A mobile network that includes small cells, such as Wi-Fi hotspots or femtocells, can pinpoint a subscriber's location within a few feet. Instead of manually "checking in" via Foursquare, a subscriber who has opted into such services could automatically receive alerts from vendors who partner with -- and pay money to -- a carrier.
Gartner recently identified mobile location-based services as one of the top 10 consumer mobile applications to watch in 2012 and predicted the consumer market will reach 1.4 billion users. Consumer revenue in North America is expected to reach $2 billion in 2012, up from $1.3 billion in 2010, according to Sandy Shen, research director at the firm.
Mobile location-based services are expected to generate $12.7 billion in revenue worldwide by 2014, states a report by Juniper Research, a telecom analysis firm based in England.
"The virtue of the cell phone is you choose to carry the thing and you choose to allow the network to track you," Jude said. "With the right kind of service with indoor, location-based identification, you can imagine a lot of ways to utilize it. I would say there's at least significant potential there [for carriers]."
Questions remain about LBS market
Although no one disputes a small cell's ability to enable LBS, the ROI for carriers is still in question. Infrastructure vendors have hyped potential adoption rates and revenue projections for years, but adoption and revenue haven’t materialized yet. It is unclear how much the rise of social networking could affect adoption.
Only 4% of adult Internet users in the United States reported using location-based services, such as Foursquare or Gowalla, according to a survey released late last year by the Pew Internet & American Life Project, a project by Pew Research Center. The highest adoption rates were in the 18-29 age group (8%) and English- and Spanish-speaking Hispanic users (10%). The most common medium was via cellular broadband.
The study surveyed 3,001 Internet users ages 18 and older between August and September. Among the 62% of respondents who said they used social networking sites, 6% said they use a location-based service.