More drivers in China will use mobile location-based (LBS) services, which mobile phone operators provide to inform users of their current geographic positions when driving, according to a recent research report.

Shanghai-based iResearch released its findings that the LBS market in China will grow more than 150 per cent in the next three years.

The robust growth is attributed to aggressiveness of cellular operators like China Mobile and China Unicom, as mobile phone industry revenues shift from voice-only services to new additions and alternatives.

Last year, the mobile LBS market grew by 80 per cent year-on-year to reach 221 million yuan (US$27.6 million), the research firm said in its report. The LBS market in China is expected to grow 159 per cent this year and 186 per cent in 2007 year-on-year.

In 2008, experts predict the market will grow 220 per cent to hit 5.25 billion yuan (US$656 million).

"The LBS is still at the initial stage of development in terms of market value and subscription base, yet this market promises great potential for mobile operators," the iResearch report said.

Currently, most of the LBS offerings in China are based on SMS (short messaging service), allowing drivers to text questions to an operator.

In the coming years, however, voices and videos will increasingly guide LBS subscribers, said iResearch.

Increasing popularity of mobile value-added services such as MMS (multimedia messaging service) and WAP (wireless application protocol) is already making LBS more attractive to Chinese consumers.

The Olympics, which demands intelligent communications, looks likely to spur the market growth in China.

In addition, the much-anticipated rollout of 3G (third generation) mobile services, which offers higher data downloading speed, will help improve LBS subscribers' mobile experience.

In fact, LBS service will be one of the most competitive offerings when operators launch the 3G services, said iResearch.

China Mobile and China Unicom, seeing LBS as an important emerging revenue stream, have been rapidly expanding the service.

Last December, China Unicom launched mobile LBS in 114 cities in China, said Zhai Yibing, deputy general manager of the mobile value-added service unit of China Unicom.

China Unicom offers more accurate network positioning compared to China Mobile as its CDMA 1X network offers higher speed than China Mobile's GPRS network.

"We are planning to cover 195 cities by the end of the first quarter of this year," Zhai said, who wants to expand that number to 300 cities soon.

The deputy general manager expects the voice-based LBS service will become in high demand with the introduction of user-friendly handsets supporting such functions.

Only Samsung and LG currently provide mobile phones enabled with voice-based LBS. Following close behind, domestic handset makers TCL and Hisense will soon launch such phones, said Zhai.

Insiders said Unicom is considering cutting the LBS subscription fees to woo more consumers and grab an upper hand in the competition with China Mobile.

LBS users now pay 18 yuan (US$2.25) per month to Unicom for the service.

Beijing-based research house Analysys International said Unicom's LBS is still focusing on high-end mobile phone users, which could thwart the uptake of the service.

A cut of the subscription fee will help expand the subscription base and build Unicom's brand in the mobile LBS market, Analysys said.

Editor: Yan