Long billed as the killer app of tomorrow, location-based services finally appear to be gaining mass-market appeal. And network operators are well positioned to cash in.
A study released late last year from In-Stat found that 53 percent of the 1,000 wireless users polled said they found navigation-type applications compelling, while only 15 percent expressed a strong interest in mobile video. The market research firm predicts the number of mobile-phone LBS subscribers will reach 335 million worldwide by 2011, while Frost & Sullivan forecasts the U.S. LBS market will exceed $600 million by the end of next year.
Network operators are scrambling to take advantage: AT&T Mobility, Sprint Nextel Corp. and Verizon Wireless have all made LBS a priority, targeting everyone from road warriors to soccer moms with easy-to-use GPS-based applications for a few dollars a month. Sprint has even packaged a GPS-enabled service with its Power Vision data plans, allowing subscribers to access turn-by-turn driving directions and other on-the-go services at no additional charge.
The key to many of the new offerings is the Global Positioning System, which uses roughly two dozen satellites to pinpoint location within a few yards. The technology allows network operators to get highly accurate location information without demanding that a user triple-tap an address or intersection into the phone.
Third-party plans
But a few third parties are looking to carve out a piece of the GPS pie for themselves. Nokia Corp. jumped headfirst into the space with last year’s acquisition of gate5, a German developer of location-based technology and applications, and is eyeing early adopters and high-powered business users with its new N95. 5o9 Inc., a Boulder, Colo.-based startup, is hoping to gain traction with a downloadable application that swipes location information from a GPS-enabled smartphone and sends the data to 5o9’s servers over the wireless Web. And Google Inc. recently added GPS functionality to its mobile mapping application.
Google’s offering provides free real-time traffic information, scrollable maps and satellite imagery without forcing subscribers to go through their carrier. The downloadable application is available on Java-enabled devices that support MIDP 1.0 or later and have Internet access as well as GPS functionality.
“We think that integrating GPS capabilities into Google Maps for Mobile will make our phones much smarter-and you’ve told us that too,” according to Google’s official blog. “Say goodbye to sore thumbs from having to constantly type in your location.”
But Google’s application spurred the creation of a free third-party application that pulls map data from Google’s servers. Mobile GMaps allows users with phones running Java to take advantage of Qualcomm Inc.’s gpsOne service, which is embedded in most Sprint Nextel devices. As Sprint is marketing a variety of potentially lucrative GPS applications, some subscribers are circumventing the carrier deck and downloading the free service powered by-but not approved by-Google.
Who owns GPS?
So while operators maintain almost exclusive control over their cellular networks, who owns GPS information?
“The short answer is, ‘Everyone.’ There are probably at least five parties who can claim they own it” including carriers, device manufacturers, the federal government and end users, said Mike Flom, managing director of Flom LBS Consulting in New Jersey. “But the reality is, from the pragmatic viewpoint, the operators can restrict access to it. Many of them do-not on all handsets, but on most handsets.”
Indeed, carriers have kept tight wraps on their GPS-based subscriber information. A few service providers allow outside parties to access location data from high-end devices such as the BlackBerry 8800 from AT&T Mobility in a kind of subtle nod to tech-savvy users, and Helio has partnered with Google to bring the GPS-enabled mapping offering to subscribers with the Drift handset.
For the most part, though, operators have kept the location of their mass-market users close to the vest. The growing tension between carriers and application developers was underscored last week when Sprint Nextel apparently threatened the developer of Mobile GMaps with legal action.
“I just want to let you guys know that I got a message from Sprint’s legal department requesting that I remove Sprint support from MGMaps,” 27-year-old Romanian developer Cristian Streng posted on a message board for Mobile GMaps. “You will still be able to use mgmaps with the Sprint GPS by manually entering the IP/port.”
A Sprint Nextel representative was not available for comment regarding Streng’s post, but the development may signal a coming trend: a rise in work-arounds that allow developers to offer free GPS-enabled services to mobile users, and a swift response by carriers looking to put the kibosh on them.
Some analysts believe it’s likely that behemoths such as Google and Nokia eventually will strike revenue-share deals with carriers and MVNOs, giving up a portion of subscriber revenues in exchange for GPS data from consumers who agree to allow such information to be shared. Until then, though, developers of all sizes will attempt to grow the market by offering services free on the cheap-without the network operator, if possible.
“If you want to seed the market and increase demand, you give it away, which is basically what Google and Nokia are doing to some extent,” Flom said. “Then you go the operators and say, I’ve got a million users on this thing. They’re not paying, but I’ve got a million users. Unlock the faucet so I can open it up and I’ll get you 10 million users..
“But if operators want to get nasty about the fact that they’re not making any money on it, you don’t have a deal.”
