Location-based services (LBSs) are a part of the geospatial and geoinformational services that rely on mapping and positioning applications to provide a wide range of offerings including faster discovery of nearby locations, location-based advertising, social networking, games and tracking to end-users. With the help of LBSs, customers can get information regarding the nearest ATM machines, fuel stations, taxi stands, pharmacies, theatres, restaurants, traffic alerts and weather updates.

LBSs have gained significant momentum in India in recent years. According to research firm Research and Markets, the LBS market in India will achieve a compound annual growth rate of 52.79 per cent over the period 2014-18. There are mainly three factors that are driving the growth of LBSs in India. The first is the provision of faster broadband by operators. Most operators are looking to upgrade their 2G and 3G networks to 4G. According to the Ericsson Mobility Report, around 40 per cent of the Indian population will be covered by 4G long term evolution (LTE) networks by 2020. Further, the country will witness a significant spurt in Wi-Fi hotspots driven by the government’s Digital India programme.

The second factor is the increased availability of affordable global positioning system-enabled smartphones and tablets in the country. The report contends that the number of people using smartphones in India is expected to reach over 750 million by 2020, a significant increase from 130 million in 2014. Finally, the improved availability of digital maps is augmenting the growth of LBSs. Digital maps were earlier available for only 30-40 cities in the country and that too with limited information. The country is now moving towards developing a national geographic information system (GIS) database. The national GIS will be a very large repository of spatial data, which will incorporate images and maps from foreign and Indian satellites with different spatial spectral resolutions. The database will cover all the national highways, railway lines, and over 1 million points describing locations of villages and major towns.

Commercial advantages

Enterprises globally are increasingly using LBSs for fleet tracking, inventory tracking, asset management, field force tracking, mapping and machine-to-machine communications. In fact, many start-ups have built a significant and differentiated business by harnessing the power of LBSs. A look at some of these successful start-ups…

• housing.com: Real estate portal housing.co.in, launched in June 2012, enables the user to see the exact location of the property advertised, as well as seek information for other amenities around it such as petrol pumps, shopping malls and schools. This has provided an edge to the company over other real estate service providers.
• near.com: Till 2013, the portal had mapped 800 cities and 4,000 towns in India for obtaining data on potential advertising locations. The portal allows users to identify these areas and other facilities around them. This helps the users to plan an outdoor advertisement campaign to reach a target audience. The company also plugs into Wi-Fi and cell tower signals which can be used to send mobile advertisements to users based on their location. For example, a pizza shop’s advertisment and address can be delivered when the user is near an outlet.
• Olacabs: The booking and operational ecosystem of the car rental service provider Ola runs with maps as the basis. All customers who use the company’s mobile application on Android and iOS-based handsets by default use maps. The advantage of mapping applications lies in their ability to pick up the customer’s location and show available cabs around that area, with an estimated time of arrival. Further, maps help Ola manage its inventory well by tracking the status of the cabs. Besides, real-time monitoring, this adds to the safety aspect of customers. Ola also uses the mapping application to formulate a location-based database that helps identify lean and peak hours so as to make accurate forecasts on passenger growth.
• Zomato: The portal provides recommendations, pictures as well as detailed maps of about 90,000 restaurants in India, the UK, the UAE, the Philippines, South Africa, Qatar and Sri Lanka to users depending on their location.

Apart from these start-ups, traditional companies are also using LBSs to improve user experience. For instance, Ford Endeavour has partnered with mapmyindia.com to equip its cars with a navigation device loaded with digital maps.

LBSs are also used by security agencies to monitor the location of people. The Department of Telecommunications in May 2011 made it mandatory for telecom operators to introduce LBSs on their networks and thereby maintain the location details of users as a part of call data records.

Issues and challenges

Despite the presence of several growth drivers, the LBS market in India faces many challenges. One of the major challenges is the lack of awareness of LBSs on a pan-Indian level. At present, these services are concentrated in only the urban areas of the country. The growth of LBSs is directly linked to the growth of mobile data. As of 2014, only 4.4 per cent of the rural population accessed the internet using a mobile device. In fact, 3G and 4G will continue to be primarily an urban phenomenon for the next few years.

The provision of LBSs requires a well-integrated ecosystem comprising telecom service providers, technology providers, merchants and customers. Even though operators in India have the network capability to introduce mobile advertising targeted at specific subscribers, they have not been able to build the necessary ecosystem to exploit the potential of LBS.

Apart from the lack of an integrated ecosystem, there are other impediments that prevent LBSs from taking off in the country. These include privacy issues such as customer authorisation for allowing their location to be mapped and the presence of multiple stakeholders in the LBS value chain – ranging from mobile device suppliers to content providers.

Most importantly, telecom service providers have been unable to come up with a well-defined plan to monetise LBSs. Given the fact that most of these services are provided free of cost with only data charges incurred by users, the absence of a robust revenue model will continue to hinder the growth of LBSs.

The way forward

In a country such as India, which is on the cusp of a data revolution, LBSs bring endless opportunities to transform the way services are delivered. Given the multidimensional benefits of locational information, operators and vendors should consider LBSs as an asset and make investments to exploit, use and market them.

LBSs have opened up many avenues for vendors to increase their brand visibility and exploit the huge market for mobile advertising in India. They can also use location-based data to make informed adjustments in their businesses, which can help them improve user experience and customer service.

For operators, LBSs can prove to be an advantageous addition to their portfolio of value-added services. This would not only increase  consumer loyalty and retention but also enhance operator ARPUs through the use of data services.

For smooth functioning of LBSs, it is critical to ensure seamless end-to-end delivery. Integration issues need to be factored in while setting up an LBS framework. Further, to address the monetisation aspect, telecom service providers should turn to consulting companies to help them draft strategies on revenue streams, expected returns on investment from LBSs, selection of merchants and the creation of an attractive value proposition to effectively grow the entire ecosystem.

Operators should also consider partnering with consulting and technology firms capable of providing end-to-end services – from making a business case to drafting a strategy, and from setting up the technology required to running it as a managed service. Also, a subscription-based model should be adopted for these services in order to address the privacy concerns associated with them.