In the news
Oct 20, 2014

Connected cars and LTE: Where are they heading?

Telecom Lead
The connected car ecosystem is quickly expanding and everyone wants a piece of the action.

From usage-based insurance, to built-in infotainment systems, the applications and potential value-added services in the connected car market present a plethora of new opportunities for car manufacturers, OEMs, hardware developers and manufacturers, and wireless carriers, among many others, said Eran Eshed, co-founder and VP of Marketing & Business Development, Altair Semiconductors.

In fact, last year, the GSMA’s Connected Car Forecast estimated that the connected car industry would be worth nearly €39 billion or nearly $50 billion by 2018.

That’s because once a car becomes “connected,” the ability to integrate other value added services becomes exponentially easier. For example, auto tracking, security and stolen vehicle recovery are services that can easily be added to cars that connect to the Internet, and there are many markets in which this is of dire need.

South Africa and Brazil each have alarmingly high rates of car theft. South Africa experiences over $750 million in stolen vehicles every year, and in 2013 Brazil topped a list with the highest rate of stolen cars per year.

In fact, Brazil has even introduced legislation to tackle the soaring levels of vehicle crime through a program called SIMRAV. Approximately 25 million vehicles in Brazil will be outfitted with telematics systems by the end of 2015. With rates of car theft as high as they are in these two markets, it is clear that more needs to be done to combat these numbers.

Moving forward, many cars will come connected at baseline, or at a minimal added cost. There is also a huge Installed base of cars without built in connectivity. This means hundreds of millions of cars that can have connectivity added to them after they have already hit the market. In developing markets, where auto-theft rates soar, adding connectivity could be a game-changer in SVR applications.

With tremendous market potential, and clear need for security & tracking and SVR applications, the question of “When?” is of lesser importance than “How?”

Currently, there are solutions on the market that operate on 2G and even 3G networks. While these solutions might be effective for SVR for now, they offer little agility in terms of value added services. Furthermore, 2G networks are on their way out.

Both AT&T and Verizon have announced the sunset of their aging 2G networks, and 3G will certainly follow suit. In fact, Verizon announced that its 3G networks, together with its 2G networks would shut down by 2021 in favor of 4G LTE networks.

With a lack of longevity and an in ability to offer a full range of value added services, it simply does not pay to invest in 2G/3G technologies for connected cars. 4G LTE can offer far more to users, particularly when it can be integrated at a low enough cost.

While there are already many solutions on the market that offer vehicle tracking, there is also a convergence trend. Companies want, and need, to offer more than tracking or SVR. Companies need to be able to differentiate themselves by offering other services such as the ability to communicate directly with a connected car from a mobile device, giving the car directions – open, close, car locators that utilize built in GPS.

Companies offering SVR and tracking and security can also offer geo-fencing applications. This way, if a driver’s car leaves the designated perimeter (in the case that it is stolen, or driven out of town by the home teenager), the driver can receive an immediate notification and respond accordingly.

Once this technology is in place, a company that provides SVR can do much more to extract revenue from this “Trojan Horse” technology. With an LTE connection, companies can add broadband access services.

This broadband connection allows users to turn their cars in wireless hotspots, similar to MiFi for a car. With this, companies can start selling in car network access over an LTE access point. These types of infotainment services are only possible via a broadband connection – leaving 2G as incapable, and 3G as inefficient without the architecture to support this type of use.

LTE connectivity enables tracking companies, wireless carriers, carmakers, OEMs and many others within the ecosystem, to extract maximum value from connected cars. And, as LTE networks become the primary networks, offering service ubiquity, the only piece left is having an LTE chip that can be offered at a low enough cost to make the cost of integration negligible.

This can be done with a single-mode LTE chipset, optimized for use in M2M applications. Since single-mode LTE does not use 3G fallback, no additional royalties have to be paid for usage of 3G technologies. Furthermore, 4G LTE offers a future proof technology, one that will be used for the next 15-20 years.

As connected car players continue to realize the value-added application that can be gained through Internet connectivity, LTE might just be the best option to offer a truly full package deal.