Half the cars sold in 2017 will have some kind of mobile connection and by 2022 there will be over a billion connected cars on the road, according to data from Analysys Mason. The research firm forecasts connected car data to represent 3.5 per cent of operators’ total mobile data by 2020.
Chris Nicoll, head of Analysys Mason’s Networks and Enterprise Research unit, said operators have a great opportunity with the connected car market – and not just for providing connectivity. “You’ve got location information, which will be absolutely critical. So it’s the connection, it’s the mobility, it’s the data behind the connection, the services, the speed of the mobile broadband connection. All of these are going to come together to add value to a connection to a connected car.”
The services being offered today are relatively basic. “It’s GPS navigation, streaming audio, maybe some video services, but we’re really just at the early stage of determining what the new and innovative services will be for connected cars,” he commented.
Looking to the services of the future, Nicoll said the automobile is a powerful platform that can offer some advanced connected car capabilities, so the opportunities are quite extensive. “It supports advanced antenna technology, making mobile broadband services a natural fit. It’s a multi-user platform with unlimited battery power.”
“There’s telematics we can pull back from the automobile as well so there’s data that can come from – not just to – the platform.”
He said it’s not just streaming video and audio. “There’s driver information, driver improvement, security information, safety information that we can get to the driver about road conditions, about traffic. There’s telematics we can pull back from the automobile as well so there’s data that can come from – not just to – the platform.”
TELUS CTO Ibrahim Gedeon noted that the connected car is not just about M2M, it’s also about connecting people. “It gets interesting when five people in a car are connected to their homes and other cars, and everything moves up the value chain.”
Looking to 5G
Many operators are starting to feel pressure on their networks with the rapid rise of M2M, which is making low latency more important. Applications like autonomous vehicles certainly have more stringent requirements than current 4G networks can provide.
Huawei is forecasting 30 billion connections by 2020, with people-to-people connections making up just eight billion of those. The company estimates 16 billion people-to-machine connections and six billion connections between things.
To be able to handle those numbers, Ryan Ding, Huawei’s president of products and solutions, said end-to-end latency needs to drop from the current level of about 40ms to 10ms and peak speeds need to hit 1Gb/s.
Verizon Telematics CTO Chuck Link said recently that almost every car manufacturer he deals with has jumped to LTE, but warns that future-proofing the nascent connected car market will need 5G connectivity modules that can easily replace old 4G connections.
Generating revenue
During a panel discussion at Huawei’s recent Global Mobile Broadband Forum in Shanghai, attendees took part in a real-time poll, with a panel of experts commenting on the survey results.
More than half of those responding to the survey thought the best way for wireless operators to make money in connected cars is to open their network capabilities to third parties through open APIs. About 12 per cent see operators as pure connectivity providers. Nine per cent said they should supply data centres and cloud infrastructure to other partners and another 9 per cent believe operators should be the ones collecting, analysing and selling big data analytics. Sixteen per cent weren’t sure.
Lars Stegelmann, global head of commercial at FIA Formula E, said it’s a huge market and there are plenty of opportunities, and the fastest player will be the winner.
Asked what would have the most impact on mobile operators, 62 per cent of audience respondents said the need for continuous coverage would put pressure on them to speed up their LTE deployments. Another 18 per cent believe connected cars would have little impact on their networks. Thirteen per cent said technologies like V2X and 5G are required to meet the automotive requirements of the future, while 7 per cent said new frequency bands or more spectrum will be needed.
“We’re looking at 4G in China next year and it will enable us to work on big data.”
Vincent Rumeau, connected cars program manager at PSA Peugeot Citroen China, said coverage is key as it relies a lot on the continuity of service. “It’s the enabler we are looking for. We’re looking at 4G in China next year and it will enable us to work on big data.”
Frederic Oltra, VP of wireless marketing at Huawei, noted that it’s not just about network coverage, but about providing a service continuity guarantee and a lot of operators aren’t able to do that. “This needs to be a key pillar to their strategies in the future.”
Taming the complexity
The most likely barriers to the connected car business taking off are interoperability between devices and the vehicle (32 per cent), fragmentation of standards (28 per cent), lack of sufficient network coverage (20 per cent), the expense of the service (10 per cent) and data plan pricing (9 per cent).
While the market offers a great opportunity, Analysys Mason’s Nicoll said it’s also extremely complex. There are many parts involved in the ecosystem — the automobile maker, the mobile operator, the middleware component and a software app component. And there is also the smartphone that consumers want to plug in for personalisation.
He noted a car has a very different upgrade cycle than we’re used to seeing in telecoms. “People don’t replace their cars every one or two years, but the technology moves fairly quickly. With LTE Advanced with carrier aggregation, the speed is going to go from megabit to tens of megabits to hundreds of megabits in three or four years. People are going to have their cars for much longer, so one of the big challenges is not just maintaining the ecosystem, but how do you keep up with technology as well.”
“People are going to have their cars for much longer, so one of the big challenges is not just maintaining the ecosystem, but how do you keep up with technology as well.”
More than three-quarters of respondents said a combination of embedded and tethered/smartphone-based connectivity would be most important. Just over 10 per cent thought embedded-only is the way forwards and 12 per cent supported tethered/smartphone-based connectivity.
Peugeot’s Rumeau said he agrees embedded and tethered connectivity will be the key technologies moving forward. “With embedded, as an OEM we’ll be able to offer all the necessary safety features. And with smartphone integration, we can let the user enjoy all the features he uses outside the car.”
When it comes to payment, 43 per cent of those polled believe the cost will be added to a customer’s current data plan. A fifth of the audience wants to see free basic service offered with in-car advertising. And almost a fifth think the preferred method will be a monthly payment and 18 per cent want an upfront payment with the purchase of the car.
Nicoll said one of the risks is for the customer to end up with too many plans, so it’s no surprise most people want it bundled into an existing plan.
More cars in China
Rumeau said the connected car market in China is starting to take off, and with all the digital native customers in the country, the company has high expectations for business to move faster and faster.
It currently relies on 3G but is looking at moving to 4G and is in talks with the mobile operators.
Rumeau said 4G will help it increase take-up of connected cars. In the premium range, he said, the take-up rate is quite good, but it struggles in the lower level and middle entry-level.
“We expect the cost of data will decrease with 4G and expect to have more and more connected cars. The more cars on the streets, the more features we can provide.”
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