The car manufacturers face the challenge of the connected car

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Digital-Insurance recently published an article (in French) where I tried to highlight that car manufacturers need to produce a Connected Car solution independent from the large technology companies that enable them to master on the long term their relationships with drivers. And as one of the option for such independent strategy, an automotive full MVNO strategy would have to be evaluated as technological enhancements have allowed this pretty old MVNO concept to become extremely pertinent in the future for the car industry.

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I enclose below an English translation

The car manufacturers face the challenge of the connected car

The Connected Car is a buzz word part of almost any announcements from manufacturers. The business models developed up to now for cars have been whole selling models, whereby car manufacturers were reselling mobile operators services integrated into their own services (navigation, maintenance, etc.) Recent discussions are focused on whether or not allowing High Tech companies such as Google or Apple to sit in the middle.
However the Connected Car implementation is often very much irresolute. Indeed car makers face key challenges. Any solution should address the following issues:
–           Security of access to the car is of outmost importance- the connection access to the car should be fully secured, in order to avoid a hacker to suppress brakes remotely for instance.

–           Confidentiality and use of driver and car personal  data: the OEM shall control the use of personal data, and should be in the position to decide whether or not to monetize them, and only with the clear agreement of the user

–           Exclusive relationship with the driver on the long term allowing loyalty to the brand and new fields of related services

–           Seamless continental coverage, especially in Europe cut in 50 independent states and far more national mobile networks.

–           Long term sustainability of the implemented connected solutions as the life span of a vehicle could be beyond 15 years, despite technology evolution and telecom providers own strategies. (abandoning technologies, new pricing policies etc.)
The automaker should start from these basic requirements to build a telecom solution for the connected car.
So rather than adapting  existing business models to the car, I trust it is for automakers to imagine a new business model developed for the car industry, taking into account their key strategic interests.
One option to consider is the establishment of a pan-European mobile virtual network operator (MVNO) dedicated to the automotive industry. Given the specificities of the automotive needs, it should have its own core mobile network  (full MVNO) and be based on 4G-LTE mobile technology providing advanced infotainment services and low latency for remote computer interactions. Such a solution can meet the concerns of automotive manufacturers mentioned above:
– Security of access: a dedicated MVNO with its own core network allows:

o          to confine automotive traffic to a dedicated core network

o          to protect traffic with a core network with IP Multimedia Subsystem (IMS) architecture allowing enhanced control of communications.

–           Personal data: enhanced by IMS, the routing of all traffic is funneled only through the MVNO core network, bypassing the host mobile operator own core network (the full MVNO uses only the access network of the host mobile operator, including antennas to

connect users).Thus personal data are fully under the responsibility of the automotive MVNO.

–           Relationship with the driver: the automotive MVNO is the natural arm of the OEM to establish and harvest the relationship with its client, the driver on the long term.

–           Continental seamless coverage:

o          Through its core network, the full MVNO generates its own services provided seamlessly through interconnecting with multiple host mobile operator across the continent.

o          The full MVNO is able to interconnect with several mobile host operators in a single market to get the best coverage, even better than the one provided by the most widespread mobile operator in a said country.

–           Long term sustainability of the connected car solution:

o          The full MVNO fully master its own SIM cards, therefore does not depend on third party mobile operators.

o          If a mobile host partner decides to stop a certain technology, the MVNO can then hook to another mobile host operator which would still operate such a technology.

o          The IMS architecture separates the application layer from the telecom access layer. Therefore the same applications would be available with 4G accesses and future 5G accesses too (at the 2025 horizon).

o          The full MVNO is able to migrate from one host network to another one at any time, thus is able to renegotiate the economic terms of the host operator if they are not fair.

The automotive full MVNO concept allows automakers to keep overall accountability for services rendered to the car user.

Car manufacturers will have to assess strategically their positioning on the service 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.
Georges-Harald Bernard
Georges-Harald Bernard has got a 25 year experience in strategy and operations in the telecom/high tech business across Europe, as Director General for France  of the MVNO mobile operator  Lycamobile, Director General of Afone group, Director General of  the French operator SIRIS and General Manager for France Telecom in Scandinavia and the Netherlands.

He also performed  international development for Unisource in the Netherlands, and TeliaSonera groups.

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