In Part 1 of our Connected Car series, we provided some basics about the connected car and its legal framework.   In the following, we highlight some of the major regulatory issues that the various players in the connected car value chain need to consider.

1. TELECOMMUNICATIONS REGULATIONS

Connected car services are offered through connectivity typically provided by a mobile and/or a satellite network operator. This makes the connected car subject to telecoms regulations in each jurisdiction where it circulates.  But the technological developments of connected cars do not always fit with the pre-existent telecoms regulations which were designed around a different concept of mobile connectivity – the exigencies around voice communication over a smartphone are different to the needs of M2M transmissions.  

Therefore, in several countries certain typical features of connected car business models may raise a number of issues.  For example, delivering multinational connectivity through permanent roaming or the use of foreign IMSIs (International Mobile Subscriber Identity, a number that is embedded in each SIM card and identifies in a unique manner the country network and the subscriber) is a pressing challenge that needs to be, and is being, addressed.   Furthermore, there will be a risk that players in the value chain (e.g., car manufacturers) qualify as resellers of electronic communication services, thus entering the realm of telecoms regulations. In addition, it is not always clear how rules on number portability could work in a connected car environment.

2. AUTOMOTIVE AND ROAD REGULATIONS

While redefining the concept of cars, connected cars are still vehicles travelling on public roads.  As such they must comply with type-approval requirements and technical standards which are of the essence in the automotive industry as well as in relation to road regulations.  This is particularly important when it comes to rules conceived to prevent drivers’ distraction and the ensuing safety risks to other vehicles or pedestrians. Connected cars allow a continuous interaction between the driver and the vehicle, including the flashing of warnings on the dashboard, the screen shield or rear mirrors.  It is important that these warnings be designed and presented so as to minimize distraction.   

3. PRIVACY AND DATA PROTECTION LAWS

Privacy and data protection are of paramount relevance in a connected car environment. In particular, the continuous collection, processing and storing of location data will challenge core data protection principles relating to transparency, data minimization and purpose specification, etc.  Further obtaining data subjects’ consents will possibly be an issue in certain countries, especially in relation to passengers or purchasers of second-hand cars.  Also, the inherent mobility of data poses security issues that the various players need to address carefully in advance.

4. CONSUMER PROTECTION LAWS

Cars are typical consumer goods, and connected cars are no exception.  Now, in addition to general consumer protection ramifications, specific legal issues may arise around the right of withdrawal for connected car related distance contracts, depending on how contractual arrangements are qualified.  The enjoyment of this right would in fact change depending on whether the distance contract with the consumer qualifies as a contract for the provision of a service or of digital contents.  Also, in several countries there are uncertainties on whether the statutory warranty for defective products applies to digital contents downloaded via the on board unit.

5. OUTLOOK

Now, all of the above poses significant challenges to the players in the value chain as well as for regulators but at the same time it provides great opportunities.  The value of the global market for connected cars is predicted to be in the range of EUR 100 billion by 2020 (source: Booz & Company) and the expected compound annual growth rate is 34.7% from 2013-2019 (Transparency Market Research).

Welcome to the future!