The business of tracking vehicles and satellites on the road is moving from being a mainly satellite-based service to one that increasingly relies on terrestrial wireless network technology -- meaning that the information exchanged will become far richer and more useful. And a raft of providers, from nationwide carriers to Microsoft to small specialized startups, are entering this new market.

Whether companies will flock to the new auto-based applications, however, is an open question.

Earth-bound networks offer several advantages over satellites, says Tom Doyle, VP of business development for Qualcomm Inc. (Nasdaq: QCOM) wireless business solutions (QWBS).

"Terrestrial networks keep getting better," says Doyle in an email. "QWBS has a mix of products shifting more and more to terrestrial. Most of our R&D is in terrestrial, not satellite. There’s more bandwidth, more capacity in terrestrial."

With more bandwidth, more data can be transmitted to and from the vehicles, taking telematics beyond simple tracking applications, allowing more graphical mapping services and multimedia applications, such as video broadcasts.

Qualcomm leads the industry when it comes to providing high-speed terrestrial wireless technology for the next generation of telematics applications, according to Phil Magney, principal telematics analyst at research firm TRG.

The CDMA pioneer has already developed third-generation cellular network technology, in addition to the wireless broadband capabilities it acquired with startup Flarion. (See Qualcomm Acquires Flarion.)

Magney, however, sees Qualcomm's high-speed, high capacity MediaFLO technology, usually envisioned as a mobile TV application, as potentially interesting for telematics users. He says that the technology could be used to broadcast video and data to users on the road.

"This is just around the corner," Magney says.

A tough sell
Verizon Wireless said in December 2005 that it plans to rollout a MediaFLO network covering half of its current markets in the U.S. It is expected to launch late in 2006. (See Qualcomm, Verizon Collaborate.)

This means that advanced telematics applications could likely be offered over the new network in 2007.

The move from pure satellite tracking to applications that combine GPS tracking with higher-speed data delivery over cellular or other networks is one of the major advances occurring in the telematics industry.

For the average user, however, telematics can still be a tough sell. As Qualcomm's Doyle says: "The primary competitor is 'no purchase.' Driving adoption is very important."

With that in mind, here's a rundown of the telematics market and a look at some of the applications that this technology is driving.

Automotive definitions
Telematics refers to the integration of GPS and -- sometimes -- other tracking systems into an automobile's electronics so that the user’s location can be pinpointed. Vendors are now starting to build more features into such systems so that more localized information can be delivered to the driver.

Fleet management is the business application of telematics, which literally involves taking asset management on the road. Business users use central software to track the routes vehicles follow and how long it takes to deliver goods and passengers to particular destinations.

The market
Sales in the telematics market -- including commercial and consumer applications -- as well as hardware and service revenue are predicted to reach $6.5 billion by 2008, according to the technical market research firm Business Communications Company

GPS Market Researchers C.J. Driscoll and Associates say that in the U.S. today, nearly 1.9 million GPS/wireless devices are used to monitor business applications such as fleet vehicles, trailers, construction equipment, and mobile workers. By 2009, this market will expand to over 5.8 million units and annual hardware and service revenues will grow to over $2 billion, the researchers predict.

Telematics boosters argue that the technology involved will help to improve road safety and traffic management. The networked vehicle can also receive far more data than ever before about the outside world -- in the form of route maps and local data -- and be fitted with onboard tools to troubleshoot reliability problems and protect the car from theft.

Most analysts agree, however, that cost and the complexity of implementing vehicular tracking and communications are the key factors that will hold back the implementation of telematics for business and consumer applications. Many also wonder how aware consumers are of the technology and how much they are prepared to pay for it.

There is also the question of how much business owners want to know what their drivers are up to. Some suggest that this could be a factor for smaller businesses taking up telematics.