Location, Location, Location

Picture this: You have one wireless phone with two lines. You get up in the morning and call the babysitter from line one. You pay the same rate you would for a landline call, maybe less. On your way to work, you call your assistant from line two, your business line. Your employer picks up the tab for this call, and you are charged more than the call from home because you're mobile. You arrive at work and continue to make and receive calls from line two, which your employer also pays for but now at a bulk rate. After work, you venture to a baseball game where you make several calls from line two-at a rate less than the stadium's payphones-and you receive short messages on your handset regarding traffic around the stadium.

Sound like a mobile phone service you and your customers might want? Operators can offer portions of the above scenario today. Location-finding technology currently being developed will allow operators to designate very specific billing zones, even small areas such as users' homes.

The questions that remain today involve the competitive advantage that location-sensitive billing might provide and the ability to pay off quickly the cost of implementing the service.

Operators have been interested in location-sensitive billing for about five years, although few have adopted it beyond office services, according to some vendors. "I haven't seen a real demand, but there is a lot of real conversation," said Mark Rohde, president of the communications solutions group for Cincinnati Bell Information Systems.

Threat to landline, incentive to users The FCC E911 mandate, which requires wireless carriers to locate callers within 125 meters by 2001, is pushing location-sensitive billing into the minds of carriers and vendors.

"One of the main applications driving deployment of our platform is E911," says Peter Cona, manager of marketing and business development for TruePosition, a company that offers location-finding technology.

In addition to location-sensitive information services and fleet-tracking applications, location-based billing might increase revenues by lowering bills, which would make carriers more competitive, says Oliver Hilsenrath, president and CEO of location-finding company U.S. Wireless.

Operators can set rates that are as low as landline for each subscriber's home. "If companies can do that, they can compete with local exchange carriers," says John Simms, chief operating officer of SCC, a company that offers wireless E911 services.

With the excess capacity that PCS offers, location-sensitive billing supplies operators with a tool that encourages use. "Carriers can optimize revenues by encouraging traffic where they have a surplus of capacity," Hilsenrath says.

For example, operators can lower rates in low-usage areas and at low-usage times, such as 3 p.m. in the suburbs. Operators also can increase rates in high-usage areas at specific times, such as certain highways during rush hour, suggests Bill Young, director of wireless networks solutions for Northern Telecom.

Location-based billing also can be used for market segmentation. "[Carriers] will look at different segments and [question] the usage pattern and the kind of pricing they need," TruePosition's Cona says. Reduced rates within sport stadiums could encourage wireless use instead of pay phones, says Stephan Virostek, director of messaging and dispatch for The Strategis Group.

The Strategis Group's 1997 Wireless Location Study expects carriers to spend $2 billion on wireless location equipment by 2002 and $2.6 billion by 2005. This number covers network-based equipment-not handset-based location-finding systems. The study also predicts that the market potential for services delivered via location-finding equipment will reach $8.4 billion five years after systems become widely used. The Strategis Group approximates that location-finding services will be widely deployed by about 2001.

SignalSoft is developing and testing a location-sensitive billing platform that allows subscribers to set their own calling zones (Figure 1). Subscribers dial a customer service number and follow a series of prompts to set zones, explains David Hose, president of SignalSoft.

Customers also might set zones themselves via a Web site that displays coverage graphically, says Philip Wacker, director of marketing of GSM for Ericsson.

Carriers could offer very discounted rates for an area that might include only the subscriber's home, or the subscriber's home and the grocery store several blocks away.

Who needs it? While location-sensitive billing sounds attractive and some vendors and carriers support it, naysayers point to valid reasons why it might not pay off. Ken Arneson, president and CEO of Xypoint, a company that offers location services, suggests that location-based billing may not be the golden service differentiator.

"One needs to look at why [carriers] would buy location-sensitive billing," he says. Usually it's to offer subscribers lower rates in certain area to encourage higher use. "The question then is, how low will airtime rates drop?"

Arneson predicts that, especially with the entrance of PCS players, wireless prices will approach landline so that wireless carriers won't have to offer special pricing in the home. "If it's a difference of two cents, is location-sensitive billing worth it? I think if a carrier does location-based billing, it will be disappointed with the rate of return."

Arneson believes that other location services, such as 411-type concierge services, will offer service differentiation and profits. "It's not going to be so much about different airtime rates in the home vs. outside, but more about what services my network provides vs. the competition."

