Location Based Services to Grow Sharply by 2006 - Report

Struggling to remain profitable amid price competition and falling average revenue per user (ARPU), mobile operators are gearing up for the roll-out of 'Next Generation' commercial Location-based Services (LBS) to create new revenue streams, build subscriber bases and reduce customer churn. New analysis from Frost & Sullivan, North American Location-based Services Markets, reveals that this market generated US$13 million in revenues in 2002 and is likely to climb to more than US$850 million in 2006.

"Information, transaction, and entertainment-based applications will frame the foundation for LBS, and mobile operators will be challenged to provide a personalized combination of these services that is unique and compelling to the mobile user," says Frost & Sullivan Industry Analyst, Brent Iadarola.

Market participants are establishing best-of-breed partnerships with key players in the LBS value chain as complete LBS require the integration of wireless network infrastructure, location-enabled devices, flexible platforms, and a range of location-specific applications and content. Market growth will be fueled by the Emergency 911 mandate of the Federal Communication Commission and the subsequent advancements in location- measurement technologies as well as wireless infrastructure and standards.

Consumer-oriented applications such as voice-enabled navigational aids, friend finders, and mobile concierge services will provide the initial impetus for LBS' adoption. In addition, businesses are already investing in company- specific solutions such as tracking services, workforce management, and security applications.

Iadarola says, "Consumer awareness along with increased availability and capacity of location-enabled handsets will be the key to increase penetration rates."

Market participants are striving to establish new pricing models that incorporate revenue-sharing arrangements into the standard licensing agreements. This, combined with incremental deployment, will enable carriers to reduce large up front investments and minimize risk. The LBS market is characterized by rapidly changing technologies and evolving industry standards. Therefore, market growth will be dependent on the ability of mobile operators to adopt flexible structures and introduce high quality, secure, just-in-time location services to suit user preferences."

Posted to the site on 15th April 2003