Inside telecommunications Issue 9

Service innovation

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Connected car solutions bring cross-sector gains

The world of telematics and machine-to-machine (M2M) solutions for vehicles is evolving rapidly.

As passenger travel rises with increasing urbanization, mobile technology can bring new levels of convenience, by enabling in-car entertainment, optimizing driving routes or aiding intelligent interactions between different modes of transport.

In an EY survey of German car owners, respondents found a range of mobile-related service add-ons appealing:

Figure 1: Connected car – German user preferences

Q: How important are the following requirements for the car of the future? (% respondents)

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Source: The Connected Car: the car of the future, EY, March 2012 (2,000 respondents to a telephone survey)

A number of announcements during Q1 2013 showed that leading automotive players are moving forward with connected car solutions. Electric vehicle manufacturers are also sizing up M2M functionalities.

Telematics innovations are paving the way for new pay-as-you-go pricing models in the car insurance market. Europe is set to lead the insurance telematics market, with more than 44m users of such services expected by 2017.1

Mobile operators are also leveraging partnerships to spur new service offerings in this space.

New telematics services are adopting a range of business models, from business-to-consumer to business-to-business, across various industry sectors. Large technology players are also vaunting their capabilities in the connected car environment.

Carriers boost Ethernet capabilities for retail and wholesale customers

For enterprises looking for improvements in bandwidth rates, strong scalability and cost credentials in a Wide Area Network (WAN) environment, Ethernet represents the way forward.

Leading service providers such as BT are extending their Ethernet capabilities. Other players, including US carrier Sprint, are leveraging partnerships to boost their global coverage. The Ethernet space is also notable for a number of relative newcomers, such as US cablecos.

Looking ahead, small to medium enterprises (SMEs) are likely to become a more important driver of demand. Many medium-sized organizations have a small number of T1 lines, yet changing needs in terms of bandwidth, reliability and privacy mean they are ripe for Ethernet-based solutions.

The carrier Ethernet market is also changing. In February, Comcast became the first service provider worldwide to achieve Carrier Ethernet 2.0 certification from the Metro Ethernet Forum, followed by Telstra Wholesale in March.

The challenge is on for carrier Ethernet providers to consider value-adding credentials in areas such as:

  • Flexible pricing options
  • More powerful online interfaces

At the same time, they need to focus on educating wholesale clients about the benefits available through migrating to carrier Ethernet solutions, as well as the key success factors involved.

Figure 2: US carrier Ethernet services revenue forecast, 2011–2016 (US$b)

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Source: “U.S. Carrier Ethernet Services 2012-2016 Forecast,” IDC, October 2012


1“Europe to Lead Insurance Telematics Market, with More Than 44 Million Subscribers by 2017,” ABI Research, 13 June 2012