Feature Article

August 22, 2013

Operators Could See $11B from Location Insight Services by 2016

Operators could be looking at an $11 billion opportunity in the next couple of years. This financial opportunity comes from something called Location Insight Services (LIS). It is the use of aggregated and anonymous information based on trends. The information is collected from connected consumers’ mobile location devices.

JDS Uniphase (JDSU), a test and measurement vendor came up with Location Insight Services. It is a variation on the real-time information of Location Based Services (LBS), which is the mobile industry’s main source of information with concerns to individual subscribers.

The results of the research were released today, August 22.The information was compiled by STL Partners. This is a research firm that specializes in business model innovation at the intersection of the Telecoms-Media-Technology sectors.

The results show that there is an opportunity for mobile operators to cash in on Location Insight Services and that by 2016 it could be worth as much as $11 billion to the operators. Subscribers’ location information is currently available to operators, however not that many have really taken on the technical challenge.

The problem is that the data needs to be transformed into a usable system. Operators also have to have to solve the business challenge of developing a practical model that would give them the best use of the information.

According to JDSU, its GEOinsights application would allow them to share this data bundled by external systems without the need for complex system integration with data warehouses. One of the biggest differences between LIS and LBS is that the data collected is not taken down to the individual level.

It doesn’t require users to opt in or accept ads on their smartphones. It's the business-to-business or business-to-government approach. Recently, JDSU acquired geolocation software designer Arieso. Its CTO, Dr. Michael Flanagan, describes this by saying, "Location Insight Services is not trying to provide an instantaneous answer on current location, but telling more about how that is trending." 

Verizon Wireless formed what it calls Precision Market Insights division in 2012 to sell customer data to third parties, and AT&T has updated its customer privacy policy to allow it to aggregate customer data to sell to advertising and marketing firms.

So you can see that the information is already there. This means that there is the potential for money to be made from this customer data. However, although this type of aggregation is much less personal than individually targeted LBS, operators will still have to tread carefully.

Recently, Telefónica Digital learned the hard way that services have to be transparent and end-user controlled. This was found out after its plan to sell anonymized data to retailers in Germany prompted a backlash. Anonymized data is organized in such a way as to keep anonymity by destroying tracks or the electronic trail that would lead to an individual.

The STL Partners research shows that while commonly available cell level location enables some of the use cases, building level location intelligence from an enterprise geolocation system significantly increases the value.

Some example that STL Partners lists are as follows:

  • Competitive Benchmarking (Retail) - previously unavailable intelligence on the profile of visitors to competitive stores
  • Infrastructure Planning (Transport) - clear identification of "pinch points" on transport infrastructure and the precise times they occur
  • Site Selection (Event planning) - evaluating previous attendee levels at a venue and attendance at competitive events with a similar audience profile
  • Advertising Evaluation (Advertising/Retail) - determining the impact of advertising on store visits

STL Partners’ report identifies two business model approaches. Operators can either provide the insights as a standalone offer, or work with partners to provide an integrated service offering. The report also outlines an eight step guide from recognizing the organization's unique big data challenge, to ensuring that insight is positioned as a business critical metric to partners and clients.

Shirin Dehghan, head of JDSU’s location intelligence business unit, had the following comments: "The findings of this report mark a step change in the perceived value of location data and the way in which operators use it. For some time, over-the-top players have led the way in using real-time location data to provide location-centric services to consumers, such as special offers or vouchers. LIS puts the power back in operators’ hands allowing them to monetize the value of their unique asset, mass location intelligence, creating new revenue streams in times where traditional business models remain under extreme pressure.”

Edited by Alisen Downey

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