There are only so many punters willing to spend good money on accessing their horoscopes and reading very short news articles on Wap phones with tiny, hard-to-read screens. Give them the chance to find out where the nearest cheap hotel room or McDonald's is, however, and you instantly have the application that everyone wants.
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The technical problem involves finding out where mobile users are so you can offer them these services. Analysys analyst Julie Robson, author of the Mobile Location Services and Technologies report, says there are several ways of tracking them down.
The easiest way is to simply locate them according to the mobile cell they are in, although this does not give a very precise reading. Nevertheless, it is good enough for providing services such as traffic reports and weather updates for the local area.
For a more precise location, companies can build global positioning systems (GPS) into their handsets, so the mobile phone or personal digital assistant can work out where it is by monitoring satellite signals. However, this would require significant processing power in the handset.
An alternative to GPS is wireless-assisted GPS (A-GPS), in which the cellular infrastructure does some of the computation work. This is all very well, but the handset still needs line-of-sight access to the network (so a user cannot access location-based services when they are in the toilet, for example).
Other systems, notably Enhanced Observed Time Difference (E-OTD) and Time Distance of Arrival (TDOA), use triangulation, where the position of the handset is determined based on the time taken by radio signals to travel between the phone and a base station.
However, there are various points that need to be resolved before location technology can be adopted, says Robson.
"It is an issue of personal privacy and data protection legislation," she says. "Do people feel threatened in the consumer sector about being located?"
Having your network provider know exactly where you are is bound to raise the hackles of the privacy advocates.
There is also the issue of persuading people to use wireless data services, which is still an embryonic market. Nevertheless, companies such as Whereonearth are heavily involved in providing software that will enable network providers to hook up location-based information with e-commerce players.
Such services could give the term "smartphone" a whole new meaning.