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Well I can imagine how it could work, by triangulating your position based on signal strength from multiple WiFi APs. That would however require multiple access points and knowing where they are. I suppose over time, if you know where you are, based on the GPS, and see APs, you could geolocate the APs with enough accuracy to then use their calculated position to extrapolate yours, when you are out of GPS coverage.
Seems pretty optimistic to me. I note they are also working on something that uses GSM/GPRS phones to gelocate. That actually makes a little more sense. I at least think you can get locations of cell towers from somewhere, which isn't typically true of random WiFi APs.
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