Location Based Services: A Primer

[This article was jointly written with Rick Mitchell]

One of the hottest buzz terms these days [2000] is “location-based services” – products that can serve up extremely localized content to mobile phone users. Let’s say you are standing on a corner in Amsterdam and punch in a request to your handset or personal digital assistant for directions to the nearest cyber cafe. The request goes to a server that combines it with your position, and sends back useful information via SMS or WAP [Told you it was 2000].

This is not a 3G phenomenon – some mobile operators have already implemented mobile positioning systems. Those operators are offering customers entirely new types of value added services based on the their location and preferences.

There are several techniques to position subscribers, but the most common one today is based on the information of the cell (sector) and a calculated distance between the subscriber and the base station. In the US, the Federal Communications Commission has mandated that operators be able to locate users to effect emergency services. In Europe, commercial ventures are poised to drive the technology every bit as hard while the EU also pushes legal restraints forward.

Depending on network topology, current operators with the GSM standard can also calculate your position, to within, say, 300 to 400 meters, or even better when combined with intelligent software. Ericsson has, for about a year now, hooked up Tommy’s, a Stockholm-based parcel delivery service, with location services that allow the company to track its trucks throughout the city.

The level of accuracy desired for useful location based services, such as a “turn-left, turn right” set of walking directions, is generally higher in urban areas than in rural ones. Similarly, emergency services like an ambulance would need less accuracy to find a car accident in the countryside (where there are few roads and a position within, say 500 meters would suffice) than in the city (where 500 meters could place an ambulance on the other side of a city block). However, legal restraints by the FCC require better emergency accuracy than 50 meters independent of whereabouts, thereby almost guaranteeing the widespread implementation of network assisted global positioning system (A-GPS), which gives location to within 10 meters.

Getting a signal Positioning techniques can be either “Terminal based” if the positioning system to some extent uses the terminal as a logical entity to calculate positioning data or “network based” where the terminal is not used as a logical node to calculate positioning data.

The network-based system of cell global identity and timing advance, or CGI-TA, is one of the broader location methods, though it has very useful applications running both in test and business systems. In the overall scheme of things, from least accurate to most are the network-based uplink time of arrival (UL-TOA), and network/terminal- fusion based techniques of Enhanced Observed Time difference (E-OTD) and A-GPS.

“Fleet management systems, using a combination of intelligent software and CGI-TA,” says Ericsson’s x Swedberg, the senior market manager for Mobile Positioning, “the application can trace a vehicle with a GSM phone. The “banana shaped’ footprint that would be created by this method is interpreted by the software, which compares movements with a map and can therefore mark very precise locations – it actually works better practically than it would seem to technically.”

A-GPS is perhaps the most reliably accurate system, giving very precise location information. The assistance comes in because GPS signals are rather weak, and the information needs boosting when users are in buildings or in streets surrounded by very tall buildings.

The whole thing is a trade-off: network-based solutions can use current handsets, giving operators 100 percent penetration of devices now. But more accurate terminal-based designs will have to wait until the terminals are actually here, rendering meaningful penetration four years away.

“It’s in the operator’s interest to make sure that they get the value from network-assisted solutions,” said Jeremy Nassau, head of wireless for Netdecisions in London, “But it could still go in several directions – you may find, for example, that GPS is good enough without the network. If the penetration gets up to reasonable levels, you’ll reach the point where you don’t need the operator anymore to provide LBSs.”

A buddy system application developed by the UK-based company iProx would even tell you if there’s a friend or relative in the vicinity that might want to dine with you and if you’ll pass an ATM on the way. A platform developed by the French company Opt[e]way would, among other things, make it possible for a taxi company to convey your location to a driver via a dashboard-mounted screen, allowing him or her to arrive at your corner within minutes, greeting you by name. A nearby department store could notify you of a sale; a bookstore could tell you that your favorite author has a new masterpiece out.

“You’ll have that 3G telephone with lovely color display and high bandwidth, and location-based services are going to enable that device to be really useful,” said Ravi Kanodia, co-founder of iProx.

These scenarios involve several distinct tasks and hardware levels, and companies are taking a multitude of approaches. In fact most LBS companies today are concentrating on B2B applications that will only eventually lead to end-user services.

“There’s a variety of players trying to get a stake in the market, but the battle is well-advanced. Most of the companies already exist,” said Paris-based Thomas Gubler, who manages the 3i Group’s wireless investments in France. He added, “I don’t see any new players getting in at the platform and infrastructure level now. It’s too advanced. Still, there will be many opportunities in this field, based on technological advances.”

Network infrastructure companies like Nortel, Nokia and Ericsson provide the basic telecom equipment. UK-based Cambridge Positioning Systems – which has a cooperation agreement with Nortel and funding from 3i Group – and the American firm SignalSoft – with $2.5 million in funding – uses signals received from operators to determine a user’s geographic position.

Iprox’s Buddy System takes this geo-positioning data, feeding it into a “correlation engine that allows you to track up to millions of users, like an air traffic control system. We can keep track of Maria and her friends all the time, and tell her when she’s close to one of them. A little like instant messaging works on the Internet.” Iprox garnered $1 million in funding through Brainspark at Tornado-Insider’s Upstart Paris conference in April.

Opt[e]way’s star product, opt[e]go TopoServer, is a platform middleware for creating end-user applications and services, aimed at telecom operators, wireless ISPs and corporate mobile intranets, says company spokesman Christophe Lefort. Released in mid-November, opt[e]go uses a patented, vector-based file format to convey location-specific information – traffic, weather, nearby gas-stations, etc. The company recently raised 18 million euros from 3i Group, Morgan Stanley Dean Witter, Goldman Sachs and Part’Com.

Sweden’s mobilePosition.com is one of the few companies already offering early LBS services via WAP, SMS and the Web. Its yachtPosition combines GPS and GSM data to give captains information on nearby ports and approaching weather. The service also allows tracking open-ocean yacht races via a position map on the Internet. BikePosition.com can, among other things, tell riders of nearby biker friends and locate brand-name part stores. MobilePositon recently got $4.9 million from Kaupthing, an Icelandic investment bank, and the Swiss investment company Qino Flagship. The US investment bank KKR invested $3.5 million.

In addition to higher bandwidth, another factor that will jumpstart LBS, according to Rahim Adatia, CEO of Lokah, is that when the market goes from GSM to 2.5G networks, it will shift from circuit-switched data transmissions to packet-switched, meaning the user will pay only for data received, not connection time, allowing him or her to stay connected indefinitely.

This raises the question of just who profits from this new technology. So far, telecom operators insist they own the positioning data, hence the lion’s share of the profits. “The main thing people are forgetting here, is who’s going to get charged,” said Adatia, a small British developer of B2B wireless software that, like Lokah, is currently making the rounds to acquire VC funding. “Business models are still evolving, both in technology and business. Most importantly, the LBS company’s relationship with operators is still evolving.”

“Some LBS companies make the assumption that they will own their customers,” Adatia says, adding, “I think that will become a big problem for them. We aggregate a billing component into our server, so if the billing arrangement changes, with the operator for instance, we can easily adjust.”

Lost in all the hype over all these nifty services is the question of privacy. What if Maria does not want her telephone company to track her everywhere she goes? “Let’s face it, the police are always going to know where you are with these phones,” said Opt[e]way’s Lefort, adding, “If that also occurred on the mass market, of course that could be a problem. Profiled services will be very important to success. It will all depend on the user’s ability to disable the service. I think the problem will be solved because the service is worth it.”