After scoring an agreement with Vodafone AirTouch plc to deploy its location-based technology in the carrier’s U.K. network, Cambridge Positioning Systems is ready to push its product in the United States.
“We have not done a lot of marketing in the United States on purpose,” said Chris Wade, chief executive officer of CPS. “We wanted to have solid stakes of progress in Europe prior to coming here. Also, there have been regulatory constraints since it has only been since September that any legal handset-based location system is allowed in the U.S.”
U.K.-based CPS offers a product called Cursor, a low-cost software solution for handsets that determines the location of users based on their proximities to base stations. Special algorithms developed by the company’s team of scientists can calculate the time it takes a radio signal to travel from the base station to the handset.
While European operators are looking at the technology as a way to generate more revenue per user, the Federal Communications Commission in the United States is requiring carriers to deploy location-based technology to offer enhanced 911 services. New FCC mandates require carriers to declare their technology decisions-handset-based or network-based-by next October, and carriers are worried about cost recovery of the new systems. Vendors that offer location-based services have long heralded the revenue-generating benefits of the technology.
Wade said the Cursor software product is about one-tenth the cost of network-based solutions and can be inserted into existing handsets. Vodafone is hoping to increase its ARPU by about $5 per month using the technology, said Wade.
“For the operator, it’s a cost-effective solution,” said Wade. “For the consumer, the handset should not cost any more.”
CPS in the summer tested Cursor with Vodafone, deploying the technology in a 150-square-kilometer radius in Cambridge, United Kingdom. It tested the service with 150 customers for three months. To give customers confidence in the service, CPS sent SMS messages to the customers indicating what street they were located on. The company also sent messages to the Automobile Association, which offers a voice-based direction service.
“We held regular focus groups, and everyone said it was a service all operators must have because it makes the customers feel safer,” said Wade. “This led to the declaration of Vodafone that it works.”
CPS today is working on a national deployment in the United Kingdom and is in various stages of negotiations with all European operators, said Wade. Wade is hoping trials with Telecom Italia Mobile will result in the carrier deploying the service in time for the Pope’s Party in 2000 when pilgrims from around the world travel to the Vatican.
CPS will earn its money by sharing revenues with operators. The company also is committed to bringing in partners willing to use the technology.
“It puts us in the risk equation and gets us focused on applications,” said Wade.
While the technology is optimized for Global System for Mobile communications technology, Wade said CPS is committed to other technologies like Code Division Multiple Access, especially when Vodafone’s U.S. operations are required to implement a location-based technology.
Today, location vendors, including CPS, are working on making their systems more accurate since the FCC recently required carriers to locate within 50 meters 67 percent of the calls. CPS’ system is about 43-percent accurate today.
“We have some clever things we are working on to enhance our algorithms,” said Wade. “We can meet FCC requirements by the time they make deployments.”
Earlier this year, a group of investment companies that include Argo Global Capital, manager of North American venture capital cooperative GSM Capital, invested $15 million in CPS.
