Growth in LBS (Location Based Services) customers in North America (NA) last year (’05 to ’06) was roughly 150%, from 1.5M to 3.8M customers.  In ’05 NA LBS revenue was roughly $450M with Sprint accounting for 70% of that revenue.  Today Verizon and Sprint account for over 80% of operator LBS revenue in North America.  Services such as VZ Navigator (>500k regular users), VZ Chaperone, and Disney Family Locator service (30% adoption rate) may result in ’06-’07 customer growth exceeding last year’s figure.  Looking into the future, 2011 projections are between 33-52M LBS subscribers, a revenue opportunity (excluding enterprise) of $2 – 4B, with enterprise LBS being up to $9B.

Family Locator has proven to be one of Sprint’s most profitable data applications, and has achieved a 30% adoption rate with Disney Mobile.  In an August report by Jupiter Research 42% of parents with children under the age of 13 are especially interested and willing to pay for services that allow them to track their child’s location, roughly 50% of a typical operator’s post-paid customer base is on a family plan.  Family Locator could generate half the consumer LBS revenue by 2011, that’s $1-2B.

Experience of SK Telecom in South Korea shows low AGPS handset penetration is a critical short-coming in customer satisfaction; current penetration of AGPS handsets is about 25%.  Note SKT (CDMA operator) had AGPS mobile devices available at the same time as Sprint and VZW, however, they did not make 100% of their portfolio AGPS because there is no E911 mandate.  Hence for GSM operators here in the US high accuracy isn’t coming anytime soon, modelling shows that even under the most aggressive AGPS introduction scenarios, its still 2010 before the critical 50% penetration is reached, that is a high accuracy location is most probable.  Suggestions to restrict handset choice for those families wanting to take the service ignore the basic problem of getting the children onto the same network, never mind restricting their handset choice.

European operators have struggled with Family Locator services because the accuracy is limited to CellID, which in the suburbs can result in an area of uncertainty of up to 3km in radius.  CellID is not acceptable to customers, and in the US where AGPS is used by the CDMA operators, CellID will not generate a competitive family locator product.  Will AT&T and TMO (T-Mobile) have no option but to open their E911 platform to commercial services?  Given family plans are similar across operators, hence for those customers interesting in Family Locator it will be the decision factor.  Will AT&T and TMO be willing to risk up to 10% of their revenue, that could be about $6B in 2011.

In the Jupiter research published in August, they also found 26% of cell phone owners between the ages of 18 to 24 want mobile social networking applications based on their friends’ locations.  Again, Sprint and Verizon appear to have an edge because of AGPS allows a usable accuracy.

But this emerging party is definitely going to have more players than just the operators.  1 800 GOOGLE, a free directory enquires, is building market share to create a user base to attract advertisers.  In fact as EU operators have shown, with a few simple questions a customer’s location can be determined to an accuracy adequate for walking directions.  So location advertising could be added without using an operator’s location information.

In fact, Google’s vans that are out taking pictures of all the streets, could also be logging the GPS coordinates of the operators’ cell sites, so their application could use the AGPS unit on some phones with no reference to the operator, as they will have an approximate fix.  In this emerging market, the operator is going to need to move fast, else find its location information bypassed or inadequate.