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With its new 5130 Geographic Messaging Services Platform (GMSP), Alcatel-Lucent claims wireless carriers will be able to monetize the next generation of location-based services, such as social networking and hyper-local advertising.

Most carriers are still just testing the waters with location-based services (LBS), but the technology is projected to generate $3.4 billion in revenue by 2012, according to market research firm Heavy Reading. At a time when ARPU is in serious decline, providers should be exploring their LBS options.

So far, with the exception of a few major trials like CBS's mobile marketing foray, wider adoption has been hard to come by.

Users have been slow to adopt these services because they are too narrow in scope and require too much individual effort, according to one analyst.

'What you're finding is that service providers today are vertically integrating location into very specific services and applications,' said Phil Marshall, a senior research fellow with Yankee Group. 'What they do need is a platform that reliably exposes that information to third-party developers.'

Alcatel-Lucent hopes that the 5130 GMSP will be that platform. Announced this week at CTIA, the platform is offered as a hosted service to wireless providers. It taps into several sources of location data and then makes that data -- along with a robust 'geofencing' capability -- available to third-party applications in a single, consistent API, whether the data comes from on-device GPS, cell tower ID, or a Parlay gateway.

Geofencing is the technique by which geographical zones are marked, and it allows third-party applications to be triggered when a device enters, leaves or stays in a particular area. For example, a user walking by a Starbucks could get an MMS message showing off the chain's latest pumpkin spice concoction and giving the user a coupon code.

The 5130 GMSP also supports moving Geofences, so that if two friends are sitting a block away from each other, they can be notified of their proximity.

While the platform comes with two applications (a social networking site and a mobile marketing platform), Alcatel-Lucent hopes third-party developers will make it a launching point for taking location-based services to new heights.

'We're not saying we know the killer app,' said Mark Disbrow, general manager of the GMSP. 'We're saying we're putting the technology into the network to enable the killer app, to let developers go crazy with Geofencing and location and advertising.'

That last element is a big part of what Alcatel-Lucent is trying to bring to the table, making it as easy as possible for potential advertisers to deliver their messages in a targeted, non-intrusive fashion.

The GMSP allows marketers to upload Geofencing information that can target a certain class of users based on self-identified age, gender, location, and interests, while the system also allows users to set the number of advertisements they receive.

Another appealing element is the ease and efficiency with which it can 'push' data, passively tracking users and their status constantly, not just when a particular application is run.

This capability gives advertisers a much more flexible window to reach potential customers as compared with many current location-based services that require users to manually 'pull' their status and any related services.

Alcatel-Lucent's market strategy for the GMSP, Disbrow said, is to offer the service to providers free of charge and take a cut of the advertising revenue.

'Now is the time -- because carriers are building out the infrastructure, and the end devices are starting to be GPS-enabled or SUPL-enabled [a standard telecom location data format] -- to provide location information to servers, and advertisers are just itching to get into the marketplace,' Disbrow said. 'So you have the perfect storm of events coming together. When combined with our unique Geofencing capabilities, we help drive that ability into the marketplace.'

Marshall agreed that there was market demand and said a mutually trusted third party like Alcatel-Lucent could do well to help broker deals between wireless providers and eager marketers.

But the full market potential is still an unknown quantity.

'I think location, and particularly the personalization it implies around services and applications, holds some promise in the market, but it's still early to tell how much,' Marshall said. 'It's an appropriate market to target, particularly for Alcatel-Lucent, and I think now it's all in the execution and the way they build partnerships.'