Author(s): Raghu Gopal
Last week, Chevrolet, a division of General Motors, announced the first unlimited data plan for in-vehicle use in the US. Chevy owners in the US with access to an OnStar 4G LTE Wi-Fi hot spot can now subscribe to an unlimited, prepaid data plan for $20 a month.
Chevrolet claims that it has sold 3.1 million cars equipped with its OnStar LTE technology since 2014 — more than any other automaker — and customers streamed 4 million gigabytes of hot spot Wi-Fi data in 2016 alone. Chevy said in 2016 that drivers of Silverado, Suburban and Tahoe vehicles consumed the most data. The MyLink infotainment system in 14 of Chevy's 2016 models is compatible with both Apple CarPlay and Android Auto, making it relatively straightforward for smartphones to be integrated with the car.
Chevrolet is partnering with AT&T for the OnStar LTE service. The carrier introduced its own unlimited data plans last month. Unlimited 4G data has become the latest trend in the US with all four major wireless carriers in the country — AT&T, Sprint, T-Mobile and Verizon — now offering unlimited post-paid plans and several offering unlimited prepaid services.
In-car LTE is not nearly as pervasive as personal connectivity, but as car fleets get refreshed, a growing number of autos on the streets will have the equipment to offer optimised connected vehicular services. The small footprints of mobile devices such as smartphones and tablets limit the placement of antennas. Vehicles provide the surface area and battery power to support an array of cellular antennas.
As smartphone penetration rates reach near-maximum levels in many developed markets, cars are providing mobile operators one area of growth for new subscriptions, and connectivity services enable automakers to create an ongoing billing relationship with customers.
Last week at Mobile World Congress, Ford announced a partnership with Vodafone to bring 4G LTE connectivity to vehicles in Europe via the new FordPass Connect built-in modem. FordPass supports Wi-Fi hot spots allowing up to 10 devices to connect to the network simultaneously.
Connectivity is changing the automotive industry, turning cars into rolling annuities, and General Motors together with AT&T have been at the forefront of this trend. Monthly service plans could help automakers improve customer retention and loyalty, and decrease their own version of churn. Chevrolet's margins on the $20 unlimited data deal are certainly thin, but there's the potential of creating incremental revenue through other value-added services and maintenance.
Given the competitive nature of both the auto and wireless business, we expect to see other car-makers jump on the unlimited bandwagon soon.