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This paper discusses the combination of a nifty pseudonym generation mechanism that is used to veil the real world identity of users with semantic user context descriptions and policy reasoning to express decisions of users and thus protects their sensitive location information. The expected development of a new class of mobile applications is further fostered by the underlying service architecture that makes use of the privacy protection means and allows the implementation of the highly postulated pay-as-you-go model. Means for privacy protection are not only an ultimate requirement for the development of successful location-based services and applications. It further means an incentive for network service operators to enrich location-based services by making available their localization capabilities to at the same time to open new sources of revenue.