LBS - The Next Killer App

A worried mother fiddles with her mobile to know the whereabouts of her teenage kids who are out partying on a Friday night. A young executive uses his mobile to keep a track of the traffic situation in the city while driving back home. An enterprise manager uses his handset to keep a tab on his sales team as the members are out on field visits throughout the day. A couple planning to dine out on a Saturday night uses mobile to find out the nearest restaurant and reserves seats prior to reaching the destination. These are just a few of the many applications of location based services that have seen a massive uptake in the emerging markets in Asia Pacific regions. The fact that these applications use SMS and USSD, a subscriber with even a $10 handset, can subscribe and enjoy them.

It is a known fact that with the mushrooming of operators in an already competitive telecom market and with the falling ARPUs, wireless carriers and their partners are developing a host of new products, services, and business models based on data services. Location services, which provide information specific to a location, are a key part of this portfolio.

Location based services have been talked about for quite a while, and many industry giants are foraying in this field from the past few years. However, the services that are provided as of now cater to the top end of the pyramid, that includes advanced users of VAS. High-end location technology available on smartphones with data plans reaches out to niche subscribers who are actively using mobile Internet. Services like Google Latitude and I-area by
DOCOMO in Japan have gained a lot of popularity, but the reach is very limited and niche in the emerging markets.

From an emerging market perspective, the experience of using Internet and thus, location based applications on mobile, is not great. This is because of spectrum issues, handset model and higher tariff considering that more than half the subscribers at any given time are sitting on a less than 20 cent balance!

 

However, a lot can be learnt from the markets in Asia and the Middle East that have overcome spectrum hurdles to successfully run location based services that have appealed to the mass subscriber base in countries of this region. Learning from the high penetration of services like infotainment alerts on SMS and the success of USSD based applications, if a host of utility applications from a location perspective can be enabled on any GSM mobile by dialing a universal number, then we have the next killer mass market application for the Indian subscribers.

In 2008, SingTel, Singapore's leading mobile operator launched the first location tracker service in the country. Branded as 'Locator', the service—that could be accessed via WAP/web—is a service that allows subscribers to locate their friends and view a map of their current location as well. The success of this service inspired SingTel to launch more location based applications on USSD platforms that are handset agnostic and cater to the critical mass. Services like *SEND by SingTel wherein a subscriber can dial a USSD string to access valuable information on amenities and general services such as petrol pumps, ATMs, etc; and location based advertising by StarHub also saw a massive uptake because of the utility for the masses.

 

One of the biggest success stories was in Malaysia when Maxis launched an SMS based friend finder service that resulted in a massive 27% penetration as it catered to over 3.5 mn subscribers. Maxis followed this up with an innovative geo-fencing technology that sends SMS alerts to subscribers as soon as a person moves out of a particular location. Other operators like DiGi also launched similar services that reached out to the mass subscriber base.

 

Now let's analyze the Indian scenario. What are some of the killer applications that have shaped the growth of VAS in India? A close look at the last decade clearly reveals that applications that revolve around entertainment and information have emerged as the clear winners. The market continues to be dominated by entertainment services like--CRBT (ringback tones) with over 20% penetration, and SMS subscription services with around 10% penetration--being the largest revenue generators for the operators. The success of these applications clearly reveals that the Indian subscriber is looking for basic needs of entertainment, information and utility when it comes to VAS. Services like these also highlight the fact that simplicity of use is also a critical element that has enabled mass adoption of these applications. Dialing a universal number from any mobile to subscribe to a service makes it much easier for the user to adopt a particular service and makes it successful in the long run as well.

The success story for location based services in the Southeast Asian market clearly showcases the potential from an operator and end-consumer perspective for a market like India. Over the years, technological advancement and initiatives by Indian as well as global companies like Google, MapmyIndia has resulted in the sophistication of the maps in digital format. On the VAS front, companies like Telenity have successfully deployed LBS products with leading operators on USSD platforms, thus setting the base for location based services to reach the critical mass.

On a flat fee of Rs 30 a month, by dialing a universal number (eg *321*88#) a mother can get to know the location of her teenager kids, or a wife can start the dinner preparation because she has checked that her spouse has just left office, or an employer knows the location of all his team members who are out on sales call, and many more such applications. The utility of knowing the location of any mobile handset to an approximate 300 meter radius of accuracy opens a plethora of applications and services that will be consumed by a large number of subscribers.

With the service meeting all criterions, the ground is all set for 'locator' to be the next killer application to look out for in 2010.

Yogesh Bijlani, country head and GM, APAC, Telenity

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