TruePosition's Cona agrees that fleet tracking, concierge services and RF optimization are hot on the heels of E911 for applications based on location technology. U.S. Wireless' Hilsenrath also says that other applications offer more opportunity than location-based billing for location technology.

While some vendors suggest that location-sensitive billing could create a billing nightmare, CBIS' Rohde says it's not likely. The billing end of location-sensitive services is only as complicated as operators' current billing packages. "The secret is attaching the correct rate plan to call records," he says.

Current options Without employing complicated location-finding technologies such as those being developed oday by companies such as TruePosition and U.S. Wireless, carriers can offer some location-sensitive billing services today. In areas with a heavy concentration of cell sites, such as a neighborhood with many wireless subscribers, operators can define a cell or set of cells where users receive a discounted rate, Ericsson's Wacker says.

Ericsson's GSM systems currently incorporate a hierarchical cell structure, meaning that networks can handle multiple levels of cells. With this architecture, operators can add microcells or picocells to areas such as sports arenas or office buildings to increase capacity. Operators can also designate different rates for these cells.

Nortel offers a product for time division multiple access (TDMA) networks, typically used in office applications, that allows operators to offer special rates to a subscriber or group of subscribers in certain areas. Users' phones are programmed to seek out cell sites that have a specific system identification number first for the lower rate (Figure 2).

To implement the system, operators need only manage the logistics of mapping these numbers to cells, adding cells only where significant additional capacity is expected, says Cedric Taylor, senior manager of private marketing for AMPS/TDMA at Nortel. Operators currently can narrow a pricing zone down to the sector of a cell. "That can be pretty small in a dense urban environment," Taylor notes.

Antennas can also determine the location of callers. ArrayComm manufactures a product designed to eliminate interference by employing multiple antenna arrays and digital signal processing software. In the process of controlling interference, the product locates users. "The technology could be used as a basis for a location system," says Karl Martersteck, president and CEO of ArrayComm. However, vendors have not yet developed a location-finding solution based on antennas.

The movement toward third generation technologies may foster further interest in location-sensitive billing. Much of the excitement surrounding 3G involves increased data transmission rates.

"New networks have to support private, semi-private and public networks," says Bob Egan, research director for The Gartner Group. A multi-tiered network, like the hierarchy inherent in TDMA, allows for location-sensitive services.

Despite its limited commercial life so far, the current progress in location technology development gives some hope that its usefulness will extend past its role in fulfilling E911 requirements. Even so, while the ability to pinpoint subscriber locations offers great potential for service and billing flexibility, these benefits may be realized later rather than sooner.

TruePosition and U.S. Wireless have led the way in developing location-finding technologies. The companies use completely different technologies, and both offer unique pricing plans for operators.

TruePosition's service, which already has been tested, uses time difference of arrival (TDOA) technology to locate callers (see figure). Its overlay system accepts calls from a signal collection system (SCS)-comprising receivers and digital signal processors placed at cell sites-and forwards data, including the identity of the phone, to a TDOA location processor (TLP). If the phone number that was dialed is important, such as 911, the TLP requests that the SCS forward further details and then processes TDOA to find the caller's location. This information is forwarded to the application processor, which stores the data and delivers it to the user-for example, a public safety organization or a carrier's billing system.

TruePosition can define multiple zones, including a caller's home zone, which can be as small as a 400-foot area. Customer service representatives can use graphical displays that show a call's location along with maps of streets and calling zones, and sales reps can use graphical systems to create calling zones. For example, these zones can integrate with billing systems by assigning a home rate to Zone 1 even though Zone 1 differs geographically from user to user.

Rather than asking the carrier to cover the costs of supplying and implementing equipment, TruePosition plans to behave like a service bureau, charging operators a monthly fee based on the number of subscribers. Peter Cona, manager of marketing and business development for TruePosition, expects that fee to range from $1 to $1.50 per subscriber.

U.S. Wireless' RadioCamera service is a signature- or fingerprint-based location system. A software and electronics device housed near a base station connects to antennas and the base station. Every two seconds, the system stamps each call processed at the base station with location information. This information is sent to a location hub or server. Only one location hub exists per market, so carriers can either share the cost of implementing the equipment or charge other carriers to use it. U.S. Wireless has implemented RadioCamera in several U.S. markets including Oakland, Calif., and markets in the Northeast.

RadioCamera has advantages over other location technologies because it continues to track a caller's location, says Oliver Hilsenrath, president and CEO of U.S. Wireless. Other technologies may locate a caller's initial location but may not be able to follow the caller if he or she moves.