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Location-Based Services
Another Season Passes Without a Word from Carriers

Spring is in the air, and that means families are traveling. It’s a shame wireless carriers failed to take the plunge into Location-Based Services (LBS) in time for families to take advantage of them, as they travel this year. “How do we get to the ski slope?” “Wonder where we can find some Italian food?” “Is there a hotel near here that allows dogs?” LBS could have answered all three questions – quickly and easily.

Consumers clearly have an interest in LBS, carriers have the capability, and the technology is mature and deployed. So why did another season pass without a word from the industry? The answer lies squarely with carriers who continue to question the consumer value proposition of LBS. Quite simply carriers do not see wide adoption in LBS at a level worth their time or effort. They wonder how to monetize the service in a way that justifies the marketing needed to drive awareness and usage.

While it’s true that every mobile phone sold in 2005 had the capability to meet the government’s E911 requirement, and thus location functionality, most carriers have been holding back. And since the carriers are in complete control of LBS, by not supporting consumer adoption, they automatically limit who can play in the LBS sandbox. In fact, currently only Nextel promotes location-based services in the Consumer Services section of their Web site.

Carriers and LBS

Carriers often talk about their customers being wary of abuse. Consumers, they say, are worried about ‘Big Brother’ knowing where they are, and where they’ve been - whether it’s the federal government, carriers or marketers. Because location information could be very valuable to external marketing companies, and because consumers are indeed worried, it is up to the carrier to put safeguards in place to protect this information. Consumers need the ability to opt in or out of carrier LBS offerings, in order for their fears to be allayed.

So why have these services and capabilities not been widely exploited and adopted? One key reason: location solutions for business have drawn most of the carrier focus. In addition, revenue-producing, custom solutions have dominated this sector.

Nextel leads all carriers in this arena. It has replicated its solution on the Sprint network. Verizon Wireless, and to a lesser extent Cingular, has focused on tailored solutions for enterprise customers. But aside from Nextel, all major carrier LBS applications are business focused: Field Service Automation/Administrator (tracking vehicles), mobile asset tracking, or driver directions and maps.

Why No Word?

For all the talk surrounding the potential and desire for location-based services from all players involved, not many consumers use them or are even aware of them. In fact, while many of today’s mobile phones already give the consumer the ability to switch the device capabilities to E911, changing this function deep in the menu structure is not something many consumers will take the time to do.

As of January 2006, only about two percent of wireless consumers had used ‘location services’ offered by the carriers. That’s roughly 4 million consumers, which shows just how large the market potential might actually be; however, most of these uses were not performed with the carrier’s location technology. The majority just entered a city or zip code to get the location information they sought — which is a waste of the available LBS technology.

Carrier	Share of ‘location services’ users
Alltel	2%
Cingular Wireless / AT&T Wireless	17%
Sprint Nextel	53%
T-Mobile	4%
Verizon Wireless	16%
Other	8%

Millions of Americans take vacations with friends and family every year. The lost revenue opportunity for carriers not implementing LBS is easy to see: they could have provided directions, points-of-interest, and destinations to these travelers. LBS solutions are a revenue prospect and customer loyalty service that has yet to be tapped.

To grow revenue in this arena, carriers need to pay more attention to the opportunities of LBS for consumers. The challenge carriers must meet is to find the right combination of easy-to-use services and value-based pricing and promotion to spur adoption.

Consumers are more than ready for LBS solutions. The time is now for wireless carriers to spread the word.

– Glen LeBlanc, Research Director, Wireless Services