Consumers in the U.S. and around the world increasingly want an Internet connection in their car, according to a study released Tuesday by AT&T Inc.’s Drive Studio and Ericsson, a Sweden-based communications technology and services firm.
The study found almost 75 percent of those surveyed who are likely to buy a car in the next three years consider connected car services — which come from a wireless Internet connection in the vehicle — important in their next car purchase. A Wi-Fi hotspot was the the top feature U.S. customers are willing to buy for their car, according to the study that focused on connected car awareness and included about 7,500 people in the U.S., Germany, Brazil, Mexico and China.
The connection allows drivers to stream music, use navigation and receive real-time traffic information, for example. It also will be necessary for autonomous vehicle deployment in the future.
“We’re very bullish on this space,” Chris Penrose, senior vice president of the Internet of Things for AT&T Mobility, told reporters in Detroit on Tuesday. “We see a lot of opportunities.”
AT&T expects to have more than 10 million vehicles connected to its network by the end of 2017; it had 4.8 million connected car subscribers as of the second quarter this year.
Much of that business is coming from General Motors Co., which partnered with AT&T in 2013 and has more than 1 million vehicles on the road in the U.S. and Canada with OnStar 4G LTE connections. GM also is expanding its 4G LTE service into Europe, among other regions globally.
In addition to GM, AT&T has relationships with eight other top automakers. Earlier this year, AT&T announced a deal to bring high-speed Internet into Jaguar Land Rover North America vehicles in 2015, a pact with Audi of America to equip 2016 Audis with AT&T 4GLTE or 3G coverage, and a partnership with Subaru of America to enhance infotainment system offerings.
Penrose said AT&T has not said how much revenue it is generating or hopes to through its business with automakers. Penrose said AT&T makes money on connected cars through wholesale relationships with carmakers that pay so much per connection, through monthly service plans with consumers to use the connection in the vehicle and through over-the-air software updates.
Automakers may increasingly use the connection in the car to conduct over-the-air updates for recall fixes.
“There’s a huge savings there” for car companies, Penrose said.
Earlier this year, GM said its OnStar 4G LTE connections could be worth $350 million in profits by 2018. The carmaker sees the Internet connection helping create business opportunities such as car sharing services and autonomous driving.
Greg Ross, director of business development and alliances at GM’s Global Connected Customer Experience unit, said the built-in connection is active during its time in the factory and the transportation chain. That has efficiency uses for GM, he said. For example, the company now can use the connection to count vehicles; it used to have someone manually scan each vehicle to complete an audit.