It's a great idea and it's one that I've had too. The hardest problem you have is pricing -- making it all inexpensive enough for it to be worth it for you and your target market. Is this a subscription / is this a one-time purchase / is this pay-per-use?
Price too high, and only high-end bikes will have it. And high-end bikes have smart thieves / are already stored safely, etc.
Otherwise, I can see how this would work. GPS, batteries, low-power design, goes inside your frame and is visually undetectable, M2M deal with jasper wireless (or sprint or whatever), etc. It'll take a while to make it reliable and have a great user experience, but its totally possible.