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| Paid location-based services struggle to find favour with individuals |
| Seema Sindhu / New Delhi Aug 20, 2009, 00:54 IST |
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Telcos, handset makers and mapping information engine companies are now focusing on paid location based services (LBS) like traffic updates, directions, finding the nearest ATMs and restaurants, fleet and individual tracking to add to their value-added services portfolio.
The Rs 5,000 crore value added services (VAS) sector is said to hold the future for telecom operators, especially when 3G services come into play. LBS, however, is in its infancy with 8-10 million users.
The action in this space began three years ago with BSNL signing up with US-based firm Telenity to provide LBS to its customers, according to an Indicus Analytics study carried in 2008 for the Internet and Mobile Association of India (IAMAI). However, the growth has not been rapid.
Consumers, states the Indicus report, have been put off by high flat fees or highly complex charging models with little value addition from the services provided. LBS can cost between Rs 100-500 a month to corporates, depending on the kind of services they demand, and between Rs 30-100 to individuals. Rather than the fee per use or flat fee per month operators should adopt ad-based revenue model, for instance, where calls and messages can be free to the users or provided for a nominal user fee and supported by advertisement content.
Prashant Singhal, Telecom Head at Ernst & Young adds: “LBS is not fully launched in India. There is need for more sales push.” Passari agrees these services will pick up with long, aggressive marketing. Only 0.1 per cent of total VAS revenue of the industry, according to Singhal’s calculations, comes from LBS. Affordability of a GPS-enabled handset is also an issue. For that reason there are only 100 million GPS-enabled phones in India out of 400 million plus, comprising 25 per cent of total mobile users. But most handset manufacturers are working out to bring the cost down. Consequently today, a GPS-enables phone can be bought for Rs 7-8,000.
Adding to telcos’ woes, users are taking to free services like Google maps, putting telcos’ subscription based LBS at disadvantage. But industry observers feel that the trend won’t last long. “Free services are always an attraction. However, adoption will be constrained as you may get limited functionality and the service will be available on high-end handsets only,” comments Dwivedi. Singhal seconds his thoughts.
Alok Goel, Business Product Manager at Google, confirms the trend, “Google has witnessed rapid increase in LBS uptake. In the last 6 months, we have seen LBS users doubling.” Goel believes LBS has great potential. It’s just that people developing applications have narrowed down the scope with maps. Developers need to look beyond maps, innovative services like Lattitude (sharing whereabouts with selected friends) will make faster headway.
Pradeep Dwivedi, Sr VP — Marketing, Tata Teleservices Ltd (TTSL), explains that “consumer growth has been challenging because LBS has been primarily available on mid- to high-end devices”. On the other hand, he asserts, “enterprises have been very enthusiastic adopters of LBS”.
Sunzay Passari, VAS & Devices Head at Loop Mobile India Ltd, notes that LBS is a long-term proposition for telcos. While corporates comprise most of the client base, individuals are using these services only out of curiosity. Another hinderance, says Passari, is poor mapping information. “Also telcos are not well equipped for such services. There’s no proper equipment in the network for such granular services.” LBS, he notes, will grow as when global positioning system (GPS)— enabled devices flood the market.
To tackle these problems, telcos, mapping information engine companies like MapMyIndia.com, handset manufacturers and independent application developers are coming together to foster growth in the industry. TTSL, for instance, plans to introduce additional LBS solutions in association with NTT Docomo. Loop, too, is working on individual tracking features. Google is also looking to integrate more innovative solutions to its location search services.
A Nokia spokesperson concludes: “One of the main challenges hindering the growth of LBS in India is lack of awareness. As a responsible market leader, we have been focusing on creating awareness and educating the mobile users on the concept and benefits of LBS. We have not only been introducing newer devices with the navigation capabilities but have also undertaken focused marketing campaigns besides showcasing live demos of the service at various touch points (shopping malls, Nokia concept stores, airports etc) across the country.”
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