The market for location-based cellular services that failed to meet the expectations set during the late '90s tech boom is poised to make a comeback, a research firm said Tuesday.
Services that would deliver traffic info and store and restaurant locations based on where a cellular subscriber is standing have failed to take off primarily due to technical problems, ABI Research said.

The slow start, however, may be over in light of pending U.S. and European legislation requiring carriers to have technology that could locate a subscriber making an emergency call, the analyst firm said. Such technology could easily be leveraged for commercial use as well.

Technical problems, however, remain, although diminishing through innovation.

Technology that uses Global Position System satellites is the least expensive method for carriers, but the systems are unable to find a cellular subscriber in a building. A more reliable, but expensive, option is to use technology that can locate a subscriber by using the cellular infrastructure to triangulate a caller's location.

Companies such as SnapTrack and Global Locate are developing equipment that combines data from both technologies to provide a system more reliable than GPS, but less costly than its alternative, ABI said.

In Asia, particularly South Korea and Japan, location-based services have sold well because consumers in both countries are more tolerant, in general, with technology's shortcomings, and have a greater need for the service, ABI analyst Edward Rerisi said.

In Tokyo, for example, location-based services are used to find places in a city where address listings and street names can be extremely confusing to visitors.

"The Japanese and Koreans are often at the forefront of cellular technology," Rerisi said. "But the bottom line on location-based services is they need it, so they're more tolerant."

In the U.S., location-based services is catching hold first among small businesses. Dispatchers for limousine and delivery services, for example, are using the technology to track drivers, who only need to carry a cellular phone. Nextel Communications is an example of a carrier that is doing relatively well in the market, Rerisi said.

Large trucking firms and regional bus lines, on the other hand, are using more advanced, and more expensive, technology to track their fleets. So-called "telematics services" usually require hardware on the vehicle, and advanced hardware and software at the dispatcher's location.

Worldwide revenue from location-based services is expected to top $3.6 billion by end of the decade from $500 million today, ABI said. Telematics services revenues is expected to exceed $5 billion by 2009 from $1.5 billion last year.

Source: mobile pipeline