Is a unified bill for phone, Internet and telematics the best way to avoid subscription fatigue among consumers? Susan Kuchinskas reports
Everyone in the automotive telematics value chain wants a recurring revenue stream from the connected car. Consumers want simplicity. So far, drivers have been willing to contract with telematics service providers like OnStar as well as with mobile phone providers. However, as more and more connectivity options become available in the car, the telematics industry risks creating subscription fatigue among consumers.
Anupam Malhotra, senior strategist for Audi's connected vehicles strategy office, says Audi research indicates that people are interested in a unified data plan. But Audi hasn't yet settled on a service or model. "Right now, you pay for the pipe into the vehicle, and what you get through the pipe is included,” he says. “The different models will depend on what kind of content is being accessed, the quality and its availability.”
All in the family (plan)
It's likely that the telematics industry will follow the same evolutionary path as the cell phone and mobile data industry. Early in the last decade, the mobile industry went through a period of turmoil, with business models for mobile content hampered by the inability of the telcos to bill on behalf of content providers and to track usage. Eventually, MNOs updated their infrastructure and became the primary billers.
There was similar consolidation of voice calls, Internet service and cable TV services. In the United States, consumers can get all three from two giants: AT&T and Comcast. Why not nav services, as well?
Aparna Khurjekar, executive director of open development for Verizon Wireless, thinks the family plans already offered by most telcos can be extended to the car. "The family charge concept makes it easier," Khurjekar says. "Now, the industry is including tablets and broadband in a single bill. Extend that to all consumer devices, the car being a primary one that is being connected very successfully. You can look then at integrating that bill into a single account."
For example, if a consumer has an end-to-end data service on the voice bill, he can tap that bucket of data from multiple lines or services. "If you want your voice minutes in the car, you can dip into the voice minutes you've already bought," Khurjekar says. "And, because we're aggregating the data usage, we'll give you better pricing while making sure our revenue is not impacted."
Mobile network operators are not the only players aiming to extend their reach. Greg Ross, vice president of business extensions for OnStar, is actively looking for partners that can add value in the form of new features to the existing service. "We have a billing system," he notes, "and we need to work out the business models. One thing we provide in addition to brand is the distribution and communications platform. That persistent data connection can provide value to partners."
And James Dawson, director of customer solutions, wireless technology, for ATX Group, has suggested that ATX could manage agreements with multiple carriers for OEMs or others, acting like an MVNO. As financial companies have proven, the consumer billing relationship offers plenty of opportunities and advantages. "From the carrier perspective, [unified billing] brings the stickiness, reducing churn and increasing take rates," says Khurjekar. "You're just adding more lines to the bill, rather than creating a whole new relationship." In addition, she says, the carrier and service provider can do joint bundling of services and special offers.
There's still more opportunities for carriers once the back-end systems have been integrated to tie different devices together. That same back-end system can create unique features for the customer, such as simultaneous ringing. "I can give you the tools to set up when to call which device, or whether to ring them simultaneously," Khurjekar says. "Or, after you download movies onto a device, I can provide it to any of your other devices."
The ‘master device’ concept
How would universal billing be handled if someone wants a connected car with one connectivity provider and a phone from a different one? Consumers are becoming less and less loyal to their carriers, while the auto is set to become everyone's longest-lived mobile device. (For more on the car as connected device, see Telematics and Generation Y: Making the car an iPhone on wheels and Telematics: Connecting the car to the home .)
Janet Schijns, vice president of the Verizon Wireless Business Solutions Group, believes that all carriers will have to work toward a unified data plan that can hook together a number of devices. She told industry leaders at Telematics Detroit, "The traditional business model of only being able to add it on the bill if you're with a specific carrier won't be the norm two, three or four years from now. Instead, you will select the primary mobile device for billing, which could be the car."
Verizon also is open to billing that is not completely Verizon-branded, according to Khurjekar. "It could be we're billing on behalf of an OEM or a service provider," she says. As Giorgio Bernardi, president and CTO of Inrete Srl, said at Telematics Detroit, "Consumers don't want to have multiple plans. Customers want to connect all their systems under one umbrella. Whoever solves this problem will be the leader in this market."
Susan Kuchinskas is a regular contributor to TU.
For more on unified data plans, join the sector’s other key players at Telematics Munich 2011 on November 9-10.
Read TU’s report Smart Vehicle Technology: The Future of Insurance Telematics for exclusive business insights into the global UBI market.
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