Connected and autonomous vehicles (CAVs) can offer a broad range of services ranging from fully or partially autonomous vehicles through to in-car infotainment services as, emergency response, remote diagnostics, navigation tools and music streaming. Car manufacturers have already deployed a wide range of connected car services, such as the OnStar infotainment services provided by General Motors, and those launched by Jaguar Land Rover. In the UK, the Greenwich Automated Transport Environment (GATEway) began trials in April of this year of autonomous vehicles in London.

The suppliers vying

There is fierce competition among providers for ownership of the relationship with drivers (and access to the associated data). In relation to connectivity, mobile operators compete with specialist IoT connectivity providers deploying innovative cloud-based connectivity platforms. While connectivity providers often enable IoT services provided by the car manufacturer or an OEM, they may have limited opportunity to monetise a relationship with end user customers.

Technological challenges

Connectivity is reliant on consistent access to mobile data networks, the industry standard currently being 4G. Reliable technology and broad network coverage are central to this. UK mobile operators have faced criticism for spotty network coverage, especially across the entire length of roads and in rural areas. The Ofcom target of 98% coverage from at least one operator by the end of 2017, is looking somewhat unlikely. This means network coverage remains a problem for CAVs in the UK. A potential saving grace for coverage, especially when 5G arrives, is the use of satellites. They are the most effective way to reach areas beyond terrestrial coverage and into aircraft, boats and fast-moving vehicles such as trains. Their use will be significant in conjunction with 5G so will help to address the coverage problem.

5G is the next stage of mobile networking and is seen as a key enabler for CAVs given expected data speeds. However, widespread rollout isn't anticipated until 2020 in the UK and is lagging behind roll-out plans elsewhere such as in South Korea. With 5G roll-out plans varying across different markets, there is a risk that differing international standards could prove problematic for connected cars which move between borders. It is important that regulators adopt a co-ordinated approach to spectrum allocation for 5G services for the same reason, and that the allocated bands are made available as soon as possible.

Regulatory challenges

As connected car solutions are international in nature, connectivity providers need to address regulatory compliance across jurisdictions in which the regulatory regimes may vary hugely. While many markets are fully liberalised with low barriers to entry for new market entrants, significant regulatory barriers remain in place elsewhere (e.g. a restriction on the provision of connectivity services by a foreign owned service provider). The regulatory regime can have a material effect on delivery models, with work around options including permanent roaming (where permissible) or greater reliance on local connectivity providers. It's tough for IoT suppliers to plan for the future with connected cars when regulation continues to diverge in this area.

As to 5G, the disharmony on frequency spectrums between international regulators is a concern. Greater discourse is required so that connected vehicles are able to operate within common spectrum bands. Within the UK, delays in the rollout of 5G are likely given that H3G (Three UK) has begun a judicial review into the competition measures of Ofcom's spectrum auction. EE (BT) subsequently began proceedings to protect their position too. Such regulatory difficulties could arise in any jurisdiction in which connectivity suppliers are looking to develop.

The more you know…

Regardless of the exact manner of the provision of connectivity, the complex, commercial relationships between inter-locking providers and drivers or owners of connected cars means there's a plethora of valuable data being generated about the driver or owner and the vehicle. This can include driving preferences, geolocation data, vehicle components updates and safety information, among many other things. Such volumes of data are easily monetised as big data analytics providers can offer their findings to other interested parties. It is, however, worth noting that the use of personal data is heavily regulated in many jurisdictions, not least in the EU where, under the incoming General Data Protection Regulation, non-compliance can lead to fines of up to the higher of 4% of annual global turnover or Euros 20m. See our article for more.

Connecting the dots

CAVs are a reality and represent a significant growth market. Regulators have an important role in in enabling investment and growth.