Telefonica calls for greater collaboration in connected cars market

The huge difference in product lifecycles between the automotive and mobile telecoms industries poses one of the biggest challenges to the nascent connected car opportunity, according to new research commissioned by Telefonica.

The Spanish operator has released a detailed study examining the status of the industry, and calling for greater collaboration between automotive companies and operators.

But it highlights the disconnect between automotive and mobile industry lifecycles as perhaps the biggest challenge the connected car industry faces.

The huge difference in product lifecycles between the automotive and mobile telecoms industries poses one of the biggest challenges to the nascent connected car opportunity, according to new research commissioned by Telefonica.

The Spanish operator has released a detailed study examining the status of the industry, and calling for greater collaboration between automotive companies and operators.

But it highlights the disconnect between automotive and mobile industry lifecycles as perhaps the biggest challenge the connected car industry faces.

While smartphone companies provide upgrades on a regular basis, for instance, automotive companies generally work on five-year cycles.

“The smartphone business model depends on regular upgrades, which is a fairly new step for the automotive industry, and plans for how to manage payments for upgrades or recognize this revenue and/or cost in financial models will need to be implemented,” said Don Butler, the vice president of marketing for Cadillac at General Motors (Detroit, MI, USA).

Telefonica’s report features input from a number of companies involved in the connected cars opportunity, including a broad selection of carmakers besides Machina Research and Futurizon, two market-research companies.

The research also indicates the need for more collaboration between operators and automotive makers on the development of profitable business models.

According to Matt Jones, a senior technical specialist for infotainment at Jaguar Land Rover, “the automotive industry is fairly archaic, working (broadly speaking) around the process of putting things into silver boxes and doing this extremely well. However, working outside these processes may be a challenge and this is where mobile operators could assist, sharing their understanding and experience of this connected market.”

Payment models for connected cars remain undeveloped, notes the report, with consumers used to paying a one-off fee for a car but facing subscription fees for connectivity services.

General Motors has suggested that operators could recognize vehicles as a second device on a customer’s monthly plan, while Audi (Ingolstadt, Germany) and T-Mobile US (Bellevue, WA, USA) are offering monthly tariffs to customers taking in-car connectivity services.

Another issue is the imbalance between different types of service, with basic telematics applications requiring very low-bandwidth connections but infotainment features dependent on much faster networks.