Location-based services are a long way from reaching their potential. Applications we've seen from the likes of Google (think MyLocation) and other GPS-based developers are just scratching the surface. In order to uncover more of LBS's functionality, Google has given third-party developers access to its location server to power LBS apps of their own.Google made this announcement late in the day Friday, and it is fairly significant. Having access to location information is half the battle in creating and making use of GPS and enabling applications with the knowledge of a user's whereabouts.

It explains how the technology works in its Official Mobile Blog:

Wireless phones can make and receive calls because they are connected over the air to a nearby cell tower. The phone knows the ID of the cell tower that it's currently using. If the phone has GPS, the Maps application on the phone sends the GPS coordinates along with the cell ID to the Google location server. Over millions of such updates, across multiple phones, carriers, and times, the server clusters the GPS updates corresponding to a particular cell ID to find their rough center. So when a phone without GPS needs its own location, the application on the phone queries the Google location server with the cell tower ID to translate that into a geographic location, i.e., lat/long coordinates.

Keep in mind, though, that Google's MyLocation feature, which uses this technology, is far from perfect in phones with no built-in GPS. Out in the 'burbs, you're lucky to get it to peg you within a mile of your actual location. The best I've seen it do is two blocks away in a city environment, where the density of towers and available location information is higher. GPS, conversely, provides nearly exact location information to a satellite.

Still, even having basic location information is better than having no location information at all. Google said that its Gears product for Windows Mobile and Android already has location technology built in, and that it expects an "explosion of mobile applications that use location technology" in the coming months. I don't disagree. Location-based services are a big part of mobile's future.