Who Wants to Pay for Location?

The next four months ought to be interesting. That's how long providers have to declare their E-911 Phase II technology choices. The FCC's Oct. 1 deadline was on everyone's mind at the L-Commerce 2000 conference.

Elliott Hamilton, The Strategis Group senior vice president, said a recent study found that 28% of consumers surveyed were "extremely" or "very interested" in location services. The study also found a high willingness to pay an extra $26 monthly for bundled location services.

"The high dollar amount indicates that consumers see value in these services," Hamilton said.

Location-enabled services, such as real-time traffic information and enhanced 411, are opportunities for providers to differentiate themselves and pick up new revenue streams. But significant obstacles remain, including defining the market, choosing technology and rolling out service.

Location services also are low priority, said Ira Gorelick, GTE Wireless group manager for new products and services. No consumer applications exist yet and providers want evidence that consumers will buy the service.

"The big question is what the consumer wants," Gorelick said. "Once we figure that out, that will drive everything else. Having a consumer say, 'This is what I want,' and having that consumer write a check for that service are very different things."

Bob Ewald, Nextel Communications senior manager for data-technology development, location and enhanced services, said cost is a major hurdle.

"For a network-overlay-based solution, it will cost $25,000 to $40,000 per cell site to add equipment and data lines," he said.

By 2001, Ewald said, it could cost $40 to $75 more for a location-enabled handset.

"If anyone tells you that putting a GPS chip in a handset is a trivial event, you can ask them if they have land for sale in Florida," Ewald said.

Most analysts say that economical devices with native location-commerce functionality are two or more years away. But IDC made an announcement at the conference that might jump-start the process: It will partner with Response Services Center to offer location services to AAA's 43 million customers. IDC and Response will develop and deploy wireless devices using IDC's In-Place in-band signaling protocol and GPS technology. Trials of an end-to-end solution will begin soon, said Dan Allen, IDC president & CEO.

As for providers, the clock is ticking.