AT&T has announced that it added 500,000 connected cars to its network in the third quarter of this year, bringing its total to 2 million in the US. This growth shows why AT&T is so involved in the sector, as its traditional SIM-only business added 400,000 subscriptions in the same quarter. The connected car and its lucrative data plan will likely be one of the main expansion targets of cellcos over the next few years.
The connected car news is not particularly surprising for those who have been keeping tabs on AT&T’s progress with its Drive program. The quiet and distinctly undramatic updates have shown that the connected car is a serious focal point for AT&T’s future business plans. While AT&T’s full results are due on October 22nd, the detail about the connected car were gleaned from an SEC filing.
At a recent CTIA panel, AT&T’s chief executive of its mobile and business group, Ralph de la Vega, said the connected car would change the entire wireless industry, and added that research suggested there would be 10 million connected US cars within the next few years. This is big news for smart cities, who will be able to exploit the technology to improve traffic flow and congestion in urban environments, as well as for other consumer IoT niches including geofencing and presence for smart home automation.
So what exactly is the connected car? There are at least two distinct strands, which are turning the car into a WiFi hotspot via cellular connection and using that as a platform to consume media on the move, and using the connection to provide environmental and status data to the user as well as other service providers – and even smart cities and traffic infrastructure as part of the Internet of Things. After all, driverless cars need to be able to speak to things to get around safely.
But AT&T’s main focus is on the former of these two options. Simply put, AT&T wants to ensure that all occupants of a car are able to use data on the go, whether it’s the driver using GPS navigation, making hands-free calls or listening to podcasts, or perhaps putting Netflix on to silence the kids in the back. AT&T sees the potential revenue from this data, and wants to get in on the action ahead of the competition – in both new cars and on older models.
The other major benefit that arises from the connected car is the telematics and usage data that can be sent to the car’s manufacturer for analysis, allowing a car to more easily communicate to its driver that it needs maintenance or that their driving style is shortening its service life. This data can also be leveraged by insurance providers, but other more general data (such as time of use or road condition) could be passed or sold on to municipalities charged with maintaining the road surface. A number of apps already use the telematics data to provide car-tracking and fuel consumption information to consumers.
On the network side of things, if AT&T builds out its 4G network coverage to include densely travelled locations (read highways) it can guarantee that streaming connections won’t be lost during cell tower handoffs or through gaps in the coverage. Similarly, a 4G network provides better bandwidth than the 3G handsets and tablets in the car might be able to get – especially if a tablet or laptop lacks a cellular radio entirely. Similarly, when the car is parked up, perhaps on an idyllic fishing vacation in the countryside, you can keep the kids happy with a solid internet connection – bringing the comfort of high speed internet to the great outdoors.
AT&T has a multi-year agreement with Volvo to provide high-speed wireless connectivity to its cars in the US and Canada, as well as winning an Audi contract, and has also announced that the first connected car to be compatible with its Share Value mobile plans will be the 2015 Chevrolet Malibu – with 30 others following from Chevrolet, Buick, GM and Cadillac. The shared data option allows customers to add the car to an existing data plan, and diagnostic and tracking functionality can be retroactively fitted to all cars made after 1996 using an Audiovox $99 dongle attachment for the vehicle’s ODB-II port. AT&T also has an embedded SIM card that can be reprogrammed in the field, which is particularly useful for global products – such as M2M asset management deployments which often require semi-frequent reconfiguration.
And we anticipate many more connected car projects emerging from AT&T’s Drive Studio, located in Atlanta, where the company tests and develops its technologies and products. AT&T also uses an innovation center to expand upon its Digital Life service – which caters for the emerging smart home market, primarily with security and automation features. While no one can agree on the size of the Internet of Things market, the consensus is that it presents a huge market opportunity for entrants. To this end, AT&T seems to be leading the charge among cellular operators and ISPs.
The Drive Studio lists a number of partner companies and sponsors, including Ericsson, Qualcomm LG, QuickPlay Media, Red Bend Software, VoiceBox, Synchronoss, Accenture, Amdocs and Jasper Wireless.