Location-Based Services

Location-Based Services

Location-based services promise to bring a wealth of value-added services to consumers and businesses in the form of location-specific content and applications. The technology can be applied to pinpoint the location of people or assets for tracking purposes and emergency 911 services. It can also be applied for location-relevant consumer applications such as driving directions, weather forecasts, traffic reports, concierge services, electronic marketing, electronic commerce, and other applications that can benefit from location-based personalization. In this manner, location-based services are effectively a form of personalization that takes into account the users' location. They can therefore be applied to a number of customer relationship management applications and electronic commerce applications aimed at increasing customer satisfaction and loyalty. In the supply chain, location-based services can be applied to help track goods and assets as they move throughout the supply chain from manufacturer to distributor to wholesaler and finally to retailer.

In the United States, one of the initial drivers for adoption of location-based services was the Enhanced 911 (E911) mandate from the Federal Communications Commission (FCC) in 1996. The mandate required wireless carriers to be able to locate callers to 911 emergency services with an increasing degree of accuracy over a number of phased deadlines. Phase I of the mandate required the location to be determined to a specific cell site, or cell sector, as it is known. The positional accuracy of a cell site can vary greatly due to the number of cellular towers per square kilometer and the amount of interference due to other buildings and structures between the cell sites. A cell site can generally provide an accuracy of within several hundred meters when locating a 911 caller. Phase II of the mandate, which had a deadline of October 1, 2001, was intended to provide the location of the caller within 50 to 300 meters using more elaborate positional determination than just the cell site. This mandate involved the application of either network-based or handset-based technologies in order to locate callers. The technologies available to the carriers included time difference of arrival (TDOA), angle of arrival (AOA), and RF fingerprinting for network-based solutions, and assisted GPS for handset-based solutions. Each of these solutions has strengths and weaknesses in terms of technical accuracy and cost of implementation. For example, handset-based solutions require modification to the handset and increased battery power and antenna strength. Due to the many complexities and trade-offs involved in implementing these technologies, the U.S. wireless carriers failed to meet the October 1, 2001 deadline set by the FCC. While the carriers did not meet the deadline for various reasons, the FCC mandate will still help to move the industry toward eventual adoption, with the full implementation required by the end of 2005.

Some of the vendors in the location-based services arena include Autodesk, Cell-Loc, SignalSoft, Vindigo, and Webraska. These companies have commercially available products in several markets that include both location-based services and telematics. The industry has also focused on standardization via initiatives such as the Location Inter-operability Forum (LIF), which was established by Motorola, Nokia, and Ericsson in September 2000.

Some of the barriers to adoption of location-based services include not only the cost and conversion factors being picked up by the wireless carriers but also consumer privacy issues. Consumers are rightfully concerned about how their location information will be used and who will gain access to it. This issue still has to be worked out by the industry and it is unclear who owns this information.

For the wireless operator, location-based services can help to generate additional minutes of air time and potentially fee-based transactions. For the enterprise business, the technology provides a way to deliver superior customer service. For example, tracking a delivery truck or rail car may enable a company to provide estimates for delivery time that are more accurate than general schedules and timetables. As another example, providing a customer with a location-sensitive offer from a nearby retail store can help to entice the customer to the store and generate additional revenues and brand loyalty.

When the various barriers to adoption such as privacy issues have been resolved, businesses should consider how they can add value to their customers via location-specific content and applications. For retailers with physical outlets, location-based services may be a viable technique to promote the brand and to develop deeper customer relationships. For content providers, location-based services may be a way to provide content that is more timely and personalized and therefore can demand a higher premium. The challenge will be to develop the right business model that will be convenient for customers and that will drive revenues from the marketing and sale of physical goods or digital services without impacting customer privacy.