The Hottest Telematics Issue? (Chapter 1)

The Hottest Telematics Issue? (Chapter 1)

“The 800-pound gorilla in the room is the monthly data plan cost,” says Dave McNamara, president, McNamara Technology Solutions and previously, Manager of Advanced Infotainment at Ford Motor Company. “Ford has a strategy to address that. There is one data plan.”

Ford implemented that strategy when it introduced Sync. In contrast, OnStar has the problem of two data plans. Besides paying for the cell phone that the driver already has, another monthly fee is required for telematics services in the car.

Myles H. Kitchen, Automotive Electronics Consultant/Analyst, at M.H. Kitchen & Associates agrees and identifies this as his number one telematics issue. He says that carmakers need to find a business model other than the monthly/quarterly flat fee subscription model. His suggestions for alternatives include paying for ala carte services, paying once for products with services included or simply paying for minutes as required.

Data transmission is a big part of implementing telematics according to Mark Fitzgerald, analyst at market research firm Strategy Analytics. “The big issue is connectivity, whether it is bringing portable devices into the car, bringing flash media into the car or having a data pipe to the car itself,” he says. Getting data into the vehicle that involves added monthly charges is definitely a deterrent for growth. “Monthly charges work for the cell phone model,” says Fitzgerald.

In automotive, one somewhat successful monthly charge model in the infotainment area is XM/Sirius satellite radio. However, that could change based on free internet-based stations with similar content, such as Pandora, Last.FM and others. “If you have a smartphone and you can stream the music to your phone and then via Bluetooth put it to your car, why would you need XM/Sirius,” he concludes. While it not easy to get good quality steaming audio in the car today, when the problem is solved, a monthly service fee of XM/Sirius will be even less attractive.

The European Perspective

While these experts reside in the U.S., the periodic service cost is also a problem in other regions. Alan Williams, Director/Consultant (UK office) and Giovanni Balli, Director/Consultant (Brussels office) of AutoGlobal Business Network Ltd, an Automotive/ITS R&D Consultancy, and their associate Nick Clare, a consultant with recent UK telematics experience, feel that people in Europe are willing to pay for telematics services as long as they feel they are getting value for their money. However, they acknowledge that a basic package of free services should be offered.

Free servicescould include updates on positions of active speed restrictions such as safety cameras and average speed Automatic Number Plate Recognition (ANPR) locations, while other services could be available at a cost. They suggest that a potential model would be able to have services that users can select or bundle rather than the umbrella type services that are usually offered. This would more appropriately match the services to the specific end user’s needs.

Strictly from the safety side, the European Commission has urged EU countries to accelerate the voluntary implementation process of the new in-vehicle emergency call system (eCall). In its August 28, 2009 communication “eCall: Time for Deployment,” it notes that “more than 70% of citizens responding to a Eurobarometer survey in Europe said they would like to have eCall installed in their next car.”

According to the communication, proprietary in-vehicle emergency call services offered in Europe by different automobile branches and service providers that include Volvo OnCall, GM OnStar, PSA, Fiat, BMW are typically bundled with other services. This could account for the current penetration rate in Europe of less than 0.4% of the vehicle fleet. Also, the service is usually offered only in high-end cars and does not cover all countries in Europe. The widespread implementation of eCall and a different cost strategy could be well received.

Do you agree that periodic service charges are the top or at least one of the top issues that carmakers and hardware providers need to address? If not, send an email to me at[email protected] and tell me what you think.

Randy Frank is a contributing editor at Telematics Update. Click here to let us know your thoughts on the above exclusive report, as we would like to continue this trend in order to give our readers high-level and engaging content.

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