Georges-Harald Bernard Issue: Europe I 2015
Article no.: 12
Topic: Key strategic issues OEMs should consider to successfully implement the Connected Car
Author: Georges-Harald Bernard
Title: Director General
Organisation: Lycamobile, France
PDF size: 192KB

About author

Georges-Harald Bernard has got a 25 year experience in strategy and operations in the telecom/high tech business across Europe. He has been 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 Cap Gemini Prosodie, Unisource in the Netherlands, and TeliaSonera groups.

Article abstract

Car Manufacturers face customer appetite for connected car solutions. However, they need to put in place flexible solutions in the car that will accommodate current 4G , but also take into account 5G solutions when available. 

Full Article

The Connected Car has generated buzz in the automotive industry in 2014. Since the Consumer Electronics Show in Las Vegas in 2014, the different types of actors, OEMs, telcos and tech companies have shown their muscles and ambitions to own the connected car solution. Recent discussions are focused on whether or not to allow High Tech companies such as Google or Apple to sit in the middle, i.e. in the passenger compartment.
Today indeed a new car-whatever brand- is supposed to drive you and assures well this primary function. However now the Millennial plus generation (15-30 years old) have a basic requirement for connectivity: drivers and passengers will largely expect the presence of services already available on their smartphone, with a high quality through 4G/LTE, such as streaming video (live sport channels, on line gaming etc). And when you start implementing 4G connectivity in the car, you enhance the scope of services delivered as well. They encompass generic services such as interpersonal communications: (including video conferencing), internet web portal and mutimedia services. They also include car industry specific services such as:

*Secured driving services-help for driving
*Navigation-traffic/ augmented reality/toll-parking/fleet management
*Emergency call-E-call.
*Preventive maintenance
*Experience feedback/reliability
*Multimedia assistance
In case of incident/accident (repair)
In case of emergency (help)
*Insurance services (tracking services, prevention of car theft ); options such as insurance pay per km, pay how you drive

However the Connected Car implementation is still somewhat messy. On one hand OEMs fear they can be overtaken by technically far more advanced high tech companies and possibly telcos, on the other hand OEMs need to offer advanced future proof quality services as they are ultimately fully responsible for the services in front of the users.
The business models developed up to now for cars have been B to B to C whole selling models, whereby car manufacturers were reselling or embedding mobile operator services. In view of the strategic shift to the service provisioning world that the Connected Car represents, OEM should carefully assess how to organize those services and keep their leading role
Unquestionably 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. This issue is probably the source of the main hesitation for OEMs to fully embrace a Connected Car strategy: the OEM is fully responsible for any digital security breach. Any such breach could lead easily to multi-billion dollar suits and brand image wreckage. Therefore OEMs should fully master the solution, and any subcontracting should be clearly thought through as OEM responsibility cannot be subcontracted.
– 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. That is where the big competition has heated up recently: OTT High Tech companies wish to have full access to those personal data to monetize them, as they do on your pc or smartphone routinely.
– Exclusive relationship with the driver allowing loyalty to the brand and new fields of related services. This seems to be the first time OEMs have the opportunity to establish a permanent link with their customer/user that should allow to nurture and grow a positive brand image.
– Seamless continental coverage, especially in Europe cut in 50 independent states and far more national mobile networks. This issue encompasses both the service definition and quality availability throughout the continent, as well as the cost arising from regulated international roaming tariffs.
– 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. The current moment is quite unique as the technology evolution- today’s worldwide roll-out of 4G/LTE-meets OEM very long term need of visibility- 4G/LTE should be the dominant wireless technology until around 2025). The solution should be flexible enough to easily accommodate the technological evolution towards 5G.
OEM should start from those basic requirements to build a telecom solution for the connected car.
I trust a full 4G MVNO (Mobile Virtual Network Operator) approach- an MVNO with its own core network- dedicated to the automotive segment could be a solution that addresses the concerns of OEM listed above:
– Security of access: a dedicated MVNO with its own core network allows:
o to confine the automotive traffic to a dedicated core network: only traffic from or to the car goes through the core network of the automotive operator
o to protect traffic with a core network with IP Multimedia Subsystem (IMS) architecture allowing enhanced control of communications. The key features of this advanced network architecture defined by the international standardization body 3GPP provide enhanced access security functions as the basis to build robust protected services, taking advantage of immune system and multi-agent architecture capable of detecting, identifying and recovering from malicious attacks
– 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. Thus personal data are fully under the responsibility of the automotive MVNO.
– Relationship with the driver: the automotive MVNO is the natural way for the OEM to establish and harvest the relationship with its client, the driver on the long term. The embedded SIM card in the car is the one of the MVNO and should last the lifetime of the car.

– Continental seamless coverage:
o Thanks to its core network, the full MVNO generates its own services seamlessly through its connections with multiple host mobile operator across the continent.
o The full MVNO is able to connect 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. There may be regulatory hurdles in some countries. However, as the car is of the most mobile essence, authorities should consider the specificity of this niche market, that would be safer and more efficient with a multi-mobile host solution.
– Long term sustainability of the connected car solution:
o As already stated, the full MVNO masters its own SIM cards, therefore does not depend on third party mobile operators. Future potential dematerialized SIMs, though easier to deal with for OEMs, would still require this principle.
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. OEM should have flexibility, as such threats are not just academic: for example AT&T has announced extinction of its 2G services in the US by 2017.
o The IMS architecture separates the application layer from the telecom access layer. The same applications would be available with 4G accesses and future 5G accesses too (at the 2025 horizon). No specific adaptation of the applications would be required for a new access network. So the automotive industry would be in position to smoothly take advantage of the new capabilities and the inter-operability and integration of different telecommunication services (mobile, Wifi, Vehicle to vehicle) allowing among others the self-driving car.
o The full MVNO is able to migrate from one host network to another one at any time, and is thus able to renegotiate the economic terms of the host operator if they are not regarded as fair. This again secures the long term viability of the full MVNO option.
The automotive full MVNO concept allows OEM to keep overall accountability for services rendered to the car user.
OEM are at a crossroads. The stable business model they will build for the Connected Car will not be easily twisted later as technical, investment and partnership decisions would have long term effects.
The OEM 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. And in doing so, it should consider the automotive full MVNO option.