To protect privacy, GPS tracking for traffic purposes is theoretically turned off by default, and needs to be turned on by the user. However, many privacy advocates are still worried that the app can be used to hack, track and stalk and unknowing victim. People would have to remember to turn it on and off when appropriate, lest they (in the words of one critic) create a non-existent traffic jam in their roadside office.
If the app does indeed work only when the user wants it to work, then there's another inherent problem: enough people need to enable this so that a relevant amount of data can come in and be analyzed. Whether any particular phone company can gather enough of a sample size for accurate traffic reporting is a steep question.
Such plans also require a considerable amount of bandwidth, so affordable unlimited data plans must be available for this to work. It would also suck up battery life with the constant streaming of data. There is also a potential danger of drivers be so distracted with checking up on the real time data while in the car that they might get themselves into an accident.