Why is there a fee for location-based services? Ask the Editors

Q: What's the difference between portable navigation devices (PNDs) and smartphones with built-in GPS? Why do we have to pay for GPS service on smartphones, even they have built-in GPS antennas, whereas for in-car GPS, we don't need to pay a monthly subscription? Is there a smartphone which will also function as a PND that will avoid paying monthly subscription to mobile companies? --Wize Chap via e-mail

A: Wize Chap, I completely understand your confusion. On the surface, PNDs and GPS-enabled smartphones seem to offer the same services and navigation tools--maps, points of interest, turn-by-turn directions--so why in the world would you pay an extra subscription fee just to get GPS capabilities on a mobile phone when you can get it all for one price on a PND? Well, there are several reasons.

(Credit: AT&T)

With GPS-enabled smartphones and cell phones, you're not paying for the use of the GPS antenna. You're paying for the connectivity and dynamic content provided by location-based service (LBS) providers like TeleNav and Network in Motion. This content includes real-time traffic, local business listings, and current gas prices, and the information provided on your smartphone will always be current since you have that constant connectivity. On the other hand, with an in-car GPS, you get whatever is preloaded on the device at the time of purchase. The map data and points-of-interest database may be current at the time of purchase, but eventually, they will become outdated and you will have to pay for any map updates. Also, if you want any real-time traffic information on a PND, there usually is a monthly or yearly subscription fee.

To get more clarification, I talked to MaryBeth Lowell, communications manager for TeleNav, who explained it this way, "With a PND, you pay for the device and what resides on the device when you buy it. If you want any upgrades, you have to pay for it, otherwise you have a device with a shelf life since you won't get map or business-listing upgrades--not to mention content like traffic. With phone-based nav, you get the benefit of the wireless connection, because it's inherent in the phone. But just like a connected PND, you need to pay a subscription to get the real-time content." Lowell also added that the reason for subscription fees is to pay the partners who provide and update the real-time data, noting that carriers are also part of the revenue chain.

Hope that helps, Wize Chap!