Although offered a degree of flexibility by the European Commission during the dark days of recession, should mobile operators now be pressured to meet commercial Location Based Services accuracy targets, asks Jake Saunders
On the 11 June 2004, the European Commission (EC) carried out a quorum on value-added data services to canvas concerns and opinions about the current state and future direction of that sector. Also, by the end of the year, the EC will have also carried out a review of compliance to its emergency location identification E112 initiative. Concise Insight believes that the two areas of mobile communications should be reviewed in light of each other. Commercial mass-market LBS and E112 deployment are intertwined.
When the EC framed its E112 mandate for EU cellular operators it took a more flexible line than its US counterparts. Cellular operators were obliged to hand-off the location co-ordinates and personal details of cellular users in distress to the emergency services: but no level of accuracy obligations was placed on the operators.
In the UK, the average level of delivered accuracy is between 1 and 4 Km, and the spread of x-y location readings is quite large indeed.
This flexibility was merited in light of the concern that the European cellular operators were feeling the strain from the 3G license fees, paid at a time when the industry was experiencing one of the most significant downturns in company performance in history. It was a prudent course of action. But what should the EC do now?
The tide is turning
2004 is proving to be a much more optimistic year than any of the previous three years. Many operators have cleaned up their balance sheets and are reporting positive cashflows. Until now, the commercial LBS market has failed to meet expectations as the anticipated take-off in mobile data services failed to materialise. But that is changing, Vodafone UK reported 16.9 per cent of its service revenues came from non-voice applications as of March 2004 and 2.6 per cent was content and value-added data service related. That is more than double the March 2003 figure. The contribution, however, from location-enabled data applications is still very small. Across the top 20 markets in Western Europe, commercial LBS revenues represented just US$ 285 million in 2003.
Distinctive and robust LBS applications are continuing to be developed, but if the EC believes that the current cashflow from LBS applications will spur on European cellular operators to purchase high accuracy positioning determining equipment, they may have to hold their breath for a while yet. As research from Concise Insight's European Location-Based Services 2004 report shows, commercial LBS applications are gaining traction but, at this rate, European cellular operators are unlikely to have high accuracy equipment for mass-market use before the turn of the new decade.
We would like to argue that it may be constructive for the EC to tighten the mandate on E112 to not only require operators to pass on the contact details and the end-user's very approximate location to the emergency services, but also to insist on a requisite level of accuracy. The accuracy target could be set rather flexibly in the early days and reviewed over time. The key to facilitating this process is a finance-raising mechanism.
There are a number of challenges facing European society. In most markets, nearly everyone who could own a mobile phone, does own a mobile:
• From its own research, the EC are aware that approximately 40 to 60 per cent of calls made to the emergency services are made on a mobile phone, and that figure is rising;
• As a result, in 2004, 64 million calls will be made to the emergency services in Western European, and that figure is rising;
• The volume of intra-EU country visits of tourists and business personnel has reached over 85 million per year;
• The location of every fixed line phone is known, that is not the case for mobile handsets. The original premise for being flexible on location accuracy is no longer tenable:
• Operators have cleaned up their acquisitions sheet and restructured their operations to be more profitable;
• Applications providers have developed LBS applications but they have little leverage to persuade the operators to install high accuracy equipment.
Therefore, given the current industry trajectory, high location accuracy for the mass market could well not appear until the end of the decade at the earliest. This is acceptable with most commercial applications but in a world where everyone has a mobile, there are the wider social and welfare implications that should be taken into account as well.
If the current bottleneck in the transfer of personal and location data between the operator and the emergency services is not resolved and location accuracy does not improve, ambulance, fire brigade and police response times could well go down, not up.
Therefore, could a tougher mandate be a 'win-win' situation for all parties? Certainly the industry does seem to be caught in a negative triangle of interoperability, capital expenditure, and handset feature-set concerns:
• A lack of interoperability currently prevents international roaming subscribers from taking advantage of LBS, although current standards being finalised through the hard work of the 3GPP, ETSI, the OMA and the GSM Association are slowly but surely rectifying the situation;
• Network-based solutions such as E-OTD and U-TDOA, other than base-station cell ID solutions, face challenges of getting critical mass as operators have been hesitant to pick up the tab on the capex;
• A-GPS handsets have not materialised because the handset manufacturers have been reticent to install GPS in a large number of GSM handset models due to intense competition from other components/applications vying for battery life, space in the handset and overall cost considerations.
Therefore the EC and the member states need to make a clear decision to either:
1. Remain flexible on the issue of location accuracy and accept that the emergency services could find it increasingly difficult to locate distressed individuals within the shortest time possible;
2. Or impose a high location accuracy mandate on the operators. Certainly there will be grumblings from the operators over political interference and capex but there is a clear-cut application that is desperately in need of accuracy, and that is emergency response.
The benefits of high accuracy PDE equipment would also have knock-on benefits for value-added data services and therefore the operators can spread the cost of location accuracy to a large number of direction-finding, traffic notices, community friend-finders and even gaming scenarios.
If the EC does opt for a stricter interpretation, then the key issue of consideration must be raising the money. The implementation of personal and location data IT transfer systems between the operators and emergency services has been disjointed in most countries, primarily due to the fact that no clear finance-raising model has been established.
Different countries, national emergency authorities and operators are prioritising at different levels of commitment. There is a danger that fragmentation also affects the deployment of location accuracy. It would perhaps be an unpleasant possibility that your choice of operator not only dictates the quality of coverage you may have in certain parts of the country but also how quickly the emergency services arrive if you are in distress.
The US introduction of E911 has been contentious, and certainly the EU could learn to avoid some of the US's pitfalls, but it does clearly set out a fund-raising model. For Europe, either a fixed fee per subscriber or percentage levy of ARPU could then be put towards the E112 budget. A proportion of that budget could then be set aside for implementation of personal and location data IT transfer systems between the operators and the emergency services, and the remainder could be allocated to the high accuracy solution of the operators choice. If the operator prefers a network-based solution, they can start to draw the funds together; or if the operator prefers a handset-based solution, the allocated budget could be used as an incentive to handset manufacturers to incorporate GPS into more mainstream handset models to ensure mass adoption.
In most countries, consumers already pay 17 to 22 per cent VAT. You could argue that the EC/national governments could meet the operators half-way, by declaring that x percent of that VAT paid by the end users is retained by the operator. Market driven solutions have, for the most part, been the most cost efficient mechanism to deliver results, but sometimes the wider social context needs to be considered. Mobiles have become the norm in our lives.
Due the current state of the LBS E112 market-place, there is a distinct possibility that it could be safer to make that emergency distress call from a fixed-line phone. It could even be argued that if a laissez-faire policy on high accuracy is maintained, there is a danger of social discrimination if an end user were to choose a network that had a lower level of location accuracy or could not afford a handset that had A-GPS built into it.
A 'raise the bar' higher accuracy location policy would have a knock-on benefit for value-added data services, as they are a whole host of applications that could benefit. Addressing the higher accuracy funding mechanism issue would allow the operator to install the position-determining equipment of their choice that benefits their commercial LBS application needs, as well as deliver improved response and location-fixes of subscribers in distress.
Jake Saunders, Director, Concise Insight, can be contacted via e-mail: Enquiry@Concise-Insight.com