We Can See You

The next big thing in cell phones may be on its way. "Location awareness"--a technology that allows your phone to find the nearest restaurant, police station, friend or relative--was pioneered in Japan and hyped as a killer app in the late 1990s. Only now is it coming to fruition, driven by new laws in the States and Europe that require operators to provide location data to police and emergency services. In Europe, where companies like Vodafone began rolling out such services in 1999, the new European Union directive took effect in September. The U.S. law goes into effect in 2005.

Challenges remain. Some services figure location based on the caller's position relative to the nearest network antenna, and are accurate to within 1,000 feet at best. Handsets that use the Global Positioning System are accurate to within 33 feet, but the software can cause overheating. And privacy concerns are paramount. These services would allow you to find anyone with a cell phone almost instantly, but the reverse is also true. Anyone could find you.

The upside could be huge. Nextel, which now ships all its phones with GPS, has tapped into a thriving market among companies that use the service to manage fleets of cars or trucks, or to direct field staff to the next assignment. Location awareness services currently represent only a few million dollars in revenues for operators in America and Europe, but forecasters project revenues from $1 billion to more than $11 billion in both markets by 2008. The range is due to uncertainty over how much telecom companies will earn from each of the many possible services, from buddy finders to cargo trackers. Even if this is the next big thing, it's not yet clear how big the profits will be.