Telematics and the role of the MNO

Jan

Jan Stojaspal

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28th October 2013

It is widely acknowledged that mobile network operators (MNOs) are going to play a vital role in the future of the connected car.

According to recent research by the GSMA, the connected car market will be worth €39 billion globally by 2018 (up from €13 billion in 2012) as the number of new cars equipped with mobile connectivity is forecasted to increase almost sevenfold.

MNOs and car OEMs are going to have to work together to create the best connected car product possible, the global association of mobile operators says.

Still, what can MNOs bring to the table, apart from simple connectivity?

Not much for developed telematics programs from bigger car manufacturers, such as BMW’s ConnectedDrive and GM’s OnStar. These have enough money invested to remain stand-alone entities, says Pavan Mathew, global head of connected car at Telefonica Digital. 

But for smaller car manufacturers, finding the capital to establish and sustain a sophisticated program will be more difficult, and these are likely to be increasingly reliant on MNOs.

The embedded SIM

The arrival of the embedded SIM as the primary source of in-car connectivity makes the involvement of MNOs more or less inevitable.

SBD, an automotive technology research and consultancy firm, forecasts that €32.6 billion in revenues – 83% of the total forecasted by GSMA – will be driven by the growth of embedding SIM technology into new vehicles, particularly as roaming costs are brought under control with the introduction of the white SIM EUICC, which can be reprogrammed to work with a number of mobile networks.

(For more on this, see Telematics the evolution of the SIM card.)

But that is not to say that the tethered smartphone is to go away. In fact, Mathew sees a hybrid model becoming the norm – with the embedded SIM underpinning eCall and security services, and the tethered SIM bringing easily changeable infotainment apps that can personalize the vehicle head unit.

“The car ecosystem is very different from that of a tablet or a phone because its technology only changes every ten years or so,” says Andrea Sroczynski, head of global automotive sales at Telenor Connexion. “You need to keep your customer happy, so you want updatable technology, but you also need stable technology for things like eCall.”

In safety-critical functions like eCall, embedded SIMs have an obvious advantage. “If there’s an accident, a tethered SIM can fly out of the window, or could even have been left on the kitchen table,” Mathew says. “That emergency situation only happens once or twice in a vehicle’s lifecycle, but when it does happen, the telematics safety features need to be working at 100% efficiency.”

Learning from the mobile experience

Still, it may be the MNOs' smartphone experience that will be of most value to OEMs. “There’s a lot of discussion from the automakers about wanting to bring the handheld experience to consumers in the vehicle,” Mathew says.

In this respect, MNOs can, for example, provide a platform for app development for OEMs, Mathew says, pointing to BlueVia, Telefonica’s own app developers platform, which launched in February 2011. The platform allows developers to market their applications to countries across the world and receive a share of the revenue generated by the traffic they generate.

But they can also help OEMs manage customer relationships. Previously, the only customers that OEMs had to communicate with were their dealerships. Nowadays, personalized telematics means it’s increasingly the individual that needs to be considered.

“If an [OEM] embedded a telematics device into a car – which included things like eCall, some navigation, a Wi-Fi hotspot and some infotainment applications – and offered a six-month trial period before the price went up to $8 a month, it still might not have the facilities to take down a billing address, credit card or bank account info,” Mathew says. “For most car manufacturers, once a car has been delivered to a dealership, that’s the last they hear of it. They don’t have the ability to establish a billing relationship with the driver, and that’s something MNOs can help with.”

Know thy customer

They can also help with sophisticated customer data analytics. Although car manufacturers have some data storage ability – they can collect data on car plants, warehouses and dealerships – they don’t have the ability to collect and segment sophisticated data on individual customers. “It’s a very different type of data,” Mathew says. “There’s a lot of regulation around storing detailed customer information, and OEMs don’t have the ability to do that yet. Of course, they could buy that ability, but they could also team up with MNOs who have 40 years of experience doing it.”

(Dominique Bonte, vice president and practice director, ABI Research, is less sure that MNOs will prove a useful partner in this respect. “Orange, by their own admission, isn’t quite ready to be a Big Data partner for the automotive industry,” he says. “Big IT companies like IBM, Oracle and Cisco are better equipped to take on that Big Data.”)

Customer care is another area where MNOs might come into play. Mobile networks have vast call centers with trained staff who can deal with customer complaints and queries. These could be invaluable to OEMs.

Maximizing potential

Ultimately, it’s about achieving a maximum service by getting various companies to do what they’re best at, Sroczynski says.

Bonte agrees: “It’s about cooperation. We need to stop thinking about who will control the ecosystem and start looking at it as a level playing field. There is growing awareness that the connected car is way too complicated for any company to think they can do everything alone.”

Charlotte Wright is a regular contributor to TU.

For all the latest telematics trends, check out Telematics Munich 2013 on Nov. 11-12 in Munich, Germany, Telematics for Fleet Management USA 2013 on Nov. 20-21 in Atlanta, Georgia, Content and Apps for Automotive USA 2013 on Dec. 11-12 in San Francisco, Consumer Telematics Show 2014 on Jan. 6 in Las Vegas, Telematics for Fleet Management Europe 2014 on March 12-13 in Amsterdam, The Netherlands, and Content and Apps for Automotive Europe 2014 on April 8-9 in Munich, Germany.

For exclusive telematics business analysis and insight, check out TU’s reports: Telematics Connectivity Strategies Report 2013, The Automotive HMI Report 2013, Insurance Telematics Report 2013 and Fleet & Asset Management Report 2012.