In-Car Connectivity: The Next Frontier For Wireless Carriers
In-Car Connectivity: The Next Frontier For Wireless Carriers.
With growing saturation in the wireless and smartphone market, automobiles provide the next big opportunity for wireless carriers to grow their revenue streams
A J.D. Power U.S. Automotive Emerging Technologies study has revealed that most consumers look for wireless connectivity options before buying their next car. A multitude of car manufacturers are offering in-car connectivity, turning vehicles into broadband hotspots, with features like hands-free calling, and access to internet radio and social media websites.
According to Mike Van Nieuwkuyk, Executive Director of global automotive at J.D. Power: “Smartphone ownership has increased to 70% in 2014, and consumers want the same connectivity in their vehicles as they are used to getting from their smartphones and tablets”.
The key player in the in-car connectivity market is AT&T Inc. (T), which has partnered with major automakers like General Motors Company (GM), Volkswagen AG’s (ADR) (VLKAY) Audi, and Tesla Motors (TSLA) to develop in-car connectivity. Although AT&T provides the service for all kinds of cars, prices differ from manufacturer to manufacturer.
GM’s Chevrolet Malibu will be the first LTE-equipped car from the company. Similar to adding a smartphone or tablet for an additional $10 per month, GM car owners can add their vehicle to AT&T’s Mobile Share Value data plan. The company has also introduced ‘standalone data packages’ for GM, which range from $5-50 and give users access to 200MB to 3GB of data per month.
The company recently revealed that its upcoming models will include a “built-in hotspot, capable of connecting to the high speed 4G LTE network”, and will be able to connect to seven devices. The feature will be optional in more than 30 GM models. Additionally, GM will offer its OnStar subscription service to owners of ‘Chevrolet, Cadillac, Buick and GMC models’ absolutely free for five years.
Audi, which previously partnered with T-Mobile US (TMUS), provides ‘in-car LTE service’ packages that span six months and start at $99, for 5GB of data. As part of a trial package, Audi’s new-generation A3 sedan will offer free LTE data usage for a period of six months.
However, the US electric car manufacturer, Tesla, provides free in-car connectivity. The company entered a multi-year agreement with AT&T, to provide ‘remote engine diagnostics, telematics, and infotainment features’ with its ‘in-car-17-inch touchscreen’.
AT&T has entered a multi-year agreement with Volvo, and apart from general in-car connectivity services, it will provide on-call services in 2015 Volvo models.
Other wireless carriers that provide in-car connectivity include Sprint Corporation (S) and Verizon Communication (VZ). Sprint has partnered with Chrysler, and Verizon has partnered with Hyundai Motor America (HYMLF). The importance of in-car connectivity has increased, with Google Inc. (GOOG) and Apple Inc. (AAPL) offering ‘car versions of their mobile phone software.’ Apple’s CarPlay allows users to connect their iPhone 5 to their car, and drastically improve in-car entertainment systems. Google has entered the market as well, with its Open Automotive Alliance.
Meanwhile, Microsoft Corporation (MSFT) has its Windows Embedded Automotive system. In May, Nokia, which is now owned by Microsoft, also invested $100 million in in-car connectivity. With the advent of ‘Internet of Things’, users seek connectivity no matter where they are.