4G Connectivity Is Live, Now What?

4G Connectivity Is Live, Now What?

Consumers are demanding greater connectivity in the car and on the road and OEMs are moving quickly to offer increased services to meet these expectations.

But will bespoke solutions work better than partnerships? Who will foot the bill? And how can automakers keep up with ever shortening consumer electronics product cycles? These are questions that will take time and the wisdom of experience to sort out.  

For its part, Honda is looking to tech giants Apple and Google to help with in-vehicle 4G solutions that look and feel a lot like the mobile experience consumers are used to. “We ask customers what they like to see in vehicles and they say they want more and more connectivity to data and info on their phones, from contacts to messaging to email to entertainment to infotainment to app access,” says Charles Koch, manager for new business development at American Honda Motor. “They’ve got a lot of data on handheld mobile devices and they want to use it (in the car) and extract it safely.”

Koch continues, “There’s no use to make a Honda-only exclusive interface, it’s better that we can deploy an interface that Apple has designed to work more closely with their mobile devices, and the same thing with Google.” The Honda executive says the automaker is also in talks with Microsoft about its ecosystem as a third partner for infotainment integration.

While automakers may head in different directions on whether to create their own infotainment systems or partner with technology firms, many OEMs and their suppliers are looking at 4G as another way to differentiate their product and perhaps drive new revenue streams. The trick is making sure the consumer understands the value proposition.

4G facing fee fatigue

“We are all, OEMs and partners, trying to understand what’s going to drive customers to subscribe for extra connectivity,” explains Jim Robnett, VP of Business Development at NNG, adding, “Even with General Motors announcing public pricing, that’s still a significant amount of money for many people, especially for people with a 4G phone with hot spot in their pocket.”

Robnett was referring to GM’s mid-year announcement around its in-vehicle Wi-Fi hotspot. It promises to pair up to seven devices with the vehicle, including tablets, smartphones, and laptops, and provide access to OnStar safety and security services. The monthly fees start at $5 for OnStar subscribers and $10/month for non-subscribers for 200 MB of data. Service provider AT&T claims that’s enough to stream more than six and a half hours of music, surf the web for 13 hours or send more than 10,000 emails without attachments.

This data plan is clearly entry-level and not meant for a family with children in the backseats watching separate video streams or playing online games while the passenger is accessing the web for directions, dinner reservations, or dashing off emails. They’re going to need a bigger boatload of data.

Audi of America recently announced its own in-vehicle 4G deal with AT&T. Audi 2015 models equipped with Audi connect will be able to pay for vehicle data via plans for $10 per month, the same amount the carrier charges to add a tablet to existing plans.

Robnett and others are also quick to note that while existing AT&T subscribers may be able to roll these new monthly fees onto their bill, it creates a quandary for consumers who use other wireless providers.

And then there’s the issue of adding yet another monthly outlay for some stretched consumer and small-fleet balance sheets.

“I see there is resistance for another bill,” notes NNG’s Robnett. “Fundamentally the business models will have to change and adapt, from the carrier side to the OEM side… If there’s the ability to cross carriers, there are a lot of back office things that have to happen.”

Industry executives have also discussed subsidizing some data, there are freemium models where consumers get a small amount of data free of charge and then pay more when that’s exhausted, or OEMs and partners may offset charges in exchange for the consumer taking some advertisements.

Pay 4G up front

Honda’s Koch says a decade of customer research has shown him a clear consumer preference: “Pretty consistently customers tell us they want all of this (4G connectivity) put into the price of the car. They don’t want subscriptions; they want these programs put in the car. There was a justification for larger pay models when embedded chip wireless costs were higher and people didn’t carry cell phones as ubiquitously as they do now. They expect these services to come with the car when they pay as much as they do.”

So as 4G rolls out for more models, how will the experience actually change in the near-term? Observers say BYOD (bring your own device) will remain popular, especially in emerging markets with less 4G coverage than in developed countries. Some expect to see a hybrid approach in the near term with BYOD in the front seat but embedded technology in the rear seat, which also helps “future proof” platforms in the inevitable upgrade cycle.

Honda’s Koch literally sees changes coming to search. “We have been playing around with (Apple’s "intelligent personal assistant") Siri as a precursor to CarPlay. It’s the same functionality, but CarPlay will let you see what you say where Siri in the car is just voice response right now. In CarPlay it will show you graphical images in the head unit. That’s very appealing to a lot of us struggling with automotive grade voice recognition for years and the success rate has been very low.”

NNG’s Robnett is keeping a close eye on GM and potential partners. “Customers are willing to pay for unique or aggregated content. SiriusXM is one example of what people will pay for that they can’t get anywhere else. GM tends to be out ahead of these things content-wise and technically. It’ll be interesting to see what they’re doing and whether they partner with movie studios, or anyone providing content will be interesting.”

The promise of in-vehicle 4G delivering seamless connectivity to the modern family with a device for each member is upon us, but clearly there are still many issues to be resolved and different approaches to be tried.

In the meantime Robnett says OEMs and infotainment partners are carefully weighing the innovations while keeping their eyes on the prize: “We can’t make the customer work too hard and alienate them with a confusing experience in the car. We have to build the right value proposition around that. While revenue from services is important, OEMs really want to sell cars. Whatever helps them sell cars at the end of the day will rise to the top.”

For the latest telematics trends, check out Telematics West Coast 2014 on October 30-31 in San Diego, USA, Telematics Munich 2014 on November 10-11 in Munich, Germany, Connected Fleets USA on November 20-21 in Atlanta, USA and Consumer Telematics Show 2015, January 5 in Las Vegas.

Leave a comment

Your email address will not be published. Required fields are marked *