2010: The rise of location services aggregation -- no, really!

Yes, we know. … For the past five years or so, each new year has been crowned (cue drum roll, please): The Year of Location-Based Services. And every year nothing much has happened. Sure people have started using mobile phones (particularly smartphones) for location-based services like turn-by-turn navigation, and we’ve started seeing location-aware services hit the app stores. But, really, location has always been on the cusp of being the next big thing; it’s never really met its much-hyped promise. This year will, however, be different. I really believe that, and let me tell you why:

This is the year that we’ll see the rise of location aggregators that will bring easy-to-implement, cross-platform and cross-carrier location services to market and will allow developers to implement both consumer and business location services in a very significant way.

Up to now, LBSs have been relatively stymied by a series of hurdles. Essentially, location data can be delivered in two ways: from the handset itself, via an application that accesses the phone’s GPS chip (or even one that does cell tower triangulation), or via the network (reading device-based GPS or triangulating cell tower location data).

Both of these approaches, as implemented today, have some downsides. The handset-based approach, as used in apps such as foursquare and Loopt, requires a GPS-equipped smartphone, an application download, and some level of user sophistication to enable and use the app. The network-based location approach, offered by location-enablers such as LOC-AID and Ulocate, requires less equipment and user sophistication, but it has been limited in the way it’s been packaged and priced. (You were typically limited to a single carrier.) Verizon’s location services only cover Verizon users, AT&T’s theirs, etc. — and usually the carriers were more interested in selling pre-built bundled LBSs rather than the raw data.

As a result you’ve seen services on the market such as Google’s Latitude, which largely focus on the subset of smartphones, and services from the carriers that are pricey. What these services have done, however, is to seed the market with interesting apps that have generated some interest (on both the consumer and business levels) for location. Services like turn-by-turn navigation and family locators and apps that leverage location to provide things like social networking and recommendation engines are moving toward the mainstream by embracing more devices at more reasonable price points (many free). All that’s really needed is something to put these apps (and dozens of new ones) in the reach of any phone on any network.

That’s all going to drive the need for broader access to location data, and that’s where the location aggregators — companies like LOC-AID, Ulocate and others — come in. They work across multiple carriers and multiple phone platforms (e.g. smartphones and feature phones) to provide location data on an application programming interface level for developers creating new LBSs. With a location aggregator in the middle, developers don’t need to develop their own relationships with each of the carriers that serve their intended market; they don’t need to program code for all sorts of phones; they don’t need to know anything more than the phone number of the phone they’re trying to locate — heck, they don’t need to dig down into the complex details of how location works in the mobile network. They just need to focus on the core competency — the app they’re creating — and leave the triangulation and GPS-chip accessing to someone else. Which makes for a great jumping off point for app development.

Especially important, according to Tom Stahl, chief operating officer for LOC-AID, is that aggregators create and implement a privacy framework that ensures location data is used legally, responsibly and within the bounds of customer control and opt-in. Neither developers nor wireless carriers want to end up on the front page of The Wall Street Journal over a situation where location data was given to the wrong person with tragic consequences. Aggregators must (and are) implementing strong systems based around opt-in and confirmation — to the point that some apps may require SMS-based responses for each use of location data, while others can use a single SMS-based verification to get privacy permissions for all location-aware apps.

I like to think of the impact of location aggregators as being analogous to the impact of SMS aggregators a few years back. By making it easier for both developers and carriers to communicate to customers across networks, they can grow the location-based revenue stream for all parties. What’s new in 2010 is that the carriers actually appear to be on board this as well, cutting deals with aggregators to open up their networks. That’s going to drive a lot more apps into location this year.