Over the last decade, the ubiquity in connectivity and changing customer expectations have also transformed purpose-driven connectivity in-vehicle solutions into a more augmented and lifestyle-driven one; giving rise to connected infotainment services and service personalisation.
With the current 4G and emerging 5G cellular network communication technologies and standards, infotainment services have enjoyed an increased emphasis, creating monetisation opportunities based on driver and passenger preferences.
Infotainment is a key concept in this ecosystem, connecting drivers and passengers which comprise a combination of systems that deliver in-car entertainment and information largely carried out through audio and video interfaces controlled by touchscreen displays and voice commands. Often deployed as means to increase customer loyalty and brand visibility by OEMs, infotainment capabilities are greatly
improved by the enhancements in connectivity, leading to greater monetisation opportunities both for them and MNOs.
Thanks to the aforementioned advancement in connectivity technology, automotive OEMs (Original Equipment Manufacturers) have been increasingly using embedded connectivity in connected cars rather than tethered systems. Embedded connectivity is achieved with a built-in modem and SIM card, whereas tethered systems, such as telematics devices, require special hardware that uses smartphones (and user SIM) for connectivity through IP (Internet Protocol) sharing; acting as modems, whereby the connectivity costs are met by the end user. Embedded connectivity also paves the way for more advanced infotainment systems backed by edge computing providing advanced driving assistance and for autonomous driving in the future.
This growth of 91% will be driven by the advancement of both ADAS (Advanced Driver Assistance Systems) and increasing the capabilities of in-vehicle infotainment systems. The research identified 5G’s high-speed and low-latency capabilities as transformative to these goals, requiring effective collaborations between automotive OEMs and operators to realise.
Operators to Play Key Role in Leveraging 5G Connected Vehicles
The research found that operators are critical to unlocking new use cases, such as autonomous driving and data-heavy infotainment via 5G; representing a $3.6 billion opportunity for providing 5G connectivity enablement in 2027 globally.
Research co-author Nick Maynard explained the opportunity further: “5G can allow automotive OEMs to upgrade the in-vehicle experience. In a vehicle market transitioning to electric vehicles, improving the user experience is key. Operators hold the critical role in enabling this in a reliable way, making them the partners of choice as their 5G networks rapidly expand.”
Until very recently, operator and OEM partnerships had been confined to narrower business model scopes in which operators were regarded as collaborators, secondary to the main OEM proposition. This is rapidly changing, owing mostly to the advancement in connectivity and operator capabilities going beyond service management and adding value to services/products provided. One of the most common examples of this in the connected vehicles space is the utilisation of infotainment features and the associated connectivity and data considerations. For
instance, eSIMs are borne out of such safety and efficiency needs; giving drivers and passengers the ability to choose between different networks according to coverage and service reliability. For operators, eSIMs allow them to rapidly onboard significantly more devices into their networks, paving the way for more IoT connectivity.
Future Opportunities for Operators
Aiming to capitalise on the enhanced connectivity and volume capabilities of 5G, operators across the globe started their deployments as NSA (Non-Standalone) solutions, which means that they are built on 4G solutions, anchoring the control signaling of 5G Radio Networks to the 4G Core. On the other hand, SA (Standalone) solutions do not depend on 4G networks and/or legacy cores; they are independent and entirely new fully virtualised 5G networks that include new radio access networks, new transport networks, and new 5G mobile core and edge networks.
Although initial 5G deployments had been more NSA, 5G SA networks are emerging. Therefore, the provision of 5G infrastructure, while also not completely abandoning 4G/LTE investments for the short to medium term, can prove key for future operator business models. One of the key benefits of enabling massive IoT use cases is part of 5G, known as the eMBB (Enhanced Mobile Broadband) standard, which allows IoT applications to send and/or receive large amounts of data in short periods of time.
5G deployments will also enable and enhance end-to-end network slicing, which is a key technology allowing connectivity and data processing to be tailored according to the needs of different business industries by creating multiple virtual networks built on the same physical infrastructure. Slicing enables each network slice to have its own security, latency, and throughput requirements. Therefore, network slicing engenders new opportunities for operators to extend their coverage offers to different industries with guaranteed service quality and customised networks separated for any vertical services. In the context of the connected vehicle, operators can lease and manage a virtual network or a ‘network slice’ to OEMs.
Commercial Use Cases Lagging Behind Connected Vehicles
The research predicts that by 2027, commercial vehicles will only account for 20% of connected vehicles worldwide, representing a small increase from 16% by the end of 2023. The research found that commercial vehicle design is not leveraging connectivity beyond simple emergency call features and basic connected infotainment systems, although this is changing, as businesses prioritise tracking and logistics capabilities. Accordingly, the research recommended that automotive OEMs prioritise integrations with common fleet tracking systems out of the factory to maximise the benefits of connectivity, and to enable commercial fleet owners to maximise efficiency in their processes.