GSM to dominate LBS market in the near term

GSM-based offerings are likely to dominate the South African location-based services (LBS) market for the foreseeable future because of the low penetration of GPS-enabled smartphones in the country.

February 16, 2012

GSM-based offerings are likely to dominate the South African location-based services (LBS) market for the foreseeable future because of the low penetration of GPS-enabled smartphones in the country.

That’s according to Jacques Swanepoel, managing director of Cellfind, which is a member of Blue Label Mobile, is South Africa’s leading player in the GSM LBS market. He says that with smartphone penetration in the country estimated to be under 20%, GSM-based services will remain the best way to reach a large segment of the population with LBS for at least the next three to five years. 

Swanepoel says that people tracking services remain the primary engine of growth of GSM LBS in South Africa, with many consumers opting for services that help them to locate children and loved ones via the cellular network.

Users can track consenting family, friends or colleagues on a map-enabled mobile device or website. Such services use cellular towers to locate a person’s position using his or her cellphone.

A similar LBS service allows a user to send an SOS from the cellphone in the event of an emergency. Once activated, the service narrows down the user’s geo-coordinates and transmits an SMS request for emergency assistance.

Swanepoel says that GSM LBS also has a number of applications in the corporate market, where it is used for specialist applications that GPS is not suitable for, such as tracking valuable goods in shipping containers. Many companies use GSM LBS to track SIM cards that are installed in GSM devices in equipment such as motor vehicles, trains, vending machines and public payphones. GSM LBS is also suitable as a back-up technology for GPS in certain fleet management, telemetry, and asset tracking applications.

“LBS has not taken off as anticipated in mobile marketing,” says Swanepoel. “For now, users are happy to share their locations with each other using social networking apps, but are wary of allowing companies to track them for marketing purposes. This market will not take off until businesses can win more consumer trust and show real value to the consumer.”

The benefit of GSM-based services, says Swanepoel, is that they work with any cellular device old or new. Users don’t need to download any special software – they simply need to activate it with the network operator or service provider. As a result, GSM LBS services offer a low barrier to entry in terms of both price and ease of use.

According to Swanepoel, another benefit of GSM-based solutions lies in the fact that they do not punish a cellphone’s battery the way a GPS-based tracking solution does. In time, however, solutions that allow the GPS receiver to be turned on and off remotely will address this drawback of GPS LBS offerings. 

GSM-based LBS can track a user’s device indoors, unlike GPS–based solutions. In urban areas, they are accurate within a few hundred metres – in Sandton, for example, the Cellfind service may be accurate up to 100m. They are accurate within a radius of a few kilometres in in rural areas covered by fewer cellular towers, stretching up to around 10km in the Karoo, for example.

Swanepoel says that the smartphone market is enjoying healthy growth, meaning that GPS-based LBS offerings will eventually begin to edge out GSM-based alternatives because of the benefits they offer in terms of accuracy and convenience. But there is still a lot of life left in GSM LBS and a great deal of benefit in the technology for network operators, companies and consumers alike.