While consumers in the United States will be pushed by government regulations into adopting location-based services, consumers in Western Europe and Japan are pulling for these types of services to keep up with consumer demands, according to “Show Me the Money: Cellular Mobile Location-Determinant Equipment,” a report from UBS Warburg L.L.C.
Japan’s history of early technology adoption combined with the inefficient and confusing layout and numbering of its major metropolitan streets is spiking the demand for accurate mobile location services. And in Europe, the current lack of government-mandated regulations is leaving the market open for consumer-driven applications. The Strategis Groups forecasts more than $32 billion in mobile location service revenues in Europe by 2005.
U.S. consumers, however, must wait for wireless carriers to comply with the Federal Communications Commission’s E-911 mandate. Carriers were supposed to file with the FCC by Nov. 9, 2000, their choice of either a handset- or network-based technology, but several, including AT&T Corp., did not. This stands to delay even further the widespread deployment of location-based services here.
UBS Warburg believes the FCC mandate will provide an initial jump start to location-based services in the states, but it does not believe it will create mass-market acceptance because “the inception of E-911 was public policy and not marketing strategy.”
“No one would dispute that E-911 is an important service, however, in our opinion, a wide breadth of accurate, effective and reasonably priced applications will be required for real market traction,” the report said.
The youth market is expected to be a significant early adopter of location-based services, latching on quickly to such applications as mobile commerce, advertising and buddy lists.
UBS Warburg said business travelers will be the segment most likely to pay for those services that will prove too expensive to develop mass-market appeal. Both business and non-business travelers’ applications will likely gain market traction once traditional roaming issues are resolved with packet-based networks, said the report.
Whichever applications are deployed, there are several technologies available to carriers, and each has its own advantages and disadvantages.
According the UBS Warburg, the advantage of network-based solutions such as Angle of Arrival and Time Difference of Arrival is their implementation does not require any changes to handsets, making them compatible with legacy systems.
“Not having to replace legacy handsets with new location-capable handsets and not having to retrofit existing legacy handsets will have a great impact on churn and subscriber management,” the report said.
On the flip side, AOA requires additional or custom antennas, and TDOA generally requires a high-data-rate backhaul, adding operational expense.
As UBS Warburg sees it, hybrid technologies such as Enhanced Observed Time Difference and Assisted GPS are the only two existing location-determinants that would be accurate enough to consistently comply with the FCC mandate, but these solutions have a slower time to market than network-based solutions.
So who will ultimately determine the direction of the mobile location service industry? Middleware providers, said UBS Warburg. Middleware is the “glue” that provides a link between the location-determinant players and the actual application providers.
Middleware provides a platform on which applications can be launched and accessed by end users, and it also can collect and store information or maintain a catalog of privacy requirements for subscribers.
“We believe that the players in this space that are successful will wield significant influence in the development of the industry and be in a position to reap the financial benefits of mass-market acceptance,” the report said.
