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 The reason? Simply put, the type of network Verizon uses isn't
global.
The $1.7 trillion wireless industry has just about reached capacity
for growth, and mobile companies are turning to connected devices
for future revenue. Connected cars, which hook up with a wireless
network, currently allow you to do everything from turning an auto
into a Wifi link for other devices, to honking its horn from
anywhere in the world. The cars are also able to update software
remotely.
The market for such technology is just getting ramped up. It
produced revenue of $8 billion in 2013 and is expected to bring in
$20 billion annually by 2018, according to Juniper Research.
So far, AT&T has announced deals with brands at eight automakers and
Verizon is trailing with four announced deals. Sprint has announced
two and T-Mobile has announced one. The value of such deals have not
been disclosed.
Verizon, for its part, rejects the notion that it is falling behind.
It says it is offering more robust services to consumers and auto
makers than its rivals.
GLOBAL ADVANTAGE
But AT&T appears to have the edge because its network uses
specifications that have become a global standard, analysts and
consultants said. Verizon's network specs are only used in a handful
of countries.
While that hasn't stopped Verizon from becoming the United States'
most popular carrier, it puts the company at a disadvantage with
automakers who want to manufacture cars that work on a common
standard worldwide.
AT&T has also developed a universal SIM card for cars, tractors and
shipments that can be programmed remotely to adapt to networks
around the world. Verizon has to install location-specific settings
on cars depending on where they are shipped.
The global reach of AT&T's network type was a key factor in Audi's
decision to sign a deal with AT&T in early September. "We needed a
foreign app that was acceptable in Europe and the U.S.," said Brad
Stertz, Audi's corporate communications manager. "That narrowed the
choices for us at that point."
Unlike AT&T's 3G network, Verizon's does not allow customers to make
a phone call and access the Internet at the same time. So in an
emergency, Verizon's connected cars can't diagnose problems with
vehicle through its data network and call the customer through the
car at the same time.
This factor was one of the reasons General Motors Co. signed a deal
with AT&T in February 2013 for a new line of connected cars, after
almost 20 years in partnership with Verizon.
"We all multi-task every day, so why shouldn't our cars multi-task?"
said Kevin Jackson, a connected customer specialist at General
Motors.
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THE COMEBACK?
That's not to say that Verizon cannot catch up. A new wave of
technology known as Long-Term Evolution will eventually override the
distinction between the two network types. By transforming voice
calls into data, the technology will allow Verizon users to place
calls and access the internet simultaneously. But analysts said
automakers may have to wait until 2020 before the technology can be
reliably used. At that point, they add, it may be too little, too
late for Verizon.
Verizon's president of Telematics, Erik Goldman disagrees. The
company, which in 2012 bought Hughes Telematics, a maker of voice
and data connectivity systems for cars, is not providing just a
wireless connection, he said. The company answers customer help
lines for support on vehicles, trains car dealers to know how to
properly activate the connection in the cars and helps customers
with billing issues. Unlike AT&T, the company does not partner with
any third party for these services.
"Our strategy is to do the entire ecosystem ourselves. It allows us
to participate up and down the value chain," said Goldman.
Another sign of life for Verizon: Wireless carriers often sign deals
not with an automaker as a whole, but for a particular make and
model of a line of cars, leaving Verizon plenty of opportunities to
score deals with automakers around the world.
For example, AT&T's deal with Audi only encompasses the A3 and Q3
cars, leaving other Audi models up for grabs.
Said Elizabeth Kerton executive director of the Autotech Council,
which connects car companies with technologies and start ups: "I
would not recommend AT&T get lazy."
(Additional reporting by Alina Selyukh in Las Vegas; Editing by Eric
Effron and Hank Gilman)
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