honda) Accord and (Toyota) Camry, where they are selling hundreds of thousands of each vehicle,” said Gratch.
