• December 31, 2010
  • By Ian Jacobs, vice president and research director, Forrester Research

Location’s Not Really Where It’s At

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First, a disclaimer: I’m not a mayor, don’t awe friends with my radical travel plans via TripIt, and have never checked in to a place on Facebook. I also have no plans to tell Macy’s or Best Buy when I walk into their stores to score kickbucks using the newly launched Shopkick service. But that’s just me—millions of consumers have taken a shine to location-based services.

Most of those services, though, only provide information triggered by a specific customer request or allow novel marketing approaches, often incorporating a form of pseudo-play into the application flow. But successful marketing creates a need for customer support.

Application developers and communications vendors have set their sights on expanding location-driven applications into customer interactions. This prospective breed of technology tries to enhance customer interactions by weaving location data into the workflow and decision-making processes. Location then becomes integral to the customer interaction.

Here’s an example, theoretical but in the works: an airline-specific mobile concierge. An airline creates a value-added service for its elite travelers. An opt-in loyalty program would identify a high-value customer’s location, drawn from his wireless carrier, and combine that with historical customer records and external data sources. Using algorithms to anticipate that customer’s needs, the application creates, schedules, and routes appropriate and meaningful interactions with that customer.

Dozens of vertical-specific ideas are cropping up for ways to incorporate location into customer-interaction applications. But for those ideas to gain traction, customers must trust their carriers and application providers. And those providers will need to win that trust—privacy and security proponents will raise concerns about the fundamental safety of these systems. There will be both horizontal concerns (carriers revealing customer locations to third parties) and vertical-specific ones (such as HIPAA regulations in healthcare).

Applications using location data also raise broad red flags around the collection of private information. [Editors’ Note: See this month’s cover story, "Eye on the Customer," for more on privacy and the use of customer data.] In an essay titled “The Death of Privacy?” in the Stanford Law Review, Michael Froomkin, a professor at the University of Miami School of Law concerned with privacy and security issues, detailed concerns about tracking the location of mobile phone users and the longevity of that data. “The privacy-destroying consequences of cell-phone tracking increase dramatically when movement is archived,” he wrote. “It is one thing to allow police to use the data to track a fugitive in real time. It is another thing to archive the data, perhaps even in perpetuity, in case police or others wish to reconstruct someone’s movements. In 1997, a Swiss newspaper revealed a local phone company kept information regarding the movement of 1 million subscribers, accurate to within a few hundred meters, and that the data was stored for more than six months. Swiss police described the data as a treasure trove.”

Froomkin argues that, legally or not, police and government agencies could access the stored location information and trace an individual’s movements back many months. The civil liberty issues may not yet trouble many potential users of location-based applications. If, however, a high-profile case cropped up in which location data were used as part of a questionable law-enforcement action, opinion could quickly change.

Any missteps around privacy could derail adoption of these technologies, so developers should ensure that all such applications have an explicit opt-in granting permission to use current location information. The opt-in should be separate from the application’s general terms and conditions. The user should be asked to accept the application license and then, as a distinct action, be asked to grant the application access to location information.

As a way to partially assuage the civil liberties fears, user agreements should make clear that location information is not archived. What’s important is a user’s location at a given moment, not three weeks earlier.

Ian Jacobs (ian.jacobs@ovum.com) is a senior analyst at Ovum. He can be reached on Twitter as @iangjacobs.

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