In-vehicle connectivity was initially a differentiator for auto brands, with those getting in early reaping the rewards of an early mover advantage. However, the competition soon caught up as connectivity shifted from being a ‘bonus’ to a ‘must-have’.
In-vehicle Wi-Fi appears to be the next stomping ground, a trend that is being facilitated by mobile network providers and the rise of the ‘eSIM’, an embedded chip that need not be removed from the device in question like a traditional SIM card. General Motors has offered 4G Wi-Fi subscriptions through its OnStar service for a few years now, with Ford’s Sync platform providing a similar service.
It may seem a frivolous endeavour, as most smartphone packages now come with a significant chunk of data included in the monthly fee. However, reports have shown that consumers across the board are far more inclined to use Wi-Fi data than cellular data – between 2.3 and 4.1 times more GB of data on average according to an August 2018 report from Strategy Analytics. The appeal also extends far beyond simply streaming music or making phone calls. A Wi-Fi hotspot within the vehicle would benefit all passengers, not just the driver.
Today, some in-car hotspots allow more than ten different devices to connect, an attractive proposition to families. Consider also the vision of shared vehicles, where groups of data hungry riders want to avoid a dip in connectivity. Then there are improvements to the vehicle’s embedded navigation services and other apps within the infotainment system. In-vehicle internet browsing could become as seamless as any other connected device, too.
Terra incognita
For those in the automotive industry, the mobile network space can be a confusing collection of acronyms and relationships.
A mobile virtual network enabler (MVNE) should not be confused with a mobile virtual network operator (MVNO), for example, nor a mobile network operator (MNO). MNOs such as AT&T, T-Mobile or Verizon, for example, provide the underlying mobile networks, whilst MVNOs are the next tier down the chain and do not run their own infrastructure. MVNEs – the ‘enablers’ – offer business infrastructure solutions required by MVNOs such as billing, operations support and back-end services.
Automakers manufacture a device – the car – and being a service provider is not in their DNA
Paris-based MVNE Transatel is pushing to become a major facilitator for automotive connectivity, and recently landed contracts with the likes of Fiat Chrysler Automobiles (FCA) and Jaguar Land Rover (JLR). As the largest MVNE in Europe, Transatel has focussed primarily on consumer devices such as smartphones and laptops, but the vehicle is becoming a firm target.
As well as launching a telematics system for all FCA cars across the European Union, the company will provide a global cellular connectivity solution to Jaguar and Land Rover cars in Germany, Italy and the UK. This will enable internet browsing and navigation services from the vehicle console, as well as on-board Wi-Fi. As the MVNE, Transatel will provide and manage the service, handle customer and retailer relations and support, and oversee the payment process for data bundles.
Vehicles will come with three years of connectivity, with 500 megabytes per month financed by JLR initially. Much like a smartphone data plan, users can top up and buy additional data from Transatel if the monthly allowance is hit early. At the end of the three years, the consumer can then decide to renew the subscription and pay a monthly fee. It is an interesting dynamic for the automotive industry, which continues to find new sources of revenue once a vehicle has been sold; buying a new car is far from a one-off payment today.
From automaker to mobile operator
Transatel is a relatively unknown player in the automotive space, and it is interesting that the majority of automakers are not forming close partnerships with primary mobile network operators. But as Jacques Bonifay, Chief Executive of Transatel, tells M:bility, automakers are “moving away from the major operators” in order to achieve independence. “They want control, and do not want to be dependent on mobile operators who would otherwise capture most of the value. OEMs want to manage all those data flows, and thus need control of the car’s network.”
Automakers want control, and do not want to be dependent on mobile operators who would otherwise capture most of the value
This element of control spans a number of areas, one of which is revenue. “As a car manufacturer you only want one SIM card in the car, which is fully optimised and under your control,” he continues. If the OEM owns the data, it can then be sold on. “If an insurance company wants to know how someone drives in order to adapt monthly premiums, you want to be able to monetise this data.”
Just as automakers are voicing plans to become ‘mobility providers’ as opposed to simply ‘vehicle manufacturers,’ Bonifay throws in a third dynamic: “We are convinced that car manufacturers will become mobile operators. When you look at the market of the connected car, you see that there is a big trend in this direction.” He highlights Audi, which is working with Dublin-based Cubic Telecom to offer in-vehicle data plans. Globetouch, another MVNE, is working with General Motors to expand OnStar’s international footprint with a single network. Then there are Transatel’s deals with FCA and JLR.
“It is far more efficient to have your own car network, to develop and integrate it once and then deploy globally with a simple connectivity agreement,” explains Bonifay. This is relatively new territory for the world’s major automakers, but other trends such as leasing and more recently, ride-sharing, have helped with the transition. “Automakers manufacture a device – the car – and being a service provider is not in their DNA. This is changing now as they lease new cars, think about car-sharing and are starting to offer Wi-Fi on board.”
Don’t get stung
But as with most forms of connectivity, Wi-Fi can also be brought in as a third party device by the consumer. Off-the-shelf devices can be plugged into the 12-volt socket inside a car to instantly create an internet hot-spot. Data packages can be purchased directly by the consumer, and there are a raft of options available from well-known players such as EE, O2 and AT&T. Automakers will be hoping to sway consumers against these Wi-Fi ‘dongles’ and instead toward an embedded solution in order to tap recurring sources of revenue. However according to experts, the cost to end consumers could be surprisingly steep regardless of the provider.
Derek Viita, Senior Analyst at Strategy Analytics, observes that many consumers are unaware of the data limits or overall cost of in-vehicle Wi-Fi. “When consumers generally hear ‘Wi-Fi’ or ‘Wi-Fi hotspot’ they envision either public or home Wi-Fi without data limits,” he says. “Unfortunately, within the car this is not the case.”
Ten years ago you had no idea of the number of applications you would have on a smartphone. Today you have no idea of the number of applications that will be available within the car in a couple of years
Chris Schreiner, Director of In-Vehicle User Experience (IVX) at Strategy Analytics, shares similar concerns. “Data limits on in-vehicle Wi-Fi would not support consistent usage of streaming video, as only a few hours of usage per month would use up all allotted data,” he says.
Transatel will cap its data plan with JLR vehicles at 500 megabytes per month during the initial three-year contract, but Bonifay suggests this may be extended. “The global trend is that data usage is going to increase, and if you don’t stream video, it’s enough… If you do start to use the connectivity for video, then it’s probably not enough.”
Looking ahead, Bonifay estimates that by 2019 most high-end vehicles globally will be equipped with on-board Wi-Fi, with the rest of the fleet in major markets following suit by 2021. “Ten years ago you had no idea of the number of applications you would have on a smartphone. Today you have no idea of the number of applications that will be available within the car in a couple of years.”
