Impact of Galileo commercial service on location-based service providers: business model analysis and policy implications

Abstract

Today's mobile location-based services (LBSs) largely depend on a free-of-charge, best-effort positioning technology, called global positioning system, which is controlled by the US military. The European alternative Galileo will not only offer a similar best-effort system by 2020, but also a premium-rate service known as Galileo commercial service (CS). Galileo CS is planned to provide higher positioning accuracy, improved security due to signal authentication and service guarantee. While the technology behind Galileo is often studied, the impact of Galileo CS on the LBS marketplace is rarely discussed. In this article, we fill this gap by analysing how improved accuracy, authentication and service guarantee may impact the business models of LBS providers. We do so by interviewing service providers, policy makers and industry experts on what new services would be enabled; technological alternatives that may emerge in the coming years; and organisational and financial issues that service providers face when adopting such a premium-priced positioning signal. We find that a more accurate, secure and reliable global navigation satellite system signal enables a range of new LBSs, although several alternative technologies are emerging that may make Galileo CS obsolete before it is even launched. To convince the LBS providers to adopt Galileo CS, the institution operating Galileo should get governments on board early on for building trust and should consider progressive pricing schemes. Still, service providers are sceptical about adopting Galileo CS, and the hope to recoup any investments in Galileo may thus be in vain.