Telecom, media industries see opportunities in connected cars

While mobile devices have allowed Canadians to stay connected to the Internet when they’re on the go, the coming emergence of Internet-connected vehicles will soon allow their cars to do the same. This means cars, trucks, vans and SUVs could, in the near future, be letting their drivers know when they need to be taken to a mechanic, while also providing the driver access to dashboard apps like music streaming and online maps, and allowing passengers to catch up on TV shows they missed. It’s technology that appeals to not only consumers who don’t want to be cut off from the Internet even while behind the wheel, but also to telecommunications and media companies who are figuring out ways to get into the connected-vehicle market. “We see it as a pretty material opportunity,” said Mansell Nelson, vice-president of machine-to-machine at Rogers Communications Inc., which announced last September it had reached a deal with U.S. wireless provider Sprint Corp. to bring Internet-connected cars to Canada. Connected cars are “a great extension of what we do for Internet and TV with our customers today, so it’s pretty logical for us,” Mansell added. He said three types of services will eventually be available in connected automobiles: telematics, meaning the monitoring and communicating of the health of the car; voice-oriented services that can respond to questions and include safety features; and infotainment services. Future car-specific apps could include features like a notification that your windshield wipers need to be replaced, he said. “This isn’t just about taking an application that’s on my iPhone today and just making it work in the car,” Mansell said — instead, it’s about modifying the app to provide a vehicle-specific experience. For companies like Rogers, he added, the opportunity in connected cars goes beyond selling connectivity through its wireless network. “How do we take our media-related assets and start leveraging them to work with some of these ?” he said, adding that Rogers is holding meetings to assess “how do we translate traditional media into an automotive experience.” This could include, for example, an app that provides weather information from one of Rogers’ news stations and also takes into account whether the windshield wipers are on. “Those are the kinds of things that are still in the very early stage of figuring out,” Mansell said, “so it’s exciting having these discussions.” Nauby Jacob, vice-president of products, services and content at BCE Inc.’s Bell Mobility subsidiary, also said connected vehicles offer his company opportunities for both its wireless network and media assets. For instance, the company is working on making its Bell Mobile TV available to vehicle passengers, he said. Mansell said Rogers could eventually allow customers to add a vehicle as one of the devices on their wireless plan, and Bell’s Jacob said that in the future, there will likely be a “combination” of that approach, and having the data used by the vehicle paid for by the manufacturer and included as part of the price of the car. “I think, from what we’ve seen, different manufacturers are taking different approaches. Some manufacturers have taken the approach whereby they will do the partnership directly with the carrier, and some manufacturers are taking the approach where they make the capability available and leave it to the consumer to make that relationship with the carrier,” he said. He added that in some cases, manufacturers prefer to connect the cars themselves, for reasons like security, automated readings and being able to better understand the operations of the car. However, when it comes to additional services like television, “that will certainly be where the consumers will probably have the relationship with the carrier of their choice,” Jacob said. Mansell noted there are about 1.5 million new-vehicle sales in Canada every year. “In the next few years, as most of the manufacturers in most of the models start to deploy, those become some pretty big numbers,” he said. Thilo Koslowski, a California-based automotive technology analyst at Gartner Inc., said opportunities for telecoms in the connected-cars field are “huge.” “Because, at the end of the day, the car is … the ultimate mobile device. It’s really a device platform similar to a cellphone or a tablet in the sense that you use that device to consume, create and share content going forward,” he said. The unique thing about cars, Koslowski added, is that they provide an especially captive audience. “If you sit in front of a television, or even if you’re holding your smartphone or tablet, you can always put it aside. … In a vehicle, you really can’t do this.” Koslowski predicted that by the end of the decade, 70 to 80 per cent of all new vehicles in mature markets like North America and Western Europe will feature some form of connectivity to the Internet, either by allowing tethering to a smartphone signal or having embedded connectivity. Currently, about 30 to 40 per cent of vehicles being sold in mature markets are capable of being connected online (not necessarily as a standard factory option), and he said by end of the year and starting next year, that number will hit 50 per cent. Koslowski said 2016 will be a “tipping point” when the majority of consumers will “start to really make connectivity a key criteria in their next vehicle purchase.” Jeff Kagan, an independent technology analyst in Atlanta, said that “what’s starting out as a competitive advantage for the carmakers who are doing it is going to quickly turn into a must-have.” He added that that while the variety of cars that are connected has grown in the past few years, we’re still in “the first inning” of the game. A few years ago, the few options available to customers were navigation and XM Radio, but now customers can use the connectivity of their smartphones to gain “access to anything that the carriers want to give to the customers,” from Internet radio, weather updates and navigation for the driver, to movies and TV shows for the passengers, he said. “And you have to remember that this is still just the very early days,” Kagan said, noting that most of the apps drivers and passengers will be using over the coming years “haven’t even been invented yet. This is the wild, wild west of opportunity.” Jennifer Kent, senior analyst at Parks Associates, said wireless carriers can also get in on the software aspect of the businesses. “There are also some mobile carriers that are starting to provide software services to the auto manufacturers,” she said, such as Sprint’s Velocity platform. “Auto manufacturers are not experts on mobile connectivity and developing apps and working with app developers, so the wireless carriers are trying to kind of play this middleman and bring all of the kind of complex ecosystem of vendors and such together all at one point and then sell that to the auto manufacturers,” she said. Trying to connect the software the cars come with, which manage things like oil levels, with the software that supports the wireless applications is a complicated undertaking, Kent added. “So the wireless carriers are trying to put together a piece of software that can wrap all of that complexity into one, and manage, really, that portion of it for the auto makers.” Ultimately, connected cars are a part of a bigger phenomenon, and while other devices will also be connected to a wireless network as part of the “Internet of things,” vehicles offer an especially big opportunity, according to Bell’s Jacob. “We think connected cars will probably be one of the largest opportunities,” he said, due the large number of cars out there, and the fact that cars allow multiple screens and also require connectivity for reasons like 911 and insurance. Gartner’s Koslowski agreed that vehicles will become part of the Internet of things. “All kinds of aspects being connected going forward, mobility being redefined,” representing “a pretty significant opportunity for carriers, which are almost the glue between all of these different pieces,” he said. “The connected vehicle is just the beginning for them, in my eyes.” — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Telecom, media industries see opportunities in connected cars

Broadcast | February 4, 2014

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