3G operators struggle to find killer app

Location-based services are unlikely to be the killer application for third-generation (3G) mobile platforms, leaving operators looking for new ways to generate revenue to pay off the horrendously expensive licence fees.

In a report from telecoms researcher Analysys, entitled Mobile Location Services and Technologies, analysts found that although "location-based services will be an essential part of future mobile packages, they are not killer applications".

Julie Robson, lead author of the report, said services such as leisure and entertainment information, traffic reports, maps and directions, targeted advertising, promotions and interactive games would only "add value to existing service packages".

But she also pointed out that the added value would still be important to a mobile operator "faced with falling airtime revenues and the cost of rolling out 3G networks".

The market that mobile operators will be tackling is forecast to exceed 680 million users by the end of 2006, representing 50 per cent of all mobile subscribers and more than 70 per cent of mobile internet users.

Robson said that in the location-based services sector, revenues will grow from just over $2bn at the end of 2002 to over $18.5bn by 2006, with 31 per cent of revenue generated in western Europe and 22 per cent in the US.

But the real killer applications will be mobile commerce, advertising and paid-for content delivery. Robson said that for location-based services to really take off, technological and interoperability issues need to be addressed.

"Integration will be critical to success in this market," she said. "Mobile operators and service providers must learn lessons from the poor acceptance of Wap, and ensure a friendly user interface that meets customers' expectations."