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April 20 marked the one-year anniversary of the so-called “location-gate” controversy in which it was first revealed that Apple (and soon after Google) were tracking subscriber location information and storing that data in order to “improve the end user experience.” While the controversy eventually faded away, it underscored the fact that Apple and Google had taken the lead in marketing and monetizing location-based services away from wireless operators. This was not an inevitable development.
For years, wireless operators have exerted significant time and money to avoid becoming the dreaded “dumb pipe,” a commoditized conduit for other companies’ high-value information and applications. Their walled-garden approach is now universally considered to be a relic, in part because of Apple and Google’s tremendous success in demonstrating the value of open, non-proprietary systems (although some would argue they only succeeding in developing a bigger, better walled garden). In any case, wireless operators have been left behind, but it’s not too late for them. In order to win, they must get back to basics, adopt laser focus (never their strong point) and leverage hidden strengths. In short, wireless operators must go on the offensive to explore new business models and reclaim market leadership, and location-enabled analytics is the way for them to do this.
A new approach to data collection and analysis
High-accuracy location enabled analytics involves the collection, analysis and dissemination of wireless subscriber data that includes high accuracy location information, the ability to locate a subscriber within an error margin of 50 meters in any environment (indoors, outdoors, urban, suburban and rural). This location performance is available today through location technologies such as radio frequency pattern matching that unlike GPS does not require line-of-sight to satellites. Armed with this information, everyone from advertisers to real estate developers to chain restaurants can make better informed business decisions.
Today, for example, a restaurant chain does not follow the “if you build it, they will come” model when selecting a new site. Given the laggard economy and overbuilding of retail corridors, it is vital that chains have as much sophisticated data as possible to assist their decision-making. Today, that usually involves a combination of local demographics, including household income and family makeup, knowledge of existing competitive locations (“follow the leader”) and old-fashioned data-collection methods such as counting cars or foot traffic to measure traffic during peak hours. But what if one could bypass the manpower resources and expense required to independently collect this data, crunch it together, and produce a useful analysis?
How does it work?
HALEA combines a wireless subscriber’s location – where they use their mobile phone on a regular basis – with other information available to wireless operators. This includes credit information, home and work addresses, types of applications downloaded and much more. Add to this the ability to cross-reference calls and text messages, and one can envision a highly-detailed, high-value trove of data that companies would be willing to pay a premium to acquire, if it is productized correctly, while balancing privacy concerns.
A very basic scenario illustrates the power of HALEA: Many subscribers call a pizza restaurant in a neighboring town with regularity every week and then travel three miles to pick up their pizzas. Using this information, a competitor could decide to build its new location closer than the existing restaurant, intercepting much of that pizza traffic. It is conceivable that the pizza competitor would pay a premium for this unique intelligence in order to avoid making a costly mistake. Real-world examples including Chevy’s restaurants and Best Buy electronics illustrate the danger of market saturation. Only the wireless operator can provide this additional value since they know the most about their customers. This opens a whole new revenue stream and upends the traditional wireless business model for voice, data and sms.
Potential roadblocks
Since the capability exists, it’s a matter of wireless operators’ willingness to accept the opportunity HALEA enables and deploy the necessary infrastructure. Many are already integrating location capabilities into their networks for E-911 and commercial location-based services. HALEA operates under the same basic technology, but requires a different approach, one that wireless operators, who are notoriously slow to adapt, have not yet embraced.
Privacy is also an issue, as the Apple controversy demonstrated. Wireless subscribers would have to opt in and agree to have their movements tracked and used. It’s not as “big brother” as it sounds. This location tracking happens today (via opt-in) for a variety of location-based services. HALEA takes it to the next logical step – repackaging and selling the information to willing buyers. Of course, a savvy operator can provide incentives for customers to opt-in in the form of discounts, bonus features, or other prizes (according to industry studies, over 80% of wireless subscribers are willing to receive opt-in text messages in exchange for special offers). The more data points the operator is able to collect, the more valuable the information will be to buyers. Wireless operators that are open to exploring HALEA and its new business models may become the Apple and Google of the next decade.
