Northern Sky Research

The Right Key for the Connected Car

Feb 12th, 2017 by Dallas Kasaboski   More from this Analyst | Profile

Last year, Toyota announced an investment of $1 Billion on self-driving technologies and artificial intelligence to help improve vehicle safety. Last month, Continental and Inmarsat announced a partnership in vehicle connectivity, with updates and telematics from vehicles transmitted over satellite.

The connected vehicle is becoming the car industry standard, driven by the need to improve safety, and save money, on the road. But the dream of the connected car is about more than just diagnostics, it is about always-on connectivity and passenger entertainment. And finding the right key to make this dream a reality may not happen in the next decade, at least, not via satellite.

NSR’s Land-Mobile via Satellite, 4th Edition report noted that the number of land-mobile, broadband-by-satellite connected vehicles is expected to remain small by 2025. The market is almost entirely represented by high-speed rail systems, as other connected vehicles typically rely on wireless or cellular coverage.

This is an important point that is a considerable challenge for the satellite-connected car. Signal decay limits the effectiveness of satellite connectivity. Harsh weather at high speeds, plus the need for a flat profile, necessitates robust, rugged, read expensive, antennas.

Additionally, the near ubiquity of terrestrial services makes it difficult for satellite to compete. Passengers seeking connectivity and entertainment can simply use their phones, and only in the most remote regions does that service become unsatisfactory.

For these reasons, the development of the connected car has been rooted in partnerships with cellular service providers, such as SK Telecom’s project with Ericsson and BMW, General Motors with AT&T for its OnStar service, and Chrysler with Sprint, although that last partnership most famously highlighted the issue of security for connected cars. Still, while partnerships of this kind continue to be announced, there is little conversation between satellite service providers and automotive manufacturers, especially with regards to coverage and availability of networks that have a prominent place in wireless operators’ disclaimers for these services.

But the Inmarsat-Continental partnership is a step in the right direction, aiming to integrate the system and service directly into the vehicle. However, as mentioned, the hurdle is how often will the service use satellite over cellular, how much will it cost, and who will pay for it?.

Without partnerships of this kind, any satellite option for the connected car will be an external device, added on after vehicle sale. Some will mention the success of satellite radio, but it is important to note that it did not become truly successful until after it was integrated into the manufacture of the vehicle, the cost of which was covered in the vehicle purchase. Thus, it is clear that OEM deals are key factors to enable satellite-based connectivity in cars.

At the same time, antenna manufacturers are not keen to pursue this market, seeing the connected car as very niche with little potential. While there are some add-on products under development for the connected vehicle, most will be some form of hybrid device, switching between terrestrial and satellite services when applicable, with only a small few being developed as stand-alone satellite systems, for end-user enterprises operating in remote environments.

Enterprises such as high-speed railways, with passengers demanding continuous connectivity and entertainment in remote regions, will comprise the large majority of connected vehicles for the foreseeable future.

NSR’s report forecasts satellite-based connected vehicles will be concentrated in North America, Europe, and Asia. Projects such as the Gilat-Renfe deal for connected trains in Spain, Gilat’s partnership with CRRC for China’s “Belt and Road” initiative, and Amtrak’s trail trains in the southwestern U.S., show up as bright spots of keen interest in developing this service further in those regions.

Bottom Line

Land-mobile broadband connectivity, via satellite, is certainly not dead and without prospects, but it is small. Challenges exist, both technological and financial, which prevent integration of satcom services into land-mobile vehicles. As it stands, railways will propose real value in this market, overcoming the challenges and delivering the need of always-on connectivity to passengers in high-traffic areas such as Europe.

Integration is the key to the connected vehicle. Dual-mode devices, integrated directly into vehicle manufacture, will allow satcom to ride along with the success of terrestrially-connected vehicles, while proposing an added value proposition for use in remote environments. Integrating the billing of the service will be another challenge, given the differences between cellular and satellite services and networks. However, it will be necessary if satcom is to make a play with network-agnostic passengers in the connected car market.