1-The Business models of the connected car.I pointed out in a previous post why 4G mobile network services seemed fit for the coming connected car services. Let’s analyze a notch further.
The strategic drivers for the connected car revolution are, as explained in my earlier post:
– the fact that for the first time in History car manufacturers (and their associate car dealers) will be allowed to establish an ongoing relationship with their end customers: they can own this customer relationship and enter into an extended services business
– the emergence of market innovative car usage related services with complete security of service access and usage, especially when we are talking about accessing /changing parameters of the technical configuration of the car, in order to avoid a hacker to suppress brakes remotely for instance.
The business models developed up to now for cars have been either B to B to C whole selling models, whereby car manufacturers were reselling mobile operators services. The recent business model developed by AT&T for GM and Audi, allows customers to add their cars to existing share plans, making the car another member of the family. However these models do not seem to fully answer the strategic drivers requirements previously explained:
– Who owns the customers? The reality is that for any issue, the car user will turn to the operator. The recent AT&T move makes it even clearer.
– Innovation: innovative services have to be implemented by the telecom operator, even if requested or defined by the car manufacturer.
– Security of services access and usage: in this case the car manufacturers fully subcontract those topics- and their primary responsibility- to telecom operators, providing only the same level of protection as for ordinary mobile subscription holders.
2 – Why a Full MVNO ?
An alternative model is to set up a specific automotive Mobile Virtual Network Operator. And to adapt the MVNO to the current car services market, such a virtual operator should be able to control and provide its own secured services. Therefore it should be what we call a Full MVNO, mastering its own core network with an advanced IP Multimedia Subsystem (IMS) architecture necessary for advanced and secured 4G –LTE (and future technologies) services.
A former post provides a comparison between MVNO models, i.e. Light and Full MVNOs.
This full MVNO model assumes that the virtual operator operates its own core network (with IMS ) allowing complete control of the services provided to customers , in terms of quality, safety and cost
The main feature a dedicated automotive IMS based MVNO provides:
– Enhanced monitoring and security of services :
• The security of services is key:
o The IMS core network control functions allow to secure the information transfer with the car
o In particular, it fully control the access to the sensitive CAN (Controller Area Network), linking the individual car’s electronic control units, that is paramount to avoid un-voluntary or nefarious access.
– Specific services accessible everywhere
• The car manufacturers and associates are able to develop their own services as they fully control the HLR (Home location Register) or HSS(Home Subscriber Server in an IMS architecture) and the core network, so they can fully design and control those new services different from the host operator (MNO).
• The full MVNO model allows to interconnect with MNOs in different countries while using only their extended radio base station access network: the provision of services is taken care fully by the MVNO’s core network. So in the different European countries, the services / content are the same across the continent, which is key for a mobile/border free car.
• The IMS globally accepted standard (and supported by the GSMA- IMS is necessary for the roll out of 4G coming voice services, VoLTE), and therefore allows easy roll-out of services. And in the car industry design and evolution of services will be heavily facilitated by the generalization of HTML 5.
• In addition the development of Software Defined Network (SDN) technologies will facilitate centralized management of services and control of access to a global network.
– A guarantee for strategic and economic sustainability :
• As it controls its core network and HLR/HSS, the full MVNO is in a position to renegotiate its MVNO contracts with host MNO operators, and if needed, can easily migrate to another network, if economic terms proposed by the host operator are not fair :
• This basically is the key advantage of the full MVNO vs. other types of MVNOs, that allows it to always get best Terms of Trade from MNOs
• Therefore this strategic position provides independence in all senses from telecom operators: the full MVNO can design its own services and get fair economic conditions.
• Given the likely volumes of equipped vehicles – multimillion –within 3 to 5 years , the investment of a full MVNO infrastructure appears justified .
• The control of the core IMS network allows to keep operating services on both 4G networks and future new access networks ( 5G etc.) in parallel.
– A consistent positioning towards car customers:
• A dedicated automotive mobile operator fits the aim of the car manufacturers to keep overall accountability for services rendered to the car user.
• An automotive mobile operator adapts its time scale to the automotive industry, usually with far longer term than the mobile telecommunication industry. It will be able to secure long term services provision, regardless of changes in the telecom sector.
• So the car manufacturer will be easily adapting and differentiate between included services using telecom (maintenance for instance ) and infotainment services or other billable services
• The car manufacturer will be freely able to develop differentiating, interactive services and decide to keep for itself all data related to the car users it can collect or to monetize the car users big data, at least partially.
I believe there will be different business models used to provide connected car services, especially as car manufacturers may rush to market quickly those new connected car services. However, car manufacturers will have to assess strategically their positioning on the services delivery value chain and the best business model for them to keep the long term relationships with their customers and ensure highly secured services provision and easy innovation.
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