Location-based services: business insights and basic functions

February 9th, 2015, Published in Articles: PositionIT


Location information provides insight into human behaviour, and is at the heart of delivering services that are relevant and convenient. Those who understand this, use location information and turn it into revenue. LBS not only drive revenue, but are also the magic ingredient which turns science fiction into reality when it comes to the Internet of Things and machine-to-machine communication.

Fig. 1: Smart phones are promising for LBS delivery due to the variety of sensors and the widespread availability of wireless networks.

Fig. 1: Smart phones are promising for LBS delivery due to the variety of sensors and the widespread availability of wireless networks.

From shopping to finding a date, to finding clothes for the date, to navigating the best route there, location-based services (LBS) have become embedded in everyday modern life. Several studies already proved that most service-related searches have a spatial element to them, making location not only relevant, but also profitable. This is the foundation of LBS.

LBS is the integration of location information with services and business processes, and refers to any service that utilises a user’s geographical position to deliver value to a customer. A service provider can monetise this value, whether it is financial or quality-of-life value (e.g. personalised information, security).

Location information sheds light on users’ interests (where they shop), habits and routines (location tracking, e.g. regularly travelled routes), places of work and home, as well as time spent at each place at any time of the day. Income, health and other information can also be extrapolated from this.

Common LBS applications include marketing, emergency response, information services, navigation, location-based social media, mobile location-based gaming, sports, billing, geo-tagging, tracking and augmented reality. Of these, navigation and navigation related services are the most popular.

Some distinguish between location services (LCS) and location-based services (LBS), with LBS supposedly adding more value to the service, but the terms are used interchangeably. In business-to-business uses it is also referred to as location insight services.


The types of LBS services and applications are constantly evolving, and are limited only by the location technologies they rely on. LBS rely on location-enabled devices such as GPS devices, smart phones, and even wearable technology.

Mobile phones are a promising platform for LBS delivery because of their variety of location- and other sensors, internet connectivity, and the widespread availability of wireless networks. For this reason, mobile network operators are well positioned in the LBS market.

In fact, the biggest drivers of LBS in South Africa are the wide-scale adoption of smart phones and social networking trends. This market is expected to grow further due to the availability of low-cost GPS devices and the deployment of 4G, as well as companies’ growing interest in user location information.

Although cellular network operators have long had the monopoly on location data, there now exists competition between network operators, handset vendors, operating system developers, and third party applications/services for users’ location data.


Location services are categorised into three groups: push, pull and tracking services. Applications often make use of a combination of these. Pull services are services in which the user initiates the request, for example, when searching for a fuel station en route to a meeting. Push services are services initiated by the service provider, such as sending you an SMS with specials from the shop you have just walked into. Tracking services, which are usually integrated into push and pull services, take your usual routes and habits into account and can take on many forms. Think of the restaurant suggestions delivered via your navigation app, which take into account your previous visits to Mexican restaurants.

In South Africa the uptake of LBS has been slow due to the considerable financial risk attached to its implementation (initial investment), and also because of technology issues such as cellular networks operating on disparate software, hardware and connectivity components. On top of that, LBS requires partnerships with other stakeholders.

The situation is changing though. Niche market analysts Micro Market Monitor expects the South African LBS market to grow to $879,6-million by 2019, at an estimated compound annual growth rate of 34,9% between 2014 and 2019.

Market analysts Pyramid Research have identified most of the opportunities to be in navigation, mobile advertisements, tourism, and consumer tracking. They have found that there has been a rise in demand for personal safety and security applications and social networking services.

In-depth business insights

Most significantly, the LBS market extends beyond traditional smartphone-centred service provider-to-public services, and there are business-to-business service providers that provide location-based business intelligence to other businesses.

Business intelligence providers incorporate multiple datasets to create complex and powerful analysis models from which to extract business insights for their clients, such as highly detailed customer profiles.

A business intelligence company might use weather pattern and crime data, overlaid onto the geo-located client database of an insurance company, for the insurance company to gain insights into areas which are more prone to damages and therefore claims. Analysed well, this information not only gives insight into the clients of a business, but also into the doings of competitors
and their clients.

