Cars are no longer just vehicles to get from point A to B. They are becoming connected ecosystems with real time news, applications and updates that will transform the travel experience on the roads. For the satellite industry, it is yet another vertical that offers intriguing potential, as the car itself becomes its own multi-faceted network.

Car manufacturers such as Daimler (Mercedes-Benz), Volvo, Audi, Toyota, General Motors and others all have a “connected strategy” now. We talk to some key decision makers within the automotive community about their view of the “connected car,” and where the satellite industry fits into this.

Audi

Pom Malhotra, as the senior manager of connected vehicles at Audi of America, is uniquely positioned to talk about the connected car market. He says the years between 2010 and 2015 encapsulate the second part of Audi’s vision for the connected car, which began in force at the start of the millennium. The work with the connected car in the first decade, from 2000 to 2010, was about connecting the car to its external environment. From 2010 to 2015 the focus has turned to building the capabilities for incorporating broadband in the vehicle and bringing services to customers that they find valuable, and are important for companies to keep alive. Audi has, over the course of the last five years, rolled out Audi Connect in the United States market. “Up to one third of customers would actually purchase another vehicle if it wasn’t for the connectivity features. For customers that choose to take connectivity from the trial phase into the subscription phase, this is a game changer in terms of how they experience and manage their vehicle. And we also find that a lot of customers who don’t immediately subscribe, will come back when they start missing the connectivity features,” says Malhotra.

Audi has recently launched its Audi Connect Generation 2 system in the new MY2017 Audi Q7 and will roll out this new platform across the vehicle lineup over the next couple of years. Malhotra says “the new game in town” is to provide seamless integration with the devices that the customer brings into the vehicle; whether a phone, watch, tablet, etc.

“It is [about a] new set of services being introduced that are designed to work in the cloud and offer benefits in the vehicle like no other. To give you an example, we will introduce Traffic Light Online, a service which connects the car to traffic light infrastructure and provides information in the vehicle that guides the driver to drive at a certain speed to be able to get green signals over their route or while stopped at a traffic signal, to know how long before a red light turns to green. There are several services like this that will be introduced over time. We are building these capabilities with an eye toward autonomous driving in the future,” he adds.

The key to growing the connected car market going forward will be to enable greater flexibility. According to Malhotra, Audi believes you don’t have to build everything into the vehicle from the start. Malhotra says a car can incorporate a very flexible hardware at the start that will allow the customer to bring in the services they would like over time. He cites the example of navigation as a good case in point.

“When we introduced Google Earth in the car, we were the first to strip out the base map layer and replace it with 3-D satellite imagery from the cloud. It still retained the road map information, points of information, but it also supplemented it with cloud information,” he says. “What we found is that over the years, customers have shifted from user data that is in the vehicle to preferring to use data that is in the cloud because it is more real time, up-to-date, and easier to use. As this behavior has changed, the ability for us to rethink how navigation systems are designed has become more important. For example, map updates Over the Air (OTA) are something that we have recently introduced. Going forward we think mapping will primarily exist in the cloud.”

Volvo

Volvo launched a connected infotainment service in its cars in the fourth quarter of 2013 in 60 cars throughout Europe, and then in the second quarter of 2014 to all models globally. The Sensus Connect service enables the user to have a lot of connected experiences with available in-car apps. In terms of getting your car connected to the Internet, you can either do that through your own phone, tethering over wireless or Bluetooth, or you can use the optional telematics unit in the car, which will also give you a Wi-Fi hotspot and remote access to the car through a smartphone app. Sensus Connect is available for all Volvo cars. Almost 90 percent of its customers go for the connected infotainment solution.

“I think we were expecting to have around this number of customers connected. We were betting on this. We tried to make sure we offered it without buying a super premium package just to get the connected experience. So, you have the option to be connected from a fairly standardized level if you will. You can add things on top like navigation, which comes with a lot of connected features, as well as the telematics unit,” says David Holecek, director of connected products and services at Volvo Cars.

When looking at the pure connectivity part, and having an onboard telematics unit, Volvo is currently at 50 percent take rate where it has launched this as an option. Uptake stretches across 21 markets around the world including most of Europe, China and the United States.

Volvo is also looking at the connected car to boost the vehicles’ experience. It has already launched a service called “in-car delivery,” which can provide a digital key to the car and, therefore, don’t need to unlock it with the physical keys. The company conducted a pilot study of the technology last year, and it launched this service recently. The service provides the car owner, for example, the ability to get a delivery of packages or groceries to their car trunk without being there.

“When you order from an online store, you can opt in for car delivery. You will get a notification that you will get delivered to the car. You also give the company a limited window to open your car trunk. It is all controlled. When they close the trunk, the car is completely locked. This is a very secured service [and] it is fully covered by our insurance company. So, if anything happens, we would take responsibility for it. This is just the first step, we will see many more of these out-of-car experiences. The connectivity of the car can do things for you even when you are not in the car,” Holecek explains.

