Why SIM-based LBS offers new hope to drive location revenues
It is no secret mobile operators have been losing out to Over-the-Top (OTT) services for a while now. Carriers are seeing falling revenues from their core services (calls and texts) as OTT providers undermine these offerings with their own services. As a result, operators are increasingly looking towards the enterprise market to secure new revenue streams and stave off simply becoming a “dumb pipe”.
One area of interest for mobile operators is location-based services (LBS) for enterprise. Fact is LBS can energize and even transform industries such as advertising, logistics and workforce management. However, just as with messaging, OTT services have started developing LBS offerings – and this risks cutting operators out of another lucrative revenue generator. So, are mobile operators destined to lose the OTT fight or can they launch their own LBS solution to claw back revenues?
The power of GPS – and its limitations
Most OTT services use Global Positioning System (GPS) - one of the most widely-used location technologies. While GPS might feel like a new technology, it has actually been around for over 40 years. However, it has only recently gained significant recognition for turn-by-turn navigation and been deployed on mobile devices such as smartphones. Already platforms such as Facebook, Foursquare and Google are using GPS and its Russian equivalent GLONASS to offer advertisers a new and engaging way of connecting with customers. Due to this interest it is expected that the LBS market will be worth nearly $40 billion by 2019.
However, GPS and GLONASS are not perfect. Due to their reliance on satellites and the need for a line of sight from a mobile device to a satellite, they both have significant problems with indoor tracking. As a result, the provision of advertising and promotions for indoor locations (e.g. in a shopping mall) can be very problematic.
In addition, satellite based systems struggle to provide the accuracy needed for reliable workforce management. With both tradesmen and delivery drivers often being inside buildings – sometimes for extended periods of time – accurate indoor location is key. And, it is not just indoor situations that present a problem. For delivery drivers and logistics companies in urban and built up areas, GPS can be frustrating as it can sometimes struggle with accuracy.
Furthermore, GPS is a huge drain on a device’s battery life. For GPS to be effective it requires several satellites, all of which have very slow connection speeds of 50 bits per second (which 40 years ago was quite “fast”), meaning location information takes a long time to be delivered – sometimes as much as 30 seconds. While this data is being transferred, a device needs to be switched on, and for a smartphone it needs to be “awake” as well. All of this leads to a frustrating user experience and inefficiencies for workers and workforce managers.
What these shortcoming in GPS represent is an opportunity for mobile operators to steal a march on OTT and offer their own LBS proposition.
Securing revenues with LBS
Operators had the potential to launch LBS a few years ago. Yet again, OTT players grabbed the market with their own GPS-based offering. And you only have to go back to early spy and espionage films to see phones being used as a location device - albeit with very basic accuracy. Nevertheless, this early iteration provided a glimpse of how cellular location technology could work indoors.
It was not powerful or accurate enough for a robust offering that would be suitable for the likes of advertisers, logistics companies or workforce managers.
What operators needed was improved accuracy for LBS. Serendipitously the technology has now caught up just as demand begins to grow. For the first time SIM-based LBS offers operators the ability to accurately track both indoors and outdoors. It has already delivered proven accuracies of between 6-200m when measured against a DGPS system. Another advantage over GPS is that SIM-based LBS solutions can run on any device with a SIM card and therefore work just as well on feature phones as on smartphones. In economically emerging regions, where smartphone penetration is still low, SIM-based LBS becomes the perfect cost effective solution for operators to launch location services.
For instance, carriers can now work with retailers in shopping malls to use location services to offer promotions to all nearby subscribers. As well as retailers, workforce and fleet managers can use SIM-based LBS technology to know where their workers are at any given time and plan accordingly. This all leads to greater efficiencies and reduced costs for businesses – and increased revenues for operators. In fact, advanced telematics solutions that can use the best of GPS and SIM technologies have already started to revolutionize industries such as construction. This sector in particular requires multiple vehicles and large workforces - spread across multiple sites –to work to clockwork precision.
So, by no means will GPS or GLONASS become simply redundant. They both offer invaluable services to business. However, their limitations offer space for operators to offer their own SIM-based LBS products to the enterprise.
The transformation of the LBS market is only just beginning, with both M2M and the Internet of Things expected to bring even more connected devices. The demand for LBS will continue to grow. For operators, LBS offers a new lease of life for their networks as they transition into enterprise service providers. Many predicted that with the growth of OTT messaging, mobile networks would simply become “dumb pipes” and mere utilities. What new SIM-based LBS technologies offer operators is an opportunity to engage with the enterprise and create new revenue generating channels.