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Mozilla Drops Axe on its Privacy-Friendly Location Service
(www.omgubuntu.co.uk)
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This should be pretty much impossible to replace short-term without resorting to Google. Building a database that maps routers, cell towers and more to coordinates from scratch takes a lot of time I imagine.
I would say that it's not hard to replace. I mean, all you need is an app that regularly dumps GPS data and a list of signal strengths from radios that broadcast unique IDs to start building out a database.
What's hard is doing one that is as complete and accurate as Google's, because Google is hoovering up data from most cell phones about the location of a lot of devices.
You are glossing over a lot of infrastructure and development, when boiled down to the basics you are right. So it is basically a question of getting enough users to have that app installed. Which is not impossible given that we do have initiatives like OpenStreetMap.