Heavy Reading Research

Proximity-Based Services May Be Closer Than You Think

Long Term Evolution (LTE) networks are already transforming industries around the world, simply by making mobile services available at higher speeds and across wider areas. Availability of fast mobile data has enabled a vast global wave of innovation, and that wave of innovation is set to grow stronger as LTE becomes more prevalent and as standards evolve, opening up new features and networking techniques to operators.

The latest (frozen) release of the 3GPP standards (Rel-12) includes definitions for a new service feature known as LTE Device-to-Device (LTE D2D). This is in its first iteration, with further developments set to follow in releases 13 and beyond. However, what is already available has the potential to transform the provision of local services and to open up new revenue streams for mobile network operators, and app providers.

LTE D2D encompasses the discovery of other devices within a few hundred meters, and enables direct communications between those devices (as opposed to transmission of communications via the mobile network). The aspect generating most initial excitement is the ability for one device to detect other devices within its proximity, and to use that knowledge of proximity as the basis for a range of new services. This capability can enable operators (and with operators' permission, third parties) to develop a range of new applications that could include advertising, gaming, local information and tourist services, new types of social networking and even peer-to-peer trading.

Location-based services have been available for a while now. But the lack of a single global standard or approach, device and power limitations, competitive inertia, privacy concerns and accuracy challenges, mean these have been a bit slower to grow than many industry pundits would have expected. That is not to say we expect we'll see vast revenue streams from LTE D2D proximity services straight away -- there is a heap of development to do first: Chipsets need to be made available and included in devices, which need to be bought by end users; operators need to work through the business models; applications need to be developed and tested.

Ideally, operators and regulators need to agree to allocate set frequency bands (or parts of bands) so that services can be delivered on a global basis for roaming users (or at the very least across networks within a single country). These things need to be achieved before rivals come up with other technological approaches that are good enough, and capture enough market share to make major investment unattractive.

However, the prospects do look good as LTE D2D offers something really quite different and interest has been piqued. Looking at one business application (and there are numerous), for the US market alone, we can see significant revenue potential for network operators.

The latest Heavy Reading 4G/LTE Insider, "LTE Device-to-Device: A Rare Chance for Revenue Growth,” looks at the current state of development of LTE D2D, summarizing the progress of standardization and highlighting noteworthy trials. It offers a timeline to potential service introductions, reviewing the hurdles that must be overcome before services can effectively be introduced. It goes on to show -- by analyzing just one potential case of LTE D2D, proximity-based advertising -- that this concept offers a great opportunity for operators seeking to grow revenues. It also includes forecasts for the proximity-based marketing business in the US, with detailed discussion of the underpinning assumptions.

— Simon Sherrington, Analyst, Heavy Reading 4G/LTE Insider

This report, "LTE Device-to-Device: A Rare Chance for Revenue Growth," is available as part of an annual subscription (6 issues per year) to Heavy Reading 4G/LTE Insider, priced at $1,499. Individual reports are available for $595. To subscribe, please visit: www.heavyreading.com/4glte.

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