As location based services become more popular through the expansion of carrier platforms and the continued development of applications, protecting a users privacy will become a focal point. I suspect that many organizations will try to be a voice for the consumer and seek to establish their own agenda.
In a story by Brian Heater the July 2006 LAPTOP magazine, Kevin Bankston of the Electronic Frontier Foundation, opined that "Location data can be sold to data warehouses, and other people can purchase logs of where you go". While technically possible, I think that this is unlikely. Wireless carriers have much more to gain from the constructive use of location information by an end user, than from packaging up someones bread crumb trails and selling it to a marketer. As a marketer, I can think of a few ways that this data can be used. For example, if I can determine based on your commuting routes that you pass by a Shell gas station on the way to work, and a Texaco on the way home, I might want to send an SMS to you in the afternoon to encourage you to stop at Texaco to fill 'er up.
Alarmists might also point to the Albert Belle story Albert Belle arrested for using GPS to track ex-girlfriend. It should be pointed out that he did not use a cell phone, rather a stand alone GPS device.
The important thing to understand in the use of mobile LBS application is that the user is (an always should be) in control of the data. For example, on a Sprint iDEN (read: Nextel) device, when invoked an application will ask the user for permission to capture their location. A user can select one of three options, 1. Yes, for this session, 2. Always, for this application, 3. Never. The user has to grant the application the right to determine their location. If denied, the application will not work, and the users location will not be determined.
Application developers can and will capture the location info to be used for that application while there is an active session. Once the user terminates the application, the location fixes will stop. Depending on the type of application, the developer will have limited data on the location of the user. It will not be "tracking" the user all day. In my opinion, the data may be more valuable in aggregate to GPS OEMs, or if the application delivers POIs, the search requests may be more valuable.
If wireless carriers are going to harness more value from the use of GPS on devices, they must make sure that user data is secure. I have not read the CPNI laws, but I would imagine that user GPS data falls under CPNI.
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