Some service providers deliver services to both individual consumers and businesses. A navigation app might provide a user with navigation and points of interest, and then sell this data to businesses to measure customer visits to stores, track crowds in real time, or measure billboard sightings quite accurately. This is the current trend, with industry players such as Google and Nokia shifting the business model from payment (serve the user), to advertising-funded services, serving users, but also serving them to advertisers.

Techniques and accuracy

The quality of LBS, including the types of services possible, depends on the accuracy of the technologies and positioning techniques LBS is based on. Not forgetting the many highly accurate datasets used in business intelligence, a large part of general consumer LBS takes place on smart phones over cellular networks.

Mobile LBS technologies comprise chipset providers (e.g. Intel), software providers (e.g. MapQuest), system providers (e.g. TomTom), platform providers (e.g. Esri, deCarta), service providers (e.g. network operators and other companies), and handset manufacturers (e.g. Sony). Some companies perform several roles, e.g. Nokia, which is a software and service provider. By its nature, LBS also relies on interoperability between technologies and different networks (which often have their own positioning technologies).

Different positioning technologies and techniques offer different levels of accuracy. For mobile phone LBS, there are three categories of positioning techniques:

  • Basic methods, such as dead reckoning, triangulation, trilateration (signal strength analysis) and proximity sensing.
  • Satellite positioning (GPS and Assisted-GPS)
  • Mobile positioning (on GSM (2G), UMTS (3G) and LTE (4G) networks), which comprise mobile-based (using cell ID, time advance, RTT), mobile-assisted, and network-based technologies.

Fig. 2: The accuracy and availability of different handset-based positioning methods.  [Credit: telecomHall]

Fig. 2: The accuracy and availability of different handset-based positioning methods.
[Credit: telecomHall]

Positioning technologies are complementary rather than opposing, and are often used in combination for increased accuracy. Before 3G, many networks were not designed for LBS. Other infrastructure-based technologies such as WiFi and Bluetooth are also incorporated to provide greater accuracy and enhanced functionality, particularly in indoor environments.

The development and refinement of related technologies such as indoor positioning, augmented reality, and wearable technology, have further enhanced LBS functions and precision.

Each technology has strengths and weaknesses, from satellite clock issues, ephemeris errors and ionospheric delays, to noise and multipath issues. An empirical study in South Africa has also found that variables such as the time of day, environment, geographical location, type of LBS request and mobile operators’ network significantly affect the accuracy of network-based positioning.


Besides accuracy, there are other technical constrains that limit LBS, such as the limited battery life of mobile phones, which is further strained by the use of GPS on the device.

The biggest concerns, particularly in mobile LBS applications, are users’ privacy and security, and rightly so. The location data of regular LBS users can be used to profile those users, and can easily divulge personal and private information such as their habits and health conditions.

As with most fast-changing technology, legislation lags behind. Privacy and other laws that regulate the LBS market also vary according to country. In South Africa the Protection of Personal Information Act (POPI) aims to protect users’ right to privacy.

Established standards, however, are more universal for reasons of interoperability. Some standards have basic privacy built into them, and specify how location information is captured, anonymised, transmitted and stored.

Even though anonymised identifiers are used so as not to reveal a user’s personal data, aggregation techniques make it possible to identify individuals, as an MIT study has proved. There are also concerns surrounding the murky terms and conditions of some services, which have seen third parties collect and sell users’ data, or LBS providers selling user data to third parties.

Stalking and other security risks related to LBS are common, particularly on social networks. There is even an active backlash movement opposing LBS with apps such as Cloak, which obfuscates users’ location to make it possible for them to “steer[ing] clear of unwanted contacts” on LBS-driven social networks.

New frontiers

The line between data uses and a user’s privacy and security clearly needs to be better specified and negotiated. This will need to happen sooner rather than later, as LBS is expected to play an important role in M2M (machine-to-machine) and IoT (Internet of Things) services, and is already in the process of being incorporated into more devices and services. The standards LBS are based on are also gaining prominence as the IoT and M2M gain momentum. In new applications this technology could make it possible for your fridge to send you a grocery list as you drive past a shop, and that is only the beginning.

Already deeply entrenched in everyday life, LBS has proved itself as a most useful tool. It offers in-depth business insights and strategy possibilities, while simultaneously offering useful services and convenience for customers due to its focus on local relevance.

Send your comments to: positionit@ee.co.za


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