Companies like Intel Corp. have experimented with using Wi-Fi hotspots in known locations to fill gaps in GPS. Some GPS devices incorporate motion sensors that estimate the user's location based on movement after the GPS signal is lost.

"There's a lot of activity, a lot of companies, and of course a lot of venture capital which is being made available for those kinds of initiatives," Bonte said. "There is a big belief that whoever comes up with something that's cheap, that works and is available will hit the jackpot there."

To gain a foothold, S5 will give away the designs for its chips, letting anyone make their own or incorporate the functions into existing chips, like those in cell phones. It plans to make money by charging for the location service, though at low rates, around $1 a month, Carter said.

S5's technology isn't ideal for navigation devices, since the chip doesn't know where it is. It couldn't, on its own, plot its position on a map the way a car navigation system does. Instead, it is S5's data center that knows where the chip is.

If you're tracking a dog — or a villain — that's not an issue. The dog doesn't need to know its location, but the S5 network can tell you via Web browser or cell phone where it is.

Apart from pets and kids, Carter envisions the system being used to track valuable equipment on construction sites and in hospitals, much the way LoJack protects cars.

If you don't trust FedEx and UPS to track your package, you could slip a tracking device into it before you ship it, and you'll know where it is.

The company has also received grants from the Department of Homeland Security to study the use of its chips in tracking shipping containers. S5 chips could even be built into cell phones to supplement GPS chips where reception is weak, like indoors.

As a bonus, S5 chips could transmit small amounts of data generated by other devices. For instance, a diabetes patient's glucose meter could be monitored remotely.

S5 plans to piggyback on existing cell-phone towers and antennas in building out its network, though officials would not say how much they expect the build-out to cost. To pinpoint a chip's location, S5 needs three receivers within the signal's range, about a mile in cities, Carter said. The company plans to cover "several" major cities next year and 35 cities within three years.

That's a tall order, but the venture's main backer lends it credibility. Billionaire Craig McCaw, who founded one of the country's first cell-phone companies, is S5's majority investor. He also backs wireless broadband provider Clearwire Corp.

S5 hasn't announced any build-out partners yet.

Remarkably, S5 plans to use free, unlicensed spectrum in the 900 megahertz band, which is already crowded by cordless phones. Steve Chacko, S5's director of product marketing, likened the feat of picking up those signals from miles away to extracting a needle from a haystack. But he said sophisticated low-power radio technology makes S5's plan viable. Its transmissions won't interfere noticeably with other devices using the spectrum, he said.