The race is on to own the connected car.
Driven by consumer demand for increasingly advanced connectivity, Gartner predicts that a quarter billion connected vehicles will be on the road by 2020. The growing proliferation of embedded in-vehicle connectivity and smartphone integration platforms is making the connected car the key driver in the developing Internet of Things (IoT) market. And SNS Research forecasts that in five years connected car services, including infotainment, navigation, remote diagnostics and enhanced safety, will generate nearly $40 billion in annual revenue.
The field is wide-open and, in the evolving connected car ecosystem, industry incumbents and new players will have to work together to develop standards and approaches to interoperability.
In its September 2015 report, “Competing for the connected customer: Perspectives on the opportunities created by car connectivity and automation,” McKinsey & Company found that consumers are increasingly willing to switch auto manufacturers and pay for connected-car services. Connectivity, once the purview of only high-end luxury brands is now a feature expected in high-volume, mid-market models, says Gartner.
The stakes for automakers and wireless carriers have never been higher.
New players and new challenges are disrupting the siloed and mechanically oriented auto industry, while major wireless carriers work to monetize both the embedded and tethered models of connectivity.
AT&T, for example, has more than 100 million customers using its video, wireless and landline services, but in Q3 2015 reported more customer additions for its connected car offerings than in any other category. The company now serves nearly 6 million connected cars. Customers include GM’s OnStar, on the wholesale level, and thousands of consumers who directly buy connected car services as part of data plans. AT&T operates a dedicated research center, the AT&T Drive Studio, in Atlanta, where it works with automakers to develop applications.
Verizon is also looking to its connected car business to drive growth. It offers Connected Car Telematics Solutions to fleet owners and, like AT&T, connects devices installed by auto manufacturers, like Daimler AG’s Mercedes-Benz. In addition, Verizon recently introduced a consumer telematics solution, called Hum, which provides roadside assistance and diagnostics, targeting the 150 million older vehicles that are not yet connected.
Designing, building, testing and monitoring the performance of IoT networks that support connected car features require a new approach by wireless carriers. There still is no standard or easy way to make disparate, complex systems talk to one another. Consumer expectations are high and all interconnected industry players will be judged by their quality of service and the user experience.
Just as the mass adoption of data hungry smartphones first strained wireless networks 10 years ago, connected cars mean carrier networks must be adjusted for the kind of always-on traffic generated by vehicle telematics and infotainment. Connected devices produce a different kind of data traffic, sending less user data than a typical smartphone. The type of continuous data coming from connected cars will require a lot of signalling relative to the small user data volume, which again is dramatically different than the traffic characteristics of standard smartphones. For this reason, older 2G and 3G wireless networks are less suitable for many connected car applications. Today’s 4G LTE and future 5G networks will be required, and the carriers need to begin to prepare today for this kind of traffic.
Thinking 10 years out, some key controls for a self-driving car will reside in the cloud. This will not necessarily generate high network load requirements but will require low latency and high-availability time-sensitive connectivity. And, the need for vehicle-to-vehicle communications and in-car entertainment systems will require different radio interfaces in the car as well.
Cybersecurity and privacy, which in the past have been automotive afterthoughts, now must be a vital part of the development process, designed into the systems from the start. As demonstrated in recent, highly publicized hacks of vehicle infotainment and control systems, today’s connected car systems have as many as 30 to 40 potential attack points. The vulnerabilities of each must be tested, monitored and protected, which is a complex task requiring an end-to-end view of a large number of systems still assembled in a traditional modular approach. Each modular system has an interface that will require security features like firewalls, intrusion detection etc. And the ability to perform over the air (OTT) application updates and security patches, commonplace in the IT world, will be vital to the success of connected car players.
Automakers, wireless carriers, technology companies, Tier 1 suppliers and public agencies are showing a willingness to be creative and collaborative to bring the benefits of automotive connectivity to consumers and businesses at all levels in the near future. Autonomous vehicles and smart highways promise to make driving easier and more pleasurable, and our roadways safer and less congested. They also represent a promising new market for wireless carriers as smartphone penetration is leveling off. Realizing the full potential of connected cars, however, will require a cultural shift in long-established industries and continued collaboration with independent researchers and industry advisors to engineer sound end-to-end technological and operational solutions.
Filed Under: M2M (machine to machine)