Mercedes-Benz

Mercedes-Benz, a heavyweight name in the automotive sector, sees itself transforming from a car manufacturer to a networked mobility provider, whereby the focus is always on the individual. All of its cars are always on and connected — even older cars can be retrofitted with adaptors so they can also be connected. It is a key part of the company’s vision. Mercedes now offers a number of connected services to its customers. For example, an accident recovery service where, after using the Mercedes-Benz emergency call system, this service connects the driver with the Customer Assistance Center so that further assistance can be given if required to deal with an accident or a broken-down vehicle. There is also a breakdown management application, which provides technical assistance in the event a car experiences mechanical failure. To this end, the GPS position and the condition of the vehicle are transmitted to the Customer Assistance Center, which informs Mercedes-Benz Service of the issue. Alongside this, there is a maintenance management application where the vehicle detects and reports pending maintenance needs and sends the necessary data to the service outlet as the basis for preparing a service quote. These are just some examples of the applications that Mercedes is working on.

In terms of its roadmap for 2016, the company is introducing a new car called the Concept Intelligent Aerodynamic Automobile (Concept IAA). This is, in essence, two cars in one, which can go from an “aerodynamic” mode into a four-door coupé. The IAA automatically switches from Design mode into Aerodynamic mode upwards of 80 km/h, altering its form with a large number of active aerodynamic measures. It is Mercedes’ vision of the car of the future, today, and the digital experience will be key behind this.

The Satellite Play

An interesting area is what impact the satellite industry can play in the connected car market. While it is unlikely to have a mainstream role similar to cellular technologies, it nevertheless could have a strong impact, particularly in a market like the United Sates. Malhotra says an area where he feels satellite technology can have an advantage is the amount of data that can be transferred at a single time.

“With a single stream, you are immediately populating the entire nationwide geography. We moved away from satellite technology for traffic services to the online system, because we needed to have the two-way communication channel with low latency, and because the download channel was creating a processing headache within the vehicle due to the large amount of non-local data. But where this capability does become very useful is when we look at things like OTA updates. It is yet to be determined what the right process will be for this; in fact, we have been quite successful launching OTA updates for items like map data over the cellular channel. But these services have to be designed carefully to not break carrier network management thresholds,” he says.

According to Malhotra, one of the possible areas of investigation for Audi is whether OTA software updates for quality management, recall management, or sending features or notices can be done over a majority of the country through satellite-based communications and then following up on the remaining vehicles over the cellular channel. He believes this could reduce the cost and provide a more effective way of implementing large data downloads going forward.

“We will have to see how the business models evolve over the next three to five years but the technologies are there. We are also monitoring the developments in the vehicle-to-vehicle and infrastructure communications space and satellite technology could be a part of the solution there as well,” he adds.

In Europe, satellite could play a part in the rollout of the Emergency Call (Ecall) safety service, scheduled to take place in 2017 across Europe.

“If you look at the statistics, some of the worst car accidents are in remote areas, and these areas may not have phone reception. So, this is where satellite technologies can step in and fill the void in some core services like that,” says Andrew Lee, principal consultant for automotive and transportation at Frost & Sullivan.

Where the Market Goes Next

Lee believes that, while the trend toward a connected car is nothing new, the conversation has entered a new phase. “The telcos have started to work quite heavily on this. We have had more requests from telcos for intelligence on the connected car, and, for instance, you will know that Vodafone acquired Cobra Telematics. So, it is now Vodafone Automotive,” he says. “So, now their key [Unique Selling Point] USP is to do with connectivity; but they also look after the communications. Previously, you had the telematics company like TomTom, and then you had to rely on paying a Vodafone or an O2 or any telecoms company for communication. So, there is greater communication of the devices and the actual telcos.”

Holecek believes connectivity is something that customers really want. He points to a study done two years ago by Accenture, which surveyed 15,000 new car buyers around the world and asked them to rank what was most important. “The very surprising findings were that 39 percent of the respondents answered that in-vehicle technology is the top priority when selecting a vehicle whereas power and speed (engine and horsepower) was just 14 percent. About three times as many people said in-vehicle technology was the key factor when deciding which car [to buy]. Power and handling is not up there any more. It was a surprise, even to us. We have sensed that trend coming already, but it was a surprising finding for many parts of the organization,” he says.

Frost & Sullivan believes that by 2018, 50 percent of all cars will have connected services in Europe; this is on top of anything related to Ecall. “I would say Europe is three years behind the United States in terms of connectivity. For the United States, we would say there already is 50 percent penetration for connected cars. [General Motors’] OnStar is being rolled out as standard on new vehicles. But, Europe is catching up,” Lee adds.

_{Mark Holmes is the editorial director of Via Satellite and Avionics magazines.}