Location-based services: Controversy at every level

Your smartphone can be a beacon telling the world where you are, with increasing precision. Is that good commerce or bad privacy, or maybe a bit of both and what does it mean for IT professionals?

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Jody Stevenson doesn't know she's been using location-based technology -- and doesn't care.

"I've been having a ball for almost a year," says the New Jersey homemaker. She enhances her shopping experiences with a service called Shopkick, which gives her loyalty points (convertible to gift cards and cash) just for walking into a participating store.

Any meaningful retailer has some effort in this space underway. Charles Golvin, retail analyst

Or, rather, an app on her smartphone (if she has remembered to invoke it) decides that it is inside a participating store, and rewards her with loyalty points (called "kicks"); the amount varies by individual store and the promotional policies of that store. She also gets varying points for scanning bar codes of specific merchandise, whether she buys the items or not.

Overall, location-based services use three different levels of accuracy -- vicinity to within a block or two (derived from GPS coordinates), presence (establishing that you are inside a given building or store) and department (pinpointing your location within a given store).

Shopkick makes use of the presence level, primarily; it's also the level that's demonstrating the most commercial success and producing the most fears about Big Brother-style surveillance.

Vicinity

With modern smartphones able to locate themselves using the GPS satellite network, applications that allow multiple users to compare their locations for specific purposes are becoming well established.

Here on Biz, a mobile app, locates nearby business people one might be interested in meeting, based on their social media entries.

"I was in Chicago for a client meeting and was interested in meeting with the people in a large firm located there," recalls Garen Mareno, director of strategic partnerships for a design firm in Los Angeles. So he consulted his Here On Biz app, which locates nearby businesspeople he might be interested in meeting, based on their social media entries.

"When I got there, many people from that firm popped up on my Here On Biz radar. I was able to set up drinks and make that first step. Another time I was in Russia and was able to reach out to colleagues I did not know were there," Mareno recalls.

The main controversy at the vicinity level appears to involve the question of whether to display the results on a map, since doing so would seem to allow, or even promote, stalking.

"We refuse to do mapping; we think it's a security issue," says Nick Smoot, one of the founders of Here On Biz.

Another example of a vicinity service is POS REP (Position Report), intended to let military-service veterans find each other. It displays a map showing nearby veterans by branch of service, but the locations are only approximated until a user "pops a flare" indicating a desire to be found, explains Anthony Allman, co-founder.

Presence

GPS signals typically don't penetrate buildings, so determining presence inside a store requires additional technology. Meanwhile, if the information is shared with other stores, it raises all sorts of questions, notes Evan Schuman, founding editor of the Storefront Backtalk newsletter and a retail technology consultant.

"As you enter a gift store they could know you just left a flower store -- but what if you were a married man buying for another woman?" he suggests, adding that stores are not sharing such data yet.

Shopkick -- the service that Stevenson uses -- bills itself as the most popular location-based service gathering data at the presence level. Since its introduction four years ago, Shopkick has been based on a box that emits a 21,000Hz tone overlaid with a modulation that is different in each store, explains Cyriac Roeding, co-founder and CEO of Shopkick. A free app on the user's smartphone hears the tone, decodes the modulation and decides what store its owner is inside of.

Mobile app Shopkick gives customers loyalty points -- convertible to gift cards and cash -- just for walking into a participating store, among other transactions.

Adults cannot hear tones higher than 16,000 Hz, and so shoppers are unaware of the signal, Roeding says, adding that while dogs -- some of which enter stores as service animals -- can hear the tone, it is not loud enough to bother them.

The company started shipping the product in 2010, and its ultrasound boxes are now emitting pulses in about 10,000 stores in the U.S.; the company claims revenue of $500 million annually.

Roeding says Shopkick users spend 30% to 60% more than other customers when shopping. For her part, Stevenson says her shopping habits have changed "just a little" since adopting Shopkick. "It might bring new products to your attention that you might not have noticed," she says.

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