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Why cars are the next frontier for the Internet of Things Add to ...

Vehicles aren’t just becoming roving WiFi hot spots, they’re becoming connected devices that eventually will be part of the Internet of Things, the growing trend of objects that interact with each other over the Internet.

Having a SIM card embedded in a car isn’t new. One of the longest-standing examples is General Motor’s OnStar service, which has operated through a partnership with Verizon, one of the largest wireless providers in the United States. The GSM Association (GSMA) forecasts a sevenfold increase in new vehicles equipped with mobile connectivity by 2018, and expects growth to grow substantially beyond that.

Trying to lead the way is GM with its 4G LTE in-car Internet service designed to give the car its own data plan. OnStar doesn’t cost extra at the dealership; nor does it require an OnStar subscription. A majority of vehicles spread across the 2015 Chevrolet, Cadillac, Buick and GMC lines are equipped with it.

“It’s integrated into the vehicle, and we have the antenna to achieve optimal signal strength and coverage on the roof instead of in your pocket,” says Fred Dixon, technology manager at GM Canada. “You can connect up to seven devices to it and it’s seamless. You enter the car, it automatically connects and you can use that data, never having to turn on your phone’s hot spot.”

Customers get a three-month trial with a hard cap of three gigabytes of data to play with. AT&T is the wireless carrier partner, and through agreements with most of its Canadian counterparts, Dixon confirms there are no roaming charges incurred in Canada and the United States. The car will automatically connect to whichever network is strongest in any particular locale within Canada, although users wouldn’t notice the shift.

This all-in collaboration means consumers can’t add the car to a shared monthly data plan they use with a smartphone and tablet, for example. The car’s data is a separate cost paid to GM, and plans start at $10 a month for 200 megabytes all the way up to $250 for 10 gigabytes over 12 months. Rates are slightly cheaper for OnStar subscribers.

Mansell Nelson, senior vice-president of products and solutions for Rogers enterprise business, believes closer partnerships between auto makers and carriers are inevitable. Bell has long been the carrier partner for OnStar in Canada, and despite the agnosticism of the 4G LTE service, carriers will want to compete to do business with the original equipment manufacturers.

“The car is becoming a computer and just one big API (application programming interface) that will need constant changing and updating,” says Nelson. “There are about 1.3 million new cars per year in Canada, and if more of them are connected, network capacity will have to continue to grow to accommodate them as connected devices.”

He cites the example of Tesla, which has pushed updates hundreds of megabytes or even a gigabyte in size. And just like with Tesla, system updates pushed to GM’s vehicles won’t count against the customer’s data bucket.

“This is the future,” says Nelson. “People weren’t used to the abrupt torque acceleration in Tesla’s cars, so they complained and the company rolled out a firmware update over-the-air [using AT&T’s network] that they could choose to install to reprogram their Tesla to accelerate more like a gasoline car.”

Research firm IDC Canada agrees, suggesting in a recent report that adoption growth for usage-based insurance will be “surprising” over the next five years. In short, a car’s connectivity would ostensibly send diagnostic data to auto insurance companies to assess and determine how safe a customer is relative to the general population.

This may resonate first with corporations and businesses running fleets, especially since privacy concerns may muddy the waters, says Nigel Wallis, research director at IDC Canada.

“There are all sorts of privacy issues around in-car connectivity that are yet to be determined, and they probably won’t be for the next few years,” he says. “The technical performance of best connectivity is going to sell a lot more cars by combining that with the feature that reaches out to a specific segment of the car-buying population. For a family with kids, it’s that you have the ability to stream to your child’s iPad or backseat TV.”

Wallis says these factors may pose a problem for OEMs to broaden the scope, since features like GM’s 4G LTE are effectively a third data plan consumers have to pay for after their home and mobile device subscriptions.

“Can they hit the price point that’s right for the consumer level? It may be that they have more success on the enterprise side in the short-term,” he says.

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