Who Will Pay?

Because the market for mobile location services is in the very early stages (in 2001, most consumers were completely unaware of mobile location services), it is often debated who will pay for them. General Motors' OnStar has built a large subscriber base in the United States by giving away service with new vehicles, but as we know from the Internet, this is not a sustainable business model. It is expected that to build the market, services must initially be underwritten by the large automotive manufacturers and telecommunication providers.

Given the heavy reliance on cars for personal transportation in North America, mobile location services will likely be dominated by automotives. In Europe and many parts of Asia, by contrast, with so many people living in large cities and having access to excellent transportation, mobile operators have a very interesting business opportunity and will deliver personal telematics products to compete with the in-vehicle telematics products. It is crucial that the mobile location service applications deliver compelling, " must-have " benefits so that consumers can be upsold to a profitable, transaction-based business model. The automotive providers have a significant advantage over the mobile operators for several reasons. The form factor of the in-vehicle device provides substantially more flexibility than a mobile phone. In-vehicle systems are able to embed the GPS receiver in the vehicle, utilize the vehicle sound system, and tap into the vehicle's power supply. Most important, auto manufacturers are able to capture diagnostics information that can be leveraged to produce cheaper and more reliable cars ”and more accurately diagnose and refer problems with a car to the driver and a repair facility. This information can substantially reduce an auto manufacturer's costs. Mobile operators have no comparable incentive.

In addition to the large auto manufacturers and mobile operators, mobile location service provision is likely to also come in the automotive space from today's emergency service and roadside assistance providers, such as the American Automobile Association, Cross Country, and ATX Technologies in the United States and Altea Europe in Europe. Given the commitment of a large number of auto manufacturers to make telematics and navigation standard equipment in most new vehicles beginning as soon as model-year 2004, and the enormous investments they have made in launching telematics service providers such as OnStar and Tegaron, it is clear that they see mobile location services as core to their business and intend to dominate it. They furthermore have the deep pockets to buy their customers by subsidizing service until real products and a real market develop.

Case Study: ATX and Portal Software

An example of how telematics service providers are implementing billing technology today can be seen by ATX's announcement to integrate Portal Software's billing software. [1]

CUPERTINO, Calif. (July 2, 2001) ” Portal Software, Inc. (Nasdaq: PRSF), a leading provider of business infrastructure software for next -generation communications services, announced today that ATX Technologies, Inc., the leading independent telematics service provider to the automotive market, is deploying Portal's Infranet customer management and billing platform to support its line of location-based mobile services. Infranet, the foundation of the Infranet Wireless product-line for convergent mobile service providers, will support ATX's telematics services such as automatic collision notification, location-based emergency response, and GPS-based navigation. Infranet also has the capability to manage future ATX services such as digital entertainment, mobile commerce, and telephony.

Telematics is a rapidly growing in-vehicle class of services that integrates wireless communications, location identification technology, and off-board database and computing functions to provide drivers with a variety of safety, security, navigation, entertainment, and convenience services. Infranet will enable ATX to quickly and easily launch and support branded services, develop new service and price plans, manage its customer base, and collect payments. With Infranet, ATX could eventually support such innovative services as streaming music or loyalty programs for mobile commerce transactions.

"ATX's services are rapidly evolving from a value-added luxury to a mass-market safety and convenience feature in automobiles," said Norm Feldman, vice president of IT for ATX. "To support our subscriber growth and service innovation, we need a strategic customer management and billing platform that gives us the scalability to manage a large and diverse subscriber base and the flexibility to support innovative new services and sophisticated price plans. After thoroughly researching a number of solutions, we chose Portal Software for its leadership and depth of experience in supporting next-generation mobile services."

Portal Software's Infranet Wireless product line provides mission-critical business infrastructure for mobile operators offering voice and mobile Internet services. Infranet Wireless features modular, off-the-shelf enhancements to the Infranet platform for supporting switched voice services such as GSM, mobile Internet services such as WAP and GPRS, interconnect billing, and business intelligence modeling.

"ATX's business model is predicated on their ability to continually pioneer inventive new mobile services. Because the Infranet platform features an open and flexible architecture, it can easily support the advanced location-based telematics services offered today by ATX, as well as whatever next-generation services they experiment with in the future," said Vijay Iyer, vice president of market development for Portal Software. "We're excited to support their next-generation mobile services, and look forward to a working with ATX as their services evolve and customer base grows."

[1] Courtesy of Portal Software. 2002 Portal, Inc.



Mobile Location Servies(c) The Definitive Guide
Software Project Management in Practice
ISBN: 0201737213
EAN: 2147483647
Year: 2005
Pages: 150
Authors: Pankaj Jalote

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