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March 2009 | Volume 12/ Number 3
The Next Wave Redux

Location-Based Services — Have Operators Missed the Boat?

For many years, there’s been talk of location-based services as a way for operators to monetize FCC-mandated E911 capabilities. Now location-based applications are gaining traction. The most popular is navigation, e.g. Google (News - Alert) Maps for your Phone or Nokia Maps, but others are emerging like geo-tagging photos and mobile social networking. Yet, except for E911, all the popular location-based applications are based on GPS or other workarounds, not on operator provided location services. What went wrong? And is it too late for the operators?

In 1996, the FCC (News - Alert) mandated systems that could report the location of a mobile handset for E911 emergency service purposes. There was a time table (phase one to be completed by 2000) followed by many waivers, many delays, more waivers and more delays, but today some 97 percent of the U.S. mobile population gets at least basic automatic location reporting if they dial 911.

There are several reasons mobile operators are not involved in emerging location-based applications. First, operators are very concerned about privacy. You might think limiting location information to applications on a user’s handset would be sufficient. However, operators are justifiably cautious, as they have brands to protect and regulatory bodies looking over their shoulders. Thus privacy concerns have so far stalled otherwise reasonable efforts to make location information available to customers and their applications. Second, operators are interested in controlling and monetizing applications. This limits their ability to attract and work with 3rd parties — just those most likely to come up with new, winning ideas. Indeed if the past is any guide, most mobile operators will miss location-based service opportunities, until and unless a specific opportunity emerges that can yield significant revenue. That’s certainly been the model for other large scale mobile applications, for example pre-paid accounts or SMS. But it doesn’t have to be that way. In another time (1999) and another place (Japan), DoCoMo showed how a mobile operator can facilitate wild experimentation and significant growth. In 1999, DoCoMo launched i-mode, a service which made it easy for mobile application developers to reach DoCoMo subscribers at no cost to the application provider (mobile subscribers pay for mobile data). DoCoMo also offered an optional billing service at a 9 percent commission. Despite small screens and 1999 data rates (9.6 Kbps), they attracted 55,000 applications and 30 million subscribers within the first 24 months. And to this day, DoCoMo makes more data revenue than any other operator in the world (despite only 127 million people in Japan).

What would happen to mobile operator data revenues if they made location information freely available to any application that a user downloaded to their handset? IT

Brough Turner (News - Alert) is Chief Strategy Officer of Dialogic (

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