Research Notes

The question is not whether there will be a market for Location-based services

– the question is which role the operators will choose?

One of the types of services that many have been talking a great deal about and that has been predicted to be one of the big future types of mobile services, is Location-based services. With Location-based services is it is possible to create much more relevant and attractive services for end-users. For example services that use the possibility of constantly updating the position of the handset (tracking), services where the content provider uses the position of the handset to initialise the service (push), or services where the user initialises a service related to the customers current position (pull). Technically there are two different methods for determining the location of a handsets; using GPS or using the mobile network and these two methods are influencing the power balance between different players on the mobile market.

GPS is independent of the mobile network and the location calculation is very precise, basically down to just a few metres. The precision of determining a location using a mobile network depends on the distance between the mobile antennas; so determining a position is much more precise in city areas where mobile antennas are much closer to each other than in thinly populated areas.

As Strand Consult has described in our new report – ”How to get success in the 3. Generation VAS market” – it is however not the difference in precision that is crucial from the mobile market players viewpoint. For the market players, the most important difference is in the market strength and position that these two different location determination methods give.

In this scenario where GPS is being used, it will not be the mobile operator handling the location of the handset and therefore the mobile operator is not the central player for those types of location-based services. Instead the handset manufacturers will in this scenario achieve a better position, as it will be the GPS module in the handset that handles the location calculation. The handset manufacturers will thereby have a greater control over standards for determining locations. Location-based services will in this scenario therefore only use the mobile networks for passive data transmission.

In the scenario where the mobile network is used for determining the handset position, the operators will have a more central role, as they control the mobile networks. Thereby the mobile network is actively used both to handle the location and to transfer data and services. This gives the operator the possibility to both have a revenue share of the location service and of the data transmission, but often the location service and data traffic is offered as a packaged solution.

On the mobile services market it will therefore make a significant difference which player is in the centre of the revenue sharing models. Mobile operators will be able to increase or maintain their share of revenue generated by location-based services, if the mobile network is used for the location determination. The other players will be willing or forced to give some of their revenue share to the operators, in exchange for access to be able to handle the location determination.

As Strand Consult describes in our new report – ”How to get success in the 3. Generation VAS market” – the mobile market is moving towards location based services using the mobile networks. This is partly due to the lack of handsets with built-in GPS, but also due to that the location calculation using the mobile networks is constantly being improved, so the difference between using GPS or a mobile network to calculate a location is decreasing.

The operators are therefore in a very good position to take the centre seat on the future market for Location-based services.

the 3. Generation Value Added Service Market

Contact us to get a copy of the report

Request the report