The market for commercial location based services (LBS) in the U.S. appears set to take off, as we saw in the second of this multi-part series on handheld location based technologies and services (see Mobile GPS: Part 1 – Behind the Rise of Location Services). Other markets around the world, however, have developed and are developing at a different pace.

In the Far East in particular, especially in Japan and South Korea, LBS has been available for longer and from more operators, and has, relatively speaking, been embraced more enthusiastically by consumers and businesses. In Europe, the market is showing signs of life, but continues to be constrained by that region’s almost exclusively GSM infrastructure and the relatively low-accuracy enhanced cell ID positioning technology available for GSM networks.

Growth
According to UK-based Juniper Research, subscriber revenues from mobile LBS in North America will grow from about $158 million in 2005 to approximately $1.5 billion by 2010. Asia Pacific, which includes India, China and other countries as well as Japan and South Korea, will see LBS subscriber revenues grow from $511 million in 2005 to $3.3 billion in 2010. Juniper expects the market in Europe to grow from $279 million in 2005 to about $2.7 billion in 2010.

Note that these numbers, which were included in a June 2005 study from Juniper entitled Mobile Location Based Services (MLBS), appear to be markedly more conservative than numbers we reported earlier in this series from U.S.-based ABI Research. ABI estimates 2005 LBS revenues in North America at $420 million, for example, and expects them to grow to over $4 billion by 2010. The two market forecasting companies are not as far apart as they appear, however. The ABI numbers include revenues from telematics and other LBS applications not available on handhelds.

Head Starts
While parts of Asia-Pacific have a decided head start on the rest of the world, LBS has still not been as successful there as operators hoped, even in Japan and South Korea. “The services haven’t been taken up as much as people at first thought they would be,” says Bruce Gibson, senior analyst and co-author of the Juniper report.

The Japanese and Korean head starts, such as they are, have partly to do with underlying infrastructure, partly with market conditions, Gibson says. Unlike Europe, Japanese and Korean operators, including the LBS leaders, NTT DoCoMo in Japan and SK Telecom in Korea, mostly installed CDMA networks. That means they had access to high-accuracy A-GPS (Advanced Global Positioning System) technology from Qualcomm and other providers.

Korean operators launched A-GPS-based services as early as 2001, Japanese operators in 2002. “What tends to happen with things like LBS is that there’s a domino effect,” Gibson notes. “If one operator launches services, especially if it’s a market leader, the others are obliged to follow suit.”

That’s what happened in Japan and Korea. Although DoCoMo and SK Telecom still lead the market in terms of numbers of services offered, virtually all operators now offer some form of LBS. According to an ABI report on LBS in Asia, SK Telecom offers seven distinct services from pedestrian and vehicle navigation to kid tracking and bus location information. That compares with three offered by the next most active operator in the LBS arena, Korea Telecom Freetel. In Japan, DoCoMo offers five services – a mix similar to SK Telecom’s – compared to one or two for other Japanese operators.

Only one other operator in the world offers more services – Nextel in the U.S., and it has the American LBS market pretty much to itself (see Mobile GPS: Part 2 –Trail Blazers, Applications).

GSM Assisted GPS
A-GPS developers have recently demonstrated the technology working with GSM networks. “But [A-GPS] appears to work much better in [the CDMA] environment,” Gibson says. “So technologically speaking, [the Japanese and Korean operators] had advantages over many other countries especially in the GSM world. The other main CDMA operators are in North America, where there have been market constraints on mobile location based services.”

It’s not just the CDMA/A-GPS advantage. Because Japanese and Korean operators deployed 2.5 and 3G networks first, they are now more broadly available. This means they have more bandwidth available for high-bitrate data applications of all kinds, including LBS such as turn-by-turn navigation with audio guidance.

Adoption Factors
Different market conditions and a different culture around consumer technology, especially in Japan, have also had a bearing. “The way that LBS seems to have evolved in most markets around the world is that on the whole it’s driven by the business sector,” Gibson says. “That hasn’t been true in Japan, however. In Japan, it has been a consumer-led marketplace in many respects.”

“[The Japanese] have a very high propensity to adopt technology at a consumer level. They lap up any new mobile devices and tend to use them to their extremes.” The same is true, though perhaps to a lesser extent, in Korea.

Is it possible these cultural differences mean Japan and Korea will always have stronger markets for advanced mobile applications such as LBS? Gibson believes not. While cultural factors have contributed to the head start Asian operators have with LBS, other world markets will eventually catch up, he says.

In Japan at least, there was probably real pent-up demand for turn-by-turn navigation solutions for another reason. Japanese cities typically do not use consistent addressing conventions. Streets can change names several times and street numbers are not necessarily consecutive. It makes Japanese cities notoriously difficult for strangers to navigate. Turn-by-turn navigation systems are a godsend.

Another reflection of cultural differences: both SK Telecom and DoCoMo offer GPS-based services for public transit users. Screens at bus stops show customers where the next bus is on its route and how long it will take to get to this stop. Or riders who are unfamiliar with the stops or can’t see out of the bus because it’s so crowded can have their handheld tell them where they are and alert them when they’re approaching the stop where they have to get off.

It’s hard to imagine a North American operator deploying such a service given that outside the biggest cities, public transit is so little used, and then only by the market segment least likely to be able to afford advanced mobile devices and services.

LBS Applications
Juniper divides LBS into four application segments: information (local weather, what’s nearby), tracking (people and assets), navigation (pedestrian and vehicle) and community and entertainment (find a friend, find a date).

Tracking is the number one application in Asia-Pacific. Juniper expects it to generate $160 million in revenues in 2005 and just over $1 billion by 2010. Community and entertainment applications are the next most popular. They also typically require the least in the way of infrastructure and capital expenditures because they’re based on low-bit rate SMS, often do not require high positioning accuracy and subscribers provide the information themselves. Juniper predicts revenues from community and entertainment applications will keep pace with tracking – $155 million in 2005 and just over $1 billion by 2010.

In Japan and Korea, where the high-accuracy positioning infrastructure is in place to support them, navigation services are further advanced than they are in other markets in the region such as India and China, Gibson notes. Juniper calls for navigation services in Asia-Pacific to generate $101 million in 2005 and $607 million by 2010. Information applications will generate $95 million in revenues in 2005, $606 million by 2010.

A Subscription Model
While Europe, like North America, lags Japan and Korea, one feature of the UK market may give it a leg up in the future and point the way for other evolving LBS markets, Gibson says. British content aggregators such as Mobile Commerce have cut deals with the four major operators to buy positioning data on opted-in subscribers. These so-called LBS aggregators can then offer services – mostly find-and-seek services such as restaurant finders and buddy tracking. In some cases, they offer services direct to all subscribers, in others they manage the service on behalf of an individual operator.

It’s a supplier model that frees the operators from the capital and marketing costs associated with developing LBS, and may for that reason move the market forward more quickly. The UK, which is still constrained by the absence of high-accuracy mobile positioning infrastructure, was the first place where this model emerged, Gibson says, but others are now beginning to emulate it.

In the final part of our series on location technology and services, we’ll return to North America to see how the market is likely to develop here. Hint: we’ll report on at least one major LBS announcement expected before the end of this month.