Operator Telematics Technology Advances Rapidly: But Tariff Packages Lack Appeal
The Internet of Things is regarded as an important strategic layout for operators in the future, and telematics is the most critical component of the IoT. It is estimated that by 2020, China's telematics market size will exceed RMB 50 billion, with enormous growth potential.
To this end, both foreign and domestic operators have long been positioning themselves in the telematics market, such as establishing strategic cooperation with automakers, developing communication technologies suitable for telematics, and exploring business models. In particular, with the maturity of V2X technical standards, operators' enthusiasm for telematics has surged again, and they have begun collaborating with other enterprises on trials and testing.
However, at present, autonomous driving is still far from commercial deployment in the short term. The telematics services currently available on the market all involve networking and controlling the vehicle's multimedia system and certain vehicle units such as doors, windows, and air conditioning. These services do not impose stringent requirements on network quality, but individual consumers are highly price-sensitive. Yet, the telematics packages currently offered by the three major operators for individual consumers are priced similarly to mobile phone plans, or even far more expensive than specific plans such as internet packages and unlimited data packages. This has also led many people to use mobile phone hotspots to access in-car features.
Early Strategic Positioning
In fact, as early as 2012, domestic operators began positioning themselves in the telematics sector. For example, in August 2012, China Telecom signed a strategic cooperation agreement with the Shanghai Municipal Government to jointly build Shanghai as a "Smart City". China Telecom used commercial vehicles, passenger vehicles, and new energy vehicle in-vehicle services as entry points to collaboratively conduct research and exploration of telematics and in-vehicle information service projects in the Shanghai region. Subsequently, the "China Telecom Telematics Service Shanghai Base" was established in Shanghai.
In October 2012, China Mobile IoT Company Limited was officially established in Chongqing, focusing on telematics business. In the same year, China Mobile launched a new telematics product in Shandong for private cars and certain industry users — the "Drive Worry-Free" intelligent terminal. In October 2014, China Mobile signed a joint venture agreement with Deutsche Telekom to establish a telematics joint venture. In April 2014, China Unicom signed a cooperation agreement with Ireland's Cubic Telecom to jointly provide comprehensive automotive informatization solutions for Tesla and deliver automotive informatization services to Tesla users in China.
To this day, the three major operators have established cooperative relationships with almost all mainstream automakers and are actively promoting the standardization and commercialization of V2X technology. For example, China Mobile has taken the lead in establishing a telematics working group within NGMN, and has been advancing the domestic LTE-V2X telematics standard within CCSA; it has also promoted the allocation of LTE-V2X telematics trial spectrum by relevant national ministries. Meanwhile, China Mobile has actively advanced LTE-V2X technology trials. In 2016, together with SAIC Motor and Huawei, it conducted LTE-V2X key technology trials at Yunqi Town in Hangzhou, covering all V2X application scenarios, and successfully demonstrated them during the G20 Summit, preliminarily verifying the feasibility and advancement of LTE-V2X technology.
Existing Tariff Packages Show No Obvious Advantage
With the continuous increase in vehicle penetration in China and the development of automotive intelligence, future vehicles will become as simple and easy to use as mobile phones, and their demand for internet access will continue to grow. This will also drive people to continuously seek telematics tariff packages that offer good value for money.
However, the current reality is that after individuals purchase a car, once the complimentary free connectivity trial period bundled with the vehicle expires, they stop using it. When they need navigation or entertainment, they simply use their mobile phone directly or connect the phone to the vehicle.
The main reason for this situation is the relatively high tariffs — vehicles are used far less frequently than mobile phones, making customized large-data packages uneconomical; at the same time, the hassle of replacing the SIM card makes users feel locked in by operators and automakers.
According to information on the operators' official websites, China Mobile's IoT card tariffs range from RMB 1/month to RMB 208/month, with data allowances from 2M/month to 11G/month, and out-of-package data charged at RMB 0.29/M.
China Telecom's IoT packages, on the other hand, are divided into non-directional and directional data plans, with directional data tariffs ranging from RMB 2/month to RMB 600/month and data allowances from 10M/month to 50G/month. Non-directional data tariffs range from RMB 3/month to RMB 780/month, with data allowances from 10M/month to 50G/month.
It is evident from this that, compared with current mobile phone tariffs, especially various unlimited data plans and internet packages, the IoT tariff system is completely uncompetitive.
Since the beginning of this year, intelligent connected vehicles have become a key focus for major automakers, and they have also become an important consideration for consumers when choosing a car. For current vehicles, the multimedia system is the device with the highest frequency of connectivity and usage. Compared with network quality requirements such as low latency, tariffs are undoubtedly what users care about most. After all, with so many inexpensive tariff products available on the market, why would consumers choose an uncompetitive package? But for operators, securing a foothold in the telematics space is undoubtedly key to future development.
Article sourced from the internet