While Deshpande was willing to talk about the service broadly, he was not willing to detail exactly how it will work, other than to say it was possible through the help of a number of partners. But after visiting the web site for the service, it’s clear that AT&T is the one providing the magic behind the curtain (although there could be other partners, too). While Apple mostly owns the user-experience on the iPhone, this demonstrates that the carrier still has some control and AT&T is willing to leverage it. According to the web site, a person’s location is based on the nearest cell tower, and the accuracy could range between a few hundred yards to a few miles. The location will be updated every one to two hours, and users will pay for the it via their AT&T bill.

Deshpande is clear in saying that while the location is updated without any help from the user, the app is still not running in the background. “We don’t have any info about that specifically. This is a different, and something we’ve worked with a number of companies to provide.”

One of the benefits to the service is that users will also be alerted via text message or email that a friend is in their close proximity, once again, making the use of the application a more engaging. That’s key. While Loopt got out ahead of many other location-based social networks on the phone, and is on about 100 phones and works with several carriers, there’s no shortage of competition. More traditional social networks, like Twitter and Facebook, are constantly adding location services, and there’s other mobile-focused apps, like Foursquare.