By Adam Jackon

Many services here in the US that were once expensive are now progressively becoming less so. Broadband Internet access seems to be in a race to the bottom, largely thanks for fierce competition between providers. Local and long distance phone service is much more affordable now thanks to competition from VOIP.

Conversely, some services that were once free or cheap are lately becoming more expensive. Television, for instance, used to be either free or very inexpensive for the average American household. Now its probably the largest monthly bill in the household behind the mortgage or rent payment. Admittedly, television has gotten a lot better over the years: more channels, better picture, DVR capabilities. I think the price increase is justified. Celular service, if not increasing in price, seems to be maintaining its premium pricing as time goes by. Sure we can TXT and PIX each other now, but does the service really need to be as expensive as it is?

Before we get into what this cellular provider of the future might look like, let’s establish what sort of technology we’re dealing with in the average American’s cell phone here in 2007.

Phones these days are location-aware. Even if you’re not using or paying for the service, the phone always knows approximately where on the planet it is, provided there is cellular coverage. The accuracy is even good enough to build a driving directions (GPS-like) service into the offering. Blackberry’s and other devices offer this - for an additional usage fee, of course. Cellular location technology is much better than GPS, though, because you don’t have the line-of-sight issue. GPS units must be able to “see” the satellites that give it geographic positioning information. If you try to use one indoors they’re useless. Modern cell phones use the cell towers for this information and thus will work anywhere that the phone work gets a signal.

They may not be doing it now, but cellular service providers are able to easily track where their users are, geographically. We know this because some of them even offer a “track your kid” feature as an add-on service. The location sensors in the phone beam the location of the kid to the cellular provider’s servers, which host a map that the parent can watch to track the location of the child. As long as the child’s phone is on, the location is known. I’m not going to get into the (very real) privacy implications here. Instead I’d like to think about some potential service offerings that could defray cellular operational costs.

1. Tracking the rate at which individual cell phones are traveling on surface streets and freeways is the most accurate possible way to monitor traffic congestion in real-time. In California CalTrans uses our FastPasses and assorted highway sensors to give a general view of freeway traffic speeds, but cell phones would be a much larger and more accurate sample and would transcend past the freeways onto congested surface streets. This data stream could be sold as a subscription service to be integrated with the very phones providing the data or with in-car navigation systems.
2. The social network possibilities here are endless. Have you ever decided where to eat a meal based on how crowded you thought the restaurant would be? What if you could jump online and see for yourself? “Restaurant X has a dining capacity of 120 and there are currently 145 cell phones in the building.” Sounds like there’s a wait - even after you count the staffs’ phones. The best part is that the restaurants and bars wouldn’t have any way of cheating and making their place look more full or empty than it really is.
3. Imagine a new social networking site thats let users create profile pages similar to MySpace and associate them with their cell phone. Users can choose whether or not they want their location to be known and who should be able to see it on a map, live. Maybe you only want your friends and not your coworkers to see it on the weekend. Better idea - maybe you never want your coworkers to see it. It’s similar to twitter or dodgeball but with far less effort and better accuracy. This social network would be much more compelling than existing ones because it dives more deeply into our offline lives. Collecting basic demographic data on cellular subscribers, combined with this rich stream of location data would yield such unique information as:
   • Which bars and restaurants are most popular and which days/times of the week/month. Consumers and competing bars would love to know.
   • What demographic frequents different bars and restaurants. I know some guys that would probably pay to see where all the girls were hanging out each night of the week.
   • Where do the different age groups tend to live? That would help make outdoor advertising more targeted and relevant.
4. I saved the most obvious and most irritating for last: targeted marketing. It doesn’t get much more targeted than this. You walk into a Target and you start receiving coupons for Walmart. You walk into Starbux and a $2.00 off coupon for Peets along with walking directions to the Peets down the block pops up on your phone. Annoying? Maybe. Profitable? Definitely. Maybe customers who don’t want the ads offers pay a slightly higher monthly subscription fee. Perhaps the cellular provider can ask the customer on the web, during signup, which offers he or she wouldn’t mind seeing. The service could, if done right, actually be a feature to some users who value saving money on purchases they’re just about to make.

The data the cellular providers have access to provides an unprecedented view into the offline habits of almost every citizen in the country. There are probably many more business models that could leverage this data that someone smarter than I will think of. The point, however, is that if a smart provider decided to build some new service offerings around these under-utilized assets and then use the new revenue streams to lower the cost of the basic cell phone service (maybe even to $0), they would be unstoppable in stealing market share from their competitors in a what has turned into an increasingly commoditized industry.

— Would you sign up with a cell phone provider if you could get free (or say under $20 / month) cell service if the provider was engaged in the businesses outlined above?