Small cells, partnerships fuel LBS market

Jessica Scarpati
23 Feb 2011
Small cells can do more for wireless carriers than improve indoor voice coverage and offload data traffic. Picocells, femtocells and Wi-Fi hotspots pinpoint subscribers' locations more precisely than macrocells, enabling carriers to launch more sophisticated mobile location-based services that generate revenue through partnerships.
The industry has hyped mobile location-based services for years. Carriers typically sold directory and navigation services directly to subscribers, but subscribers no longer expect to pay money for such location-based services, thanks to Google and free smartphone apps.
Now, over-the-top (OTT) players ranging from Facebook to Foursquare are partnering with advertisers and retailers to profit from mobile location-based services that encourage users to "check in" at a restaurant or store via smartphone applications, SMS or websites by offering incentives like coupons or other promotions.
If left unchecked, OTT providers will steal another revenue opportunity from carriers, just as the Android Market and Apple's App Store did to service providers with mobile application stores. Location-based OTT providers will use these free services to rake in revenue off the backs of carriers.
"The willingness of the consumer to pay anything to get [mobile location-based services] is vanishingly small," said Mike Jude, program manager at Stratecast, a division of Frost & Sullivan. "You generate revenue on the vendor and small business side and say, 'We can drive business to your doorstep because we know where you are in relation to your consumers.'"
Wireless carriers will need precise knowledge of their subscribers' exact locations if they are going to build a revenue stream with mobile location-based services. But location precision has been difficult -- if not impossible -- for carriers to achieve with macrocells, which cover a few square kilometers, Jude said.
GPS is more accurate but performs poorly indoors, which becomes problematic for supporting mobile location-based services in a shopping mall, airport or convention center.


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