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Telecoms, Web Firms Jostle Over Location Services

U.S. law requires all mobile phones to have an electronic signal, giving the owner's location, opening up a hot new market for Google, Microsoft, and others in addition to the usual telecom players.

By: Lucas van Grinsven and Tarmo Virki

BARCELONA (Reuters) - When U.S. regulators required that mobile handsets carry an electronic beacon giving the user's whereabouts, they handed telecoms and technology companies a hot new business opportunity.

Sprint Nextel and Verizon are already using the technology to help companies locate employees who are on the road and to aid travelers planning a weekend trip, charging up to $15 a month for their services.

But Google Inc. and other Web services firms are now stepping into the arena, threatening to bite into the phone companies' share of the market even as they offer opportunities for cooperation in new types of services.

Google, Yahoo Inc. and Microsoft Corp. have an edge over carriers because of their low costs and their ability to reach any customer with a browser -- increasingly a standard feature on cell phones.

"No group is better equipped to steal the march than the Internet services companies," said Mark Becker at Atos Consulting.

BOOST FROM U.S. INITIATIVE

Opportunities for location services got a major boost from the United States' e911 directive, which aims to help emergency workers to locate people in need.

In response, U.S. telecoms operators in the United States now sell mobile phones that contain a Global Positioning System (GPS) chip, which gives the user's precise position, and software to speed up the location process.

That software, which assists the GPS and hence is named Assisted-GPS, or A-GPS, is used in the services offered by Sprint and Verizon.

Only seven years ago, navigation systems that used GPS technology were an exclusive feature in expensive cars that added $3,000 or more to the vehicle's cost.

Around 2002, navigation systems, while still used mostly as a driving aid, broke below $1,000 for a handheld computer connected to a GPS unit.

Today a dedicated standalone navigation device from TomTom or Garmin, which a user can carry anywhere, costs as little as $300 and the companies estimate that 14 million units will be sold this year alone.

FOCUS ON SERVICES

Now that handsets in the United States and several Asian markets are being fitted with GPS locators, the focus is set to shift again, away from the hardware and 1-gigabyte memory cards that can store maps of entire continents, to navigation services.

This plays into the hands of Internet companies and threatens the profitable business of device makers.

"Access to location-based services via an Internet terminal, which can be a phone, means that the number of hits is the real value driver," said Fortis Bank's Oberdorfer.

All major navigation technology firms are present at this week's 3GSM conference in Barecelona, the world's biggest mobile communications trade show, as they target the 810-million-unit-a-year cell phone industry.

"All the navigation companies and all the Googles in this world are interested in the sector," said Panu Vuorela, chief executive of Finnish navigation software firm Navicore.

Mobile operators are wary that they may soon be subsidizing expensive handsets and upgrading their network to accommodate positioning technology, only for Google to start offering free navigation services paid by advertisers of area shops and facilities.

Google, on its Google Local service available in the United States and Britain, currently offers free navigation twinned with local businesses and services on desktop computers. It has taken the first tentative steps to bring the service to phones.

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