Issue 53 • AUG 2014
All aboard for contactless payments for travel in London
News
THIS MONTH...
• Post Office selects Transatel to deliver MVNO 3 • TenTel launches to shake up UK residential phone and broadband 4 • Bango launches one-click billing with Etisalat 4 • GoodGame and Onebip introduce in-app carrier payments 5 • Indie retailers embrace m-pay app Yoyo after student success 5 • Integration into loyalty apps crucial for m-coupon success 6 • MoPowered rolls out easy to use secure mobile payments 6
Analysis EDITORIAL Apple and iWallets It could just be silly season news, but it looks like Apple will build a secure iWallet into iPhone 6. Paul Skeldon thinks this could have a huge impact on the m-payment industry 7 MILLIONS OF COMMUTERS are set for easier and more convenient journeys in London from 16 September, when Transport for London (TfL) will introduce contactless payments for all pay as you go customers on the Tube, London Overground, DLR and Trams in addition to the capital’s buses. The new option, which is part of a huge range of improvements TfL is making for customers, means that there will no longer be any need to spend time topping up Oyster balances because fares are charged directly to payment card accounts. Contactless payments – credit, debit, charge or pre-paid cards or devices – work in the same way as Oyster, charging the pay as you go fare by touching in and out on the readers at the start and end of every journey The system is unique in that it will only send one charge per day so that passengers pay only the best value fares over the day. In addition to this ‘daily’ capping, a new Monday to Sunday cap will also apply for customers using the contactless payment option, as TfL’s advanced system will automatically calculate the best value contactless fare over the course of the week. Only one charge per day will be sent to the bank or financial provider for payment clearly referencing it as a payment to TfL for travel. Registered customers will be able to easily view their journey and payment history via their TfL online account. The account, part of TfL’s work to modernise and personalise the services that it offers customers, ensures ease and transparency and also gives customers the ability to obtain refunds on incomplete journeys.
OPINION The good, the bad and the ugly Alex Kinch, CEO of Ziron, continues his paen to SMS with a look at some of the key developments around SMS – this month he goes on holiday 8 OPINION On the road The connected car is the bext battle ground for apps and pretty much all things mobile. Paul Skeldon takes a look at the state of the market, what the opportunities are hears from four leading car makers about what they want from connected tech 9
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NEWS #TELECOMS Post Office selects Transatel for expert delivery of UK MVNO launch RECENTLY PRIVATISED snailmailer the Post Office is set to roll out its own MVNO mobile services throughout its 11,500 branches, online and over the phone from autumn this year. Working with network company Transatel, the new mobile virtual network operator (MVNO) will leverage mobile solution provider’s awardwinning mobile virtual network aggregator (MVNA) technical platform and partnership with EE in order to give its customers access to the UK’s biggest network whilst benefitting from the great value for money and transparency offering. Martin George, Chief Commercial Officer at Post Office, explains: “Launching our own mobile service, with the support of Transatel, is a significant milestone in the Post Office’s journey of change and a testament to our continuing efforts to offer more essential services for our customers. We are very excited about our ambitious plans in the mobile market and are confident we have chosen the right partners to help us deliver this.” Bertrand Salomon, Transatel deputy CEO added: “The Post Office is the number one mails retailer in the UK and their customers put a huge amount of trust in them for their other services,
so I am really honoured that they have trusted Transatel and our awardwinning MVNA platform to launch their mobile service in the UK.” Post Office is Transatel’s 27th MVNO partner in the UK. In the last 12 months, Transatel has already launched Phones4U MVNO LIFE Mobile on its MVNE platform, and on its MVNA platform has launched new postpaid MVNOs Pop Mobile and Airwave Smart Mobile, as well as new prepaid MVNOs for Filipino MNO Globe last year, Lomo Mobile in March and the first prepaid SIM card for The Co-operative (The Co-operative Mobile) in April this year. They joined more than 150 enterprise, B2B, B2C, and niche MVNOs who have chosen to partner with Transatel worldwide. In a challenging economic environment MVNOs need to enter the market as quickly as possible and at a competitive price. