Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.
The communications industry rarely hesitates when it comes to trumpeting the importance of its latest innovations. The market rang the “revolution” bell when wireless application protocol (WAP) came out back in the day, and the peals sounded again when 3G supplanted it. Since then, access to the mobile Internet has become table stakes, but LTE is set to raise the bar again, and the reality of LTE will likely live up to the hype, thanks in no small part to what automotive manufacturers plan to do with this technology.
Analysts predict that the general market for LTE will double this year. Infonetics Research forecasts it to easily pass the $10 billion mark by the end of 2013, with LTE networks already launched in 66 countries. Subscriber growth contributes to the rapid spread of LTE. In 2012, there were 6 billion wireless subscribers, and we’ll see 7 billion by 2017, according to analyst firm Informa.
Among the most exciting applications for LTE is coming in the space where many subscribers spend a significant amount of time: their cars. General Motors recently announced it will partner with AT&T to begin equipping its vehicles in North America with embedded LTE mobile broadband in 2015. No doubt, other automotive manufacturers will follow suit in the race to turn cars, trucks and SUVs into rolling smartphones. It won’t be long before the connected car becomes a baseline consumer expectation. From there, the market will likely see a push for newer and better value-added applications: streaming video and onboard cameras, infotainment with rapid download times and premier voice-over-IP in-car communications.
So what will all of this mean for communications service providers? These companies must shift from self-contained communications players into participants in a larger game, but the returns could be higher for them than ever before. In the connected-car future, the CSP might become nearly as important to a vehicle’s market success as the nature of the car itself.
In a recent report, “GM’s Global LTE Strategy Aims for New Connected-Vehicle Experiences,” Gartner states, “GM will simultaneously support high bandwidth connectivity via smartphones, and plans to pursue creative business models to drive broad adoption of its new LTE platform.” More specifically than creative business models, it will be creative data plans that make or break the LTE value proposition for the automotive industry. GM and its peers will need CSP partners that can support flexible, inventive and forward-looking data plans and customized packages.
Thirty-one percent of American car owners prefer in-vehicle Internet via smartphone data plans rather than through an embedded vehicle data plan, according to Gartner. An obvious fix is to create a plan that simply adds the vehicle as an additional device on an existing mobile contract. Other potential changes to the traditional mobile billing structure could include:
–Support for unlimited downloads via an in-vehicle head unit.
–Availability of data plan extensions during the new car sale process.
–Multi-country roaming in regions such as Europe, the Middle East and Africa.
–Data plans that can be discounted in exchange for access to diagnostic feeds.
Flexible billing will be a significant factor in the success of the connected car, but most existing business support system infrastructures won’t be able to keep up.
Soon, carriers will need to begin offering payment options that can be modified to include, or not include, LTE vehicle capability. Subscription billing models will need to be as diverse and flexible as the plans for which they are designed.
The car of the near-future will very different from the one we know today, and so will the mobile communications billing system. How fast we get there will have a lot to do with how quickly CSPs realize and prepare for the possibilities.
Scott Swartz brings more than 20 years of software and services industry leadership to MetraTech. Swartz founded MetraTech in 1998, after spending time at NetCentric, an early entrant in the business of cloud computing and where he created the industry’s first SGML/XML billing protocol. Prior to NetCentric, Swartz was a director at Cambridge Technology Partners, a pioneer in the delivery of client/server solutions for large enterprises. At CTP, he led the deployment of complex customer care, billing, and logistics solutions for Fortune 100 and 500 companies. He has been named a Technology Pioneer by the World Economic Forum and is a director of the Massachusetts Network Communications Council. Swartz holds a bachelor’s degree in electrical, computer and systems engineering from Harvard University.
