Operator's second annual connected car survey suggests safety apps are the main service drivers will pay for, but their appetite for connectivity is growing.

Sarah Thomas, Director, Women in Comms

July 16, 2014

3 Min Read
Telefónica: Safety Is Top Connected Car 'App'

When you think of a connected car, it's likely navigation and infotainment services that come to mind, but safety features are still the top "apps" that drivers want -- and will pay for.

According to Telefónica SA (NYSE: TEF)'s second annual Connected Car industry report, increased safety and early warning systems, followed by smarter navigation and usage-based insurance, are the most popular connected car features. Consumers are starting to ask for them by name, with 71% of drivers in the survey indicating they are interested in using, or are already using, connected car services.

Telefónica says that 80% of consumers expect the connected car of the future to provide the same connected experience they are used to at home, at work, and on the move via their mobile phones -- implying that they do want to go beyond safety features as well.

What they don't necessarily want is to pay incrementally for these types of services. Pavan Mathew, Telefónica's head of connected car, says that, especially in the US, drivers will pay for safety- and security-related services, which could include car diagnostics, geofencing to track the whereabouts of young drivers, and traditional roadside assistance services. But infotainment and media apps are more challenging, especially since the average driver is only in the car for his or her commute in the developed world. (See Finding the Value in Transportation Telematics.)

That said, what consumers will pay for, as well as how they will pay, is still being worked out. Telefónica suggests there are geographical variations as well. It found that 40% of Spanish drivers prefer a one-off payment, while Americans, Germans, and Brits would like to pay for the connectivity itself, with the option to add on additional services. (See AT&T Makes GM Cars a Data Plan Add-On and AT&T Tests Drivers' Desire to Pay for LTE.)

Also, while 60% said they prefer to access connected services through their dashboards, most are still tethering their smartphones for any other type of app or service. Mathew says to expect a lot more activity around embedded connectivity in the next year and beyond, although it will primarily be 3G with 2G fallback, since LTE networks around the globe aren't yet ready for this kind of bandwidth-heavy deployment, and car makers aren't prepared to pay for it. (See MNOs Need to Get in the Driver's Seat.)

Last year, Telefónica used its survey to predict that the number of vehicles with built-in connectivity would increase from 10% in 2013 to 90% by 2020. This meshes with a forecast from Analysys Mason that 90% of new cars will have embedded connectivity by 2024. (See Connected Cars: Tether Today, Embed in 10.)

Telefónica in the driver's seat
The survey results are, of course, good news for Telefónica, which is making a big push into the connected car. Earlier this year it signed an agreement with Tesla to bring connectivity to its Model S car in Europe. The appointment of Mathew, who joined two years ago from General Motors as "head of connected car," shows how serious it is as well. (See Tesla Connects Its Cars in Europe With Telefónica and If These Cars Could Talk.)

Mathew was part of the transition when Telefónica brought its digital spin-off, Telefónica Digital, back in-house earlier this year. At that time, the connected car and machine-to-machine communications became big focuses for the entirety of the operator, and not kept to a separate division. It sees a big uptick in demand for connectivity in cars, even just since last year's survey, and it wants to play an integral role in the value chain. (See Telefónica Walks the Digital Tightrope.)

"Now telematics service and connectivity in certain models are in the top 10 reasons to purchase," Mathew says. "Consumers are asking what kind of connectivity they have when they come in to purchase the vehicle. Consumers have a framework, they understand it, and are looking for it."

— Sarah Reedy, Senior Editor, Light Reading

About the Author(s)

Sarah Thomas

Director, Women in Comms

Sarah Thomas's love affair with communications began in 2003 when she bought her first cellphone, a pink RAZR, which she duly "bedazzled" with the help of superglue and her dad.

She joined the editorial staff at Light Reading in 2010 and has been covering mobile technologies ever since. Sarah got her start covering telecom in 2007 at Telephony, later Connected Planet, may it rest in peace. Her non-telecom work experience includes a brief foray into public relations at Fleishman-Hillard (her cussin' upset the clients) and a hodge-podge of internships, including spells at Ingram's (Kansas City's business magazine), American Spa magazine (where she was Chief Hot-Tub Correspondent), and the tweens' quiz bible, QuizFest, in NYC.

As Editorial Operations Director, a role she took on in January 2015, Sarah is responsible for the day-to-day management of the non-news content elements on Light Reading.

Sarah received her Bachelor's in Journalism from the University of Missouri-Columbia. She lives in Chicago with her 3DTV, her iPad and a drawer full of smartphone cords.

Away from the world of telecom journalism, Sarah likes to dabble in monster truck racing, becoming part of Team Bigfoot in 2009.

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