Google Latitude: Operator business case heading south?

UK: Comment from Jeremy Green, Practice Leader & Michele Mackenzie, Principal Analyst, Ovum.

Google is stealing a march on operators
Location has long been touted as one of the key enablers which should be core to both the operator’s own direct-to-consumer (D2C) service offering and more recently as a network enabler which operators could open up to third-party application developers and preferably at a premium.

However, operators have dragged their heels for so long that device vendors such as Nokia and Internet players such as Google have stolen a march on the operators, launching their own location-enabled applications and building location platforms which allow them to enable third-party applications and build developer communities to serve their own user bases.

Google is in the process of building a location network across its markets and this is largely independent of the operator’s cooperation (although it is dependent on the operator refraining from disruptive action).

For most operators, it is too late to develop location awareness as a fully fledged premium service. And it was becoming increasingly unlikely that they would succeed in offering location as an enabler to third parties.

But Vodafone’s recent announcement that it will open up its network APIs to the developer community puts Vodafone at least back in the picture. Vodafone is one of the few operators with the size and scale to take on some of the other contenders. But is it too little too late?

Neither side ready for a fight
Google’s location platform uses a number of data criteria and location solutions in order to pinpoint the user’s location. It takes the device’s dynamically assigned IP address in order to determine the user’s country information.

It then identifies the cell tower which is serving the user in order to determine further the location of the user; this is done by the Google Maps application itself, so that the device can calculate its own location without any further information from or calculations by the operator’s network.

Google has built its own database of cell tower locations and cell IDs, information which is collected through active ‘war driving’ and its mapping application and fed back to its database. Google Latitude also uses the network of WiFi access point locations in order to determine the user’s location, and lastly the GPS functionality on the mobile phone.

Google’s service is to some extent dependent therefore on the operator’s infrastructure. At present, this would not be an issue for most operators who are seeking to drive further data traffic on their networks and Google’s applications are contributing to this.

But for those operators who are providing their own location services either as a D2C offering or business-to-business (B2B) offering, Google may well be undermining their business case.

The G1 Android phone offered in the UK by T-Mobile does not support Google Latitude, even though Google Maps is available, and G1s offered by other operators do support Latitude. This is allegedly because T-Mobile UK has requested that the feature is disabled, citing privacy concerns. This suggests that the operators are not prepared to go down without a fight, and that Google is still sensitive to operator concerns.

Advertising is key to success again
In line with its core business model of advertising, Google is likely to focus on monetising Latitude through advertising revenues, mainly local advertising. It may look at how it could generate revenues from selling contextual information on its users, presumably to advertisers. This will have to be done on an aggregated level in order not to compromise the data privacy of its users.

We believe that Google will make its location tools, including APIs, available free of charge to developers on the Google platform in order to drive usage of the Web.

These developers will therefore be able to query Google’s database of users’ locations, subject to the privacy constraints set by the users themselves and stored on the platform; we think that Google does not plan to charge for this.

It’s worth noting, though, that Google’s location server (which makes this possible) is not a Gateway Mobile Location Centre in the sense intended in the architecture for location services standardised by the mobile industry almost ten years ago. This too may be an indication that the operator-centric model for mobile location services is past its sell-by date.