Why Connected Car Could be So Big for Mobile Operators

The connected car ecosystem is among the most-promising for mobile operators for several reasons. First, firms such as Verizon and AT&T already earn revenue in that ecosystem, so it is not completely-new terrain. But there are other reasons.

Connected vehicle systems promise huge changes in the cost of transportation, and huge changes in industry dynamics. And anything that promises huge disruption of existing industrial business models always will get attention, investment and rearrange revenue streams and business models.

So connected transportation could provide huge new roles for access providers who move up the stack into platforms, services and roles.

“If you remove the cost of the human driver from an on-demand trip, the cost goes down by perhaps three quarters,” argues Benedict Evans, “If you can also remove or reduce the cost of the insurance, once the accident rate has fallen, it goes down even further.”

So, autonomous vehicles are “rocket-fuel for on-demand” transportation, he argues. And, logically, potential reshaping of auto sales and support markets, demand for urban parking (possibly including the cost of adding mandatory parking facilities in large buildings) and other externalities.

Demand for, and use of, public transportation could change dramatically, in many cities. Oddly enough, if there is less congestion overall, might public transportation journey times be shorter? And, if so, might more people use public transportation?

On the other hand, will on-demand transportation actually reduce congestion as much as some believe? Might some passengers who might have chosen public transportation choose on-demand modes instead?

And, if so, what effect might that have on the business case for supplying bus service in many areas? Might it be cheaper for a city or municipal transportation service to rely on on-demand as a substitute product, in some instances?

Up to this point, on-demand ride sharing has competed with use of taxis. In the future, might on-demand also compete with package delivery services, owned vehicles and bus service?

Such changes are hard to model. But all suggest the widespread implications of autonomous vehicles for mobile service providers, especially when those operators can create or build roles elsewhere in the ecosystem beyond communications.