2022 was an inflection point in the history of automotive technology: for the first time, the sales of connected cars surpassed those of non-connected cars1. As the market for these vehicles continues to grow, telecommunications service providers will play an instrumental role in their success and realize new avenues for revenue that extend beyond the roads, to assembly lines and even dealerships. But to do so, telecoms must work now to extend the reach and robustness of their networks, and to form strategic partnerships with the key players in technology, government agencies, and the automotive industry.
Covering the map
While the days of fully autonomous driving are well over the horizon, the era of connected cars has most certainly already arrived. Today’s typical vehicle requires network connectivity to activate a wide variety of functions, from driver convenience features like entertainment systems and navigation, to diagnostics services like over-the-air updates and real-time alerts, to safety aspects like over-speed alerts and hazard warnings.
By 2027, the global market for these smart vehicles is projected to reach 367 million2, generating data that will flood telecommunications networks. Further, as cars evolve to incorporate higher levels of autonomous functionality—requiring connectivity for communication with other cars (vehicle-to-vehicle, or V2V) and intelligent traffic systems and pedestrians (vehicle-to-everything, or V2X) - this network strain will only deepen.
Today’s cellular networks in most regions aren’t consistent enough to enable these more sophisticated V2V and V2X communications with sufficient reliability3. Therefore, it’s critical that telecoms accelerate their 5G buildouts, particularly with an emphasis on 5G standalone - 5G core networks without 4G LTE foundations - to provide the groundwork necessary to unlock these capabilities.
Critically, telecoms must also work to address coverage gaps in remote areas that presently have little to no service. Rather than prioritizing coverage only by population density, as telecoms have customarily done, they must also begin to consider traffic density so that more heavily traveled roadways through rural areas have enough bandwidth to allow for reliable V2V and V2X communication.
There are a few ways telecoms can bolster their coverage in addition to traditional cellular base stations. Edge computing deployments adjacent to particularly high-density intersections are one way to help manage the added network load4. Edge brings the benefit of lower latency processing, allowing more agile V2X communications between vehicles and external sensors like traffic lights and pedestrians’ mobile devices. In addition, to provide coverage to especially remote stretches of roads, telecoms can harness 5G non-terrestrial networks provided by of low-earth-orbit satellites - a practice that has proved practical in the defense sector and in maritime communications5.
The need for collaboration
Regardless of size, no telecommunications company can undertake the effort to enable next-generation autonomous cars on its own. Success in this emerging market depends on industry coordination, strategic partnerships and government backing - and those with the best relationships in these areas stand to gain the most ground on their competitors.
The intricate communications frameworks behind tomorrow’s autonomous traffic won’t be possible without a rigorous set of standards that ensure cars, traffic sensors, and other components are all speaking the same language. GSMA, the global association for mobile operators, has been working with governments to align on the Cellular V2X (C-V2X) communication protocol, which leverages 4G and 5G networks. This protocol has the backing of more than 130 leading mobile operators and auto manufacturers who are working to establish the regulatory framework needed for further development6.
Beyond aligning standardization efforts, governments can also throw momentum into the buildout of networks by subsidizing the extension of cellular networks to remote areas that lack the fixed customer density for profitability. Whether such subsidies are built into future infrastructure bills depends on industry lobbying efforts, and participation among telecom companies can help amplify the push.
In the meantime, some telecoms have begun to partner with satellite providers to cover these underserved areas. In this arrangement, the end-user’s service switches from the carrier’s cell network to the satellite network as the vehicle travels out of range, similar to a typical roaming dynamic. Similarly, partnerships with cloud providers can help speed the development of edge solutions for low-latency processing in high-density environments.
New revenue streams
In addition to playing an instrumental role in the realization of the future of transportation, telecoms that invest heavily in vehicle connectivity services stand to realize tremendous new sources of revenue. According to some estimates, 5G connectivity for connected vehicles alone represents a $3.6 billion opportunity7 for telecoms - and the potential for additional services and data monetization figures to raise this potential even higher.
Finally, telecoms can also generate revenue from 5G-enabled automotive applications beyond the realm of mobility. Private 5G networks have begun to transform manufacturing, where their robust connectivity is powering more sophisticated robotic assembly processes and enabling real-time quality monitoring8. For auto dealers, 5G connectivity can unlock novel sales tools like the use of augmented reality to give buyers a look at vehicles in different colors or with premium add-ons. And 5G can even aid in the more efficient disposal and recycling of vehicle components at the end of their lifespans9.
The race is on to build out the data infrastructure to enable tomorrow’s more intelligent, safer, and more environmentally friendly transportation landscape. For telecoms, the challenge is greater than simply building out coverage and capacity; success will ultimately hinge on teamwork and alliances to forge a standardized path forward.
1Source: IBM Institute for Business Value, “Connected Cars,” p.3
2Source: Juniper Research, “Connected vehicles to surpass 367 million globally by 2027, as 5G unlocks data-heavy use cases”
3Source: IBM Institute for Business Value, “Connected Cars,” p.9
4Source: IBM Institute for Business Value, “Connected Cars,” p.16
5Source: IBM Institute for Business Value, “Connected Cars,” p.10
6Source: GSMA, “Connecting vehicles to everything with C-V2X Today and in the 5G Era.”
7Source: Juniper Research, “Connected vehicles to surpass 367 million globally by 2027, as 5G unlocks data-heavy use cases”
8Source: IBM Institute for Business Value, “Connected Cars,” p.6
9Source: IBM Institute for Business Value, “Connected Cars,” p.7
