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Location-based services: will usefulness trump qualms?

Early adopters are aware, interested and willing to pay – especially for receiving emergency services.

by rebecca diercks
September/October 2001

Location-based services have been a hot topic for several years, fueled by the FCC enhanced 911 mandate. The mandate states that by the end of 2001, most U.S. citizens should be able to dial 911 from their mobile phones and have an emergency operator be able to determine their location to within 100 meters. While this E911 capability
is perceived as useful, some industry observers note that the fear of “Big Brother”-style use of location information might inhibit people from using other location-based services enabled by the technology.

Location-based services use location-sensitive technology, such as Global Positioning System, or GPS, or network-based solutions, to deliver services or applications to a wireless device such as a mobile phone. These services can include finder applications that let mobile phone users locate friends or family, businesses or landmarks. They also can deliver maps, directions or traffic reports.

Cahners In-Stat Group recently surveyed its panel of mobile phone and wireless Internet users to determine their interest and opinion toward location-based services. Take note that panelists tend to be early adopters. A total of 1,540 wireless phone users, including 347 wireless Internet users, responded to the survey. In-Stat found significant interest in the services, as well as willingness to pay for them.

Awareness of location-based services was somewhat higher than expected; 35 percent of wireless phone users and 53 percent of wireless Internet users had at least heard of the term and had some idea as to what it meant.

Additionally, 40 percent of wireless users and 51 percent of wireless Internet users found the concept of location-based services to be very appealing. When given a list to select from, emergency response services that allowed a user to download maps and get directions to various locations elicited the highest interest.

In-Stat found that 38 percent of wireless users and 45 percent of wireless Internet users were willing to pay a monthly fee for location-based services. The majority of those willing to pay said they would cough up $5 to $10 per month to receive such services, on top of normal monthly service charges.

Service providers must beware, however, as 65 percent of wireless users and 75 percent of wireless Internet users said that it would be extremely important to opt-in, or to give permission to have their location tracked. Additionally, more than 85 percent of both wireless users and wireless Internet users noted that it was extremely important to have the ability to have control over how their location information was used by their service providers and others. A number of legislative efforts have been proposed to address E911-related privacy concerns. While respondents showed significant interest in location-based services, service providers also must provide a certain level of control to the user. More than 80 percent of both wireless and wireless Internet users wanted the ability to turn the location-tracking capability of a wireless phone on or off at will.

It is important to note that, despite the FCC mandate, very few Americans actually will be able to receive this kind of service since many carriers have not deployed or even decided on a location-tracking solution. However, Cahners In-Stat expects that in 2002 many carriers, in the United States and throughout the world, will be able to offer the ability to track mobile phones. Cahners In-Stat believes that location-enabled services have the potential to drive revenue, on a global basis, of more than $13 billion by 2005. The revenue from these services will help carriers offset the cost of location-enabling their networks, and will also succeed in driving data usage in a time of falling revenue for wireless voice services.

Rebecca Dierks is director of wireless research at Cahners In-Stat Group.