A very odd phenomenon is sweeping the automotive and wireless industries and was in full flower at MWC 2017. The onset of 5G connectivity has wireless carriers excited over the high bandwidth, low latency and high availability applications inherent in this new network technology – to say nothing of network slicing for targeted applications. But the application segments promising the greatest growth lie outside the segment garnering the largest increase in connections.
Connected cars are delivering new network connections for carriers such as AT&T and Vodafone, among a few fortunate competitors, beyond the wildest expectations of even the most ardent IoT enthusiasts. Smarthomes and wearables may be hot, but the connected car is at the core of network connection expansion.
The only problem is that connected vehicles remain an elusive source of revenue. After paying the wireless and the cable bill – some of which consumers have been able to combine – there is little patience for a separate bill for the connected car! Most of the diagnostic and remote control (remote start, door unlock) applications for connected cars require minimal bandwidth.
The problem is simple to explain. There is nothing natural about connecting a car and for car makers it’s a nightmare. And, yet, consumer interest in car connectivity is high, according to Strategy Analytics’ own consumer survey and focus group data.
Twenty years ago General Motors created a compelling application in automatic crash notification (ACN) which the company was able to leverage to differentiate its cars, increase sales and drive subscription revenue. In the very earliest days of OnStar, dealers were free to charge extra for the feature – something which was quickly nipped in the bud.
Masked by GM in the deployment of OnStar was the sausage-making ugliness of wireless connections, network reliability, battery consumption, network credentials, and, fundamentally, consumer expectations – to say nothing of the potential privacy violation and cybersecurity implications. Consumers don’t understand the complexities of vehicle connectivity – they just want it to work the way their mobile phone works.
For car makers, introducing a wireless connection in the car with an emergency response responsibility carries heavy liability requirements to this day. Before any consumer has tapped into an embedded modem-based family finder app or Wi-Fi access, the car maker – in partnership with the carrier – must sell its soul as to the reliability of the on-board system in the event of a crash.
The onset of smartphones tamped demand for ACN, but ubiquitous connectivity introduced the concept of apps in the dashboard, streaming audio, Wi-Fi, digital assistants, artificial intelligence and contextual awareness. Car companies quickly came to realize that location itself was a valuable and potentially monetize-able proposition.
Now autonomous driving has usurped the attention of auto makers, shifting the focus to sensors and on-board systems capable of recognizing environmental elements in real time. Carriers are keen to capitalize on the autonomous driving craze and the billions of invested dollars, but the market leaders in self-driving technology have thus far eschewed connectivity.
Waymo, Uber, Tesla and a dozen or more startups have thus far treated wireless connections as irrelevant. In spite of the indifference of self-driving system developers, wireless carriers and infrastructure suppliers have soldiered on with tests and prototypes and proofs of concepts.
The more immediate concern of the wireless industry vis-à-vis auto makers is the emergence of V2V communications via dedicated short range communications (DSRC) technology. DSRC-based V2V promises an alternative form of vehicle connectivity capable of delivering content and safety.
Unfortunately for DSRC, commercial applications for the technology have been few and far between and so it has become almost entirely reliant on government mandates and funding – with the exception of companies such as Veniam that have focused on enterprise applications for the technology. In essence, wireless carriers have been forced into making the case for 5G based on it serving as an alternative to DSRC.
To focus 5G on safety applications is to remove the revenue opportunity. The reality is that 5G will enable new customer service value propositions integrating virtual and augmented reality to the process of building and servicing vehicles and enhancing driving. The first hint of this brave new driving world was exhibited by Audi demonstrations at MWC showing “see through” technology based on streaming video from one vehicle to a following vehicle and the same application shown in the Qualcomm and Orange booths.
Of course, it makes no sense for a driver to observe the video – in real time – projected to his or her following vehicle. The message behind the demonstration was that 5G technology can deliver this level of low latency performance via the embedded connection in the car.
Will 5G enable collision avoidance? It’s possible. 5G connectivity will enable a 5G-equipped car to avoid a collision with another 5G-equipped car via inter-vehicle communications – but that event (momentous indeed!) is years away.
For now, vehicle-to-vehicle connections are solely built around alerts and require driver intervention to prevent a crash. So, sadly, the 5G hype for automotive applications at MWC was somewhat undermined by both solely sensor-based self-driving technology and the current conceptual limitations of V2V.
Where both LTE and 5G can have an impact is in leveraging multiple layers of vehicle connections for a more comprehensive real-time view of vehicle movements in space particularly in urban settings. Collision avoidance and self-driving systems taking advantage of these connections and data processing – including neural networks and machine learning – are only currently deployed in test mules and prototypes too expensive for mass deployment.
The sad truth is that vehicle connections are critical to carrier growth, but revenue growth from automotive comparable to mobile video or online gaming will be elusive in the short-term. General Motors’ Global Connected Consumer division may be on the right track in enabling unlimited wireless data plans (this week). The key to success remains making it as simple and easy as possible for the consumer to add their car to their existing wireless plan. That will be a first good step forward – GM is in the lead here as well.
Strategy Analytics’ perspective on MWC 2017: tinyurl.com/zyejk3c – #MWC2017Alters Connections Between Carriers and Car Companies
