Telematics and the connected car: How to deal with increasing data use

Although data usage by smartphones is rising steeply—according to a recent Nielsen analysis, smartphone data traffic in the United States grew by 89 percent over the past year, from 230 MB per month in the first quarter of 2010 to 435 MB this year—there are still far too few connected cars to make an impact on mobile networks. “That’s just a drop in the ocean in comparison with the rest,” says Terry Norman, principal analyst at Analysys Mason who leads the firm’s wireless networks and spectrum research programs. “I expect [data traffic to cars] growing maybe five to ten years down the line, but not for the moment.” (For more on connected cars, see Telematics and the socially networked car and Telematics and the socially networked car, Part II.)

According to ABIresearch, a market intelligence company specializing in global connectivity and emerging technology, only 13 percent of the roughly 70 million new cars produced around the world this year will have factory-installed telematics, either fully embedded or a hybrid solution combining an embedded part and a smartphone. What’s more, a vast majority of the connected cars today still rely on slower, low-bandwidth connections, sufficient to support basic services like automatic crash notification, remote vehicle diagnostics and various types of location information, but not enough to power data hogs like Internet radio or video downloads.

This may be disappointing news for those eager to have the latest in smartphone connectivity available in their cars, but it makes sense for car manufacturers contending with lead time times twice or three times as long as those in the smartphone industry. Carmakers also worry about alienating customers if they provide a broadband service that works badly due to gaps in coverage. “Car companies are concerned that if they rush into some of these technologies too early, they will be blamed for network issues,” says Richard Robinson, director, automotive multimedia and communications service at Strategy Analytics, a technology consultancy firm. “I don’t think I’d put my name on it.”

Great expectations for connectivity

So, for the time being, many manufactures are either sticking to solutions requiring lower bandwidths or making broadband connectivity somebody else’s problem—by tethering a smartphone to the in-car telematics system. BMW is doing both.

While it embeds an EDGE modem to power its ConnectedDrive suite of services, which includes Google Maps, Google Local Search, Web browsing and, most recently, real-time traffic information, the driver still needs to plug in his iPhone if he wants to connect to Facebook and Twitter or listen to Internet radio. “I think a customer is more open to accept [service interruptions] with his mobile phone, but not with his car,” says Michaela Wiese, a BMW spokeswoman for ConnectedDrive. “If you buy a premium car like a BMW and you pay a lot of money for it, you expect that it works all the time.”

Audi, another early adopter of in-car telematics, embeds a faster UMTS modem that, with peak data rates of up to 7.2 Mbps, is capable of turning any Audi into a rolling Wi-Fi hotspot. But it will only debut its modular infotainment platform next year.

By 2016, when ABIresearch forecasts that 60 percent of all new vehicles will come installed with telematics (83 percent in the United States, 88 percent in Western Europe), there will be a lot more connectivity to choose from, and not just from cellular networks. “We are probably a good four or five years away from any serious concern about an unbearable burden on the networks,” says Roger Lanctot, senior analyst, automotive multimedia and communications service with Strategy Analytics. “The carriers welcome this burden and they will respond by expanding the capacity of the networks.”

Expanding capacity

The expansion in capacity will come from several different directions. Between 2013 and 2015, Long Term Evolution (LTE) with peak data transfer rates of 80 Mbps, or four times today’s speeds, is expected to be broadly available. (For more on LTE, see Will LTE lead the 4G revolution? )

Further boosting data capacity of mobile networks will be the widespread possibility to offload data via Wi-Fi hotspots and femtocells. According to Norman of Analysys Mason, more than 50 percent of macro outdoor traffic will be offloaded within five years. This option may not be practical for a moving car due to gaps in coverage, hand-over delays and interference from other networks, but it will work just fine for a quick movie download when the car is still, say, at a gas station.

And mobile network providers like Telenor are also looking at satellite to provide low-bandwidth connectivity in areas without mobile network coverage. “We don’t see one clear solution of how to provide [high] bandwidth services going forward,” says Per Lindberg, global business development executive of Telenor Connexion, the M2M arm of Telenor. “I think we will see a combination of a lot of technologies [and] we think that we need to be basically everywhere in order to meet all the customer requirements.”

Forging a unified mobile broadband network

Market specifics will determine which technology will be used and in what combination. “In Sweden, we launched our LTE network some time ago and it’s quite a rapid pace of building that network now,” Lindberg says. “It will have a high capacity, so we don’t see the need of adding Wi-Fi to that. [But] if you go into another country, take India, for example, where we also have our own network, we still don’t have GPRS coverage in the entire country. Voice and SMS are still the core services and it’s a huge country to cover.”

Still there are major obstacles to making mobile broadband widely available.

Europe, for one, needs to find a way to forge a pan-European mobile broadband network that will work seamlessly and not threaten to bankrupt its users through high roaming charges. The GSM Association is working on concept for a new type of SIM card that would be remotely activated to work with whatever network has the best coverage in a given area. But carriers may be unwilling to give up control of sensitive customer data and the right to determine which network operator a customer uses while roaming abroad. “There is a lot of concern about the security mechanisms and it’s also disruptive to the [current] business model,” Lindberg says. “Today, we basically own the customer as long as they have our SIM card.”

Also, operators still need to find a way to put an end to the all-you-can-eat data feast that has clogged their networks and eaten into their profits, without alienating customers. Only then can mobile network operators halt falling data revenues, which today stand at around $20 per gigabyte, according to Norman of Analysys Mason, but could fall as low as $5 in 2015 if nothing is done.

A solution will likely come in the form of data caps, significant data offloads and new pricing models tying tiered pricing to different qualities of service, among others. Telekom Deutschland is already limiting the bandwidth of heavy users, but it is also looking at ways to make the flow of data over its networks more efficient.

“One thing is to have more efficient technology and the other is to look more deeply into the traffic and the applications,” says Mathias Elsner, Telekom Deutschland’s vice president for data solutions and wholesale. According to Elsner, the company is looking into prioritizing some of its data traffic, trying to shift nonessential traffic to times when the load on its networks is low. It is also beginning discussions with application providers on how to shape their data streams so they put less of a burden on the networks.

According to Norman of Analysys Mason, all these things need to come together for mobile broadband to keep up with customer demand in the years to come. “If operators employ all techniques at their disposal—and that includes HSPA+, LTE and significant offload in a managed fashion, if the fixed network providers along with the fixed network vendors provide the technology needed on the fixed backhaul side and also the regulator provides the spectrum at the time it is needed in the bandwidth it is needed—then we should be able to support conservative traffic growth at something like 50 percent per annum,” he says.

Jan Stojaspal is a regular contributor to TU.

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