Understanding PDE (Positional Determining Entity)

In the past 2 years, the industry has finally moved beyond LBS as a category to LBS as a feature. As stated previously, “What app wouldn’t be more useful with location?”! What’s misunderstood in all of this is how location is retrieved by the app and what this means.

E911 (government mandated subscriber location lookup) in the early days was the initial motivation for opeartors to introduce network-based location lookup. This location is acquired through a combination of network triangulation technologies and is delivered to the requested entity (eg person or app) via a positioning server. This approach is often referred to PDE or carrier-based location lookup.

The challenge with PDE has been in business models; operators have been charging for PDE location queries and a variety of middle-men and/or aggregators have been trying to sell this access (eg Wavemarket, Autodesk’s former mobility group, Alcatel Lucent and others). Most developers obviously can’t afford to pay 5-10 cents per location lookup and have thus resorted to the many free alterantive ways to get location such as determining location by the cell tower or getting location through WiFi or most obvious, getting location from GPS (readily available through APIs in smartphones today.

You may ask, why PDE if you can get location in other means? The challenge with the alternative solutions, is that the app can only get location for you (and you only). This is great for use cases like Google Maps but what if you wanted to get the location of your buddy or what if you wanted to send an SMS when one of your friends walked by your house – yes, that would be kind of creepy but advertisers love this scenario (proximity marketing). Unfortunately, the only way besides doing a FourSquare check-in to get the location of one of your buddies or a passerby is using carrier-based location lookup.

To entice more developers, many of the carrier location aggregators have been trying to offset the 5-10 cents per query pricing via alternative business models. For example, a developer can receive subsidized queries in exchange for sharing advertising revenue from their app. Unfortunately as much as mobile advertising is growing, it still cannot offset even a 5 cent query. The better question to ask is why is there a charge at all – if PDE was free, there would be a whole new set of apps that could be enabled built leveraging real-time location. For example, without needing an app running in the background, I could track the entire life-path of a user – an advertiser’s goldmine in terms or profiling! Well, as with most things, the reasons things are the way they are is often not the most logical:

1. Without naming operators, some can’t scale PDE. I’m pretty sure they want to open it up, assuming the right privacy features were in place but the query volume would kill the network infrastructure. Let’s see what happens as initiatives like GSMA’s OneAPI continues to push forward – this is a solvable problem.

2. Some operators are restricted by their licensors. For example, CDMA operators use Qualcomm’s QPoint to power the PDE and likely have licensing fees based on volume that inhibit their capability to open it up.

3. And of course the biggest problem is that there are a handful of developers (eg Family Locators) who are actually paying 5-10 cents per query. Unfortunately, when somebody is willing to pay, then let them pay even if it inhibits innovation. I guess we’ll have to wait for Google to make it free (somehow)!

In any case, let’s see how this evolves. Carrier-based location lookup can open-up a whole slew of new applications that cannot be achieved effectively today. It moves the problem from getting location to the larger problem of privacy which many others are trying to tackle.

Has the Power Shifted Back to Operators?

Over the past few years, we’ve seen the OEMs (including platforms) take a more and more facing role to end-users. The OEM controls the App Store; the OEM has the direct consumer app billing relationship; the OEM is launching new services that often are in direct conflict with existing services that operators have managed for years; the OEM is dealing with customer service directly (ie call ATT regarding the iPhone and you are directed to Apple customer support) – the list goes on. Ask any developer today where do they go to build and distribute their apps – they go to the OEM for development support, for distribution and most importantly, for their checks!

With that being said, ATT’s and now O2’s recent announcements of moving to metered data plans has created a potential shift-back in control to the operator. In Google’s perfect world (although not admittedly), operators are dumb pipes, building infrastructure to enable voice and data services. Operators focus on their networks, leverage their phone retail distribution channel and deal with billing and customer service as it relates to voice and data. For services, the OEM takes charge – part of a broader concept that in the new world order, OEMs will pay operators a percentage of their services revenue and not vice-versa (a la Blackberry receiving a percentage of operator’s data revenue).

In any case, with operators imposing data tariffs (expected for quite some time), app developers may now need to rely on the operator more than ever. If I have a data hungry app (eg Qik), I want to sell that app with unlimited data. To include features that tell my users to curtail their usage because of data caps is a non-starter. Does this mean smartphone apps could be sold with data packages (eg when you buy Hulu later this summer on your iPhone for $10/month, it includes unlimited data?) – that’s a deal that can only be done with the operator putting them front-and-center again.

This is not a first, premium feature phone apps on operator catalogs have often been zero-rated (made data-charge free) but most feature-phone apps never consumed that much data to begin with. If the next generation services are expected to be data-heavy, it’ll be interesting to see how OEMs and operators deal with special data privileges for certain apps (ie are we returning to the walled garden?)