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| Location-based services are set to be the next big tech wave |
September 7, 2007 |
By Ian Harvey
When Ontario software engineer Bern Grush found a yellow parking ticket on his car, first he saw red. Then he saw the future.
Why have a system in which people have to drop coins into a meter which pay for other people to walk around ensuring they paid? Most of the money paid out for parking goes back into funding the parking management system. There had to be a better way.
That was 2002. Armed with a background in satellite mapping, Grush went to work on an idea to liberate drivers from the tyranny of parking tickets. Skymeter, currently under trial in Europe, is a GPS system he created which links a car to a location. Users pay an annual fee to the municipality, which then tracks the location of the car via GPS satellites. A sticker—essentially a parking pass—is displayed in the window, testifying they paid in advance. More than that though, the system also tracks how many kilometres they drive on city streets and how often, allowing cities to charge a “congestion fee” if they so desire.
That potential fee may not win Skymeter many friends, but some places, such as London, England and Singapore, have already moved to restrict the number of cars driving into the downtown cores, and a system such as Skymeter could automate these programs.
But Grush’s technology may win some driver converts: motorists who rarely drive, for example, can prove that fact to their insurance companies, resulting in lower insurance rates. The system can also track factors such as where cars are driven, at what speed, and with how much acceleration, braking frequency and even cornering.
“You would only pay for the kilometres you actually drive,” said Kamal Hassan, CEO of Skymeter, during a recent location-based services seminar held at the Toronto MaRS Centre presented as part of Toronto Tech Week.
Hassan claimed the technology can reduce road congestion and greenhouse gas production and return savings directly to the consumer. Also, he said pilot tests show Skymeter increases average road speeds by up to 30 per cent (less congestion equals a better flow of traffic).
New business models
 Skymeter is a location-based service (LBS), a market segment many industry watchers are pegging as the next big thing. As GPS-enabled devices become increasingly common, and prices drop accordingly, the concept of leveraging the user’s location is causing new businesses and initiatives to pop up like mushrooms in a B.C. forest. And for those without GPS, it is possible to estimate a position based on the distance of the cellphone signal from the nearest transmission tower.
Proponents suggest location-aware technology like Skymeter could be to mobile what the Internet was to desktop computing, leading to an explosion of users and applications. And that raises comparisons to the early days of the Web, when many corporations found themselves scrambling to jump online. Today, progressive companies may demand not only a mobile strategy but also an LBS strategy.
Take something as simple as banking. Customers could avoid extra ATM charges by looking up the location of their bank’s nearest cash machine on their cellphone. Or, a person looking for coffee could look up Tim Horton’s or Second Cup.
And then there is the Holy Grail the mobile industry has been talking about for years: one-to-one marketing through text messages sent directly to a consumer’s cellphone. You’re walking through a mall and your cellphone beeps with an incoming message sent from the store you’re currently passing. Consumers would have to opt in to these offers, but many would do so for 10 per cent off, say, a pair of sunglasses.
All of that is coming, said Lawrence Surtees, IDC Canada’s vice-president and principal analyst of communications research, although there are still some bumps in the road.
Canada has been slow in the uptake of wireless: penetration rates here are about 58 per cent, compared with Italy’s 129 per cent (some people have more than one mobile line) and the U.S.’s 72 per cent. Surtees said there is a lot of growth waiting to burst and it is services like LBS that will drive that growth. In fact, IDC said LBS was worth about US$50 million in North America in 2005 and will reach US$3 billion in 2010.
Some of that is already in play, he said, noting LBS has been used by the commercial sector for years. “There’s a little company out of Ancaster, Ont., which is reselling air time for a subscription tracking service for the transportation industry. By knowing where their trucks are and who is closest they can control costs and save clients money on gas. One fuel oil company, for example, saves up to $12,000 a year per truck.”
Heavy equipment companies can also track their inventory with LBS technology, a vital tool in an industry prone to the theft of machines worth hundreds of thousands of dollars. It’s also in play for fleet and courier tracking, traffic alerts and weather alerts.
LBS for fun and profit
And then there’s gaming. Hewlett-Packard recently rolled out the concept of virtual game play in real space using its GPS-equipped Travel Companion iPaq. The game system is called mScapes.
In the full-blown grand scheme—on display at the HP site www.mscapers.com —players overlay a fantasy environment onto the real world. Buildings, seen on the handheld’s screen, appear as castles, with software capturing the images via camera and then “re-skinning” or redrawing surfaces. Gamers “fire” virtual shots at each other and the software tallies the score. Like console games, GPS renders enemies and allies as blips on the screen. Think Warcraft played in Stanley Park.
On a more serious level, Tyler Lessard, director of ISV Alliances at Research in Motion, said demand is also growing among business users.
An application called geo-fencing uses GPS data to create artificial geographic borders—a virtual fence—on maps, allowing corporate controllers to set boundaries for their equipment and staff. It might also be programmed to filter restaurant choices for employees or trigger alarms when equipment migrates outside the permitted zone.
Toronto-based Cellwand launched its #TAXI service to connect cellphone users with a carrier-partnered cab company by dialling #TAXI (#8294). The new version recently rolled out to Bell Canada wireless customers incorporates location data and connects to the closest taxi company. Now Cellwand is in beta trials with #HOME, in which consumers get information about a home listed for sale.
“You’d dial in and then be prompted to enter the street number, because we know which neighbourhood you’re in but it would give us the specific address,” said Nick Quain, president and CEO of Cellwand. “We would supply all the basic information, such as bedrooms and features, and then you could connect directly with the agent if you wanted more.”
He said the service would be of interest to more than just homebuyers: “There’s a whole group of people out there, ‘info-voyeurs,’ who are just curious about houses.” Some agents are concerned about the technology. “Some love the idea that this will free them from the tire kickers but others want to talk to everyone directly.”
What will open the floodgates in demand for LBS services, however, are consumers who will vote with their thumbs. It won’t be pretty at first, since they’ll likely get hit with sticker shock when the cellphone bill arrives with those data charges. It’s the classic case of buying a $5 ringtone using your mobile and then finding out you also paid $10 in data charges.
The biggest hurdle to LBS, as Surtees points out, is whether the Canadian wireless carriers will get greedy over how the revenues from such services are shared or whether they will see that by giving up a little Average Revenue Per User— which currently ranks among the highest profit margin in the world—they can kick-start a whole new revenue stream.
SIDEBAR
Definitions
Global Positioning System: A system which employs a network of satellites to determine location on Earth. Most modern cellphones have GPS chips built in.
Location-based service: An LBS system uses the location of the user to deliver new and specific functionality. This could be used by a consumer to find the nearest pizza place or by a rental car business to track a fleet of vehicles. Location is determined using either GPS, cell-tower triangulation or signal strength.
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