Verizon flexes its driverless auto muscles

Michael Wayland
The Detroit News

As Detroit automakers and Silicon Valley tech companies compete over autonomous vehicles, Verizon Communications Inc. is positioning itself to be the leader in managing and analyzing those fleets of self-driving cars.

The New York-based telecommunications giant is rapidly becoming the largest player in telematics — a combination of telecommunications, vehicular technologies and real-time wireless data that are central to connected cars and self-driving vehicles.

“There’s still a lot to be determined about the future and how autonomous vehicles and other developments in the automobile industry play out,” said Andres Irlando, the CEO of Verizon Telematics Inc. “But the collection of assets that we have and we’re building will absolutely make us a player in that space.”

Those assets have rapidly grown in the last five years to transform Verizon from a network provider for automakers to a partner in logistics management and connected in-vehicle software and applications.

Verizon most recently made moves to acquire Fleetmatics Group PLC for $2.4 billion and Telogis Inc. for an undisclosed amount. The Telogis deal closed on July 29. Fleetmatics expects to be finalized in the fourth quarter.

Both companies offer services for managing and operating vehicle fleets, which many believe to be the gateway for acceptance of self-driving cars.

Once both deals are closed, Verizon will control about 25 percent of the telematics market, according to C.J. Driscoll & Associates, a telematics market research and consulting company.

“They will be the largest player worldwide,” said Clem Driscoll, founder and principal of the firm in California. “These solutions can command a pretty good monthly fee and Verizon has a very strong name which they’re already applying to these companies.”

Ireland-based Fleetmatics provides operators of truck and delivery fleets with information on vehicle location, fuel usage, speed and miles driven. That information will be necessary for connected vehicles that can drive themselves. Fleetmatics has more than 37,000 customers and about 737,000 subscribers.

Telogis is a cloud-based software firm specializing in connected vehicles and managing mobile devices and wireless networks.

The telematics market is expected to grow from about 8 million GPS/wireless devices being used to manage fleet vehicles, trailers, construction equipment and mobile workers to more than 14 million units by 2019 — creating annual hardware and service revenues of nearly $4.7 billion — according to a comprehensive study by the Driscoll firm.

Verizon’s strategy revolves around leveraging its network and partnerships it has developed through its core businesses.

Marni Walden, executive vice president and president of product innovation and new businesses for Verizon, described it earlier this month as “leveraging the muscle of Verizon” during the Media, Communications and Entertainment Conference in Beverly Hills, California.

Irlando said: “You can’t have autonomous vehicles if they’re not connected to the internet, which our best-in-class networks enable. That connection becomes ever more important — the reliability of it, stability of it, security of it — as the stakes associated with autonomous vehicles goes up.”

A dropped cellphone call is one thing; a dropped connection with a self-driving car going 70 mph is another thing entirely.

Verizon started in the automotive sector with General Motors Co. and its OnStar service in 1996. The company continues to support OnStar services for GM vehicles made prior to the Detroit-based automaker’s switch to AT&T in 2014. It has grown that single partnership into others — most prominently with Mercedes-Benz and with its own Hum aftermarket connected-vehicle product.

Hum is an aftermarket tool compatible with most vehicles made since 1996. It can be used with a smartphone app to provide connected-car technology such as vehicle diagnostics, location-based services, and roadside and emergency assistance.

“The thing about this product,” Irlando said, “is it’s the only product on the market that enables any vehicle to become a smart car — even if it wasn’t built with smart-car technologies and it provides the most modern roadside assistance technologies together.”

There remains room for any of Verizon’s telecommunications competitors or even automakers to enter the telematics space, according to Driscoll.

“You have a strong growth in the industry that’s maturing,” he said. “It’s not going to grow at that rate forever, but it has been growing consistently and it is a recurring revenue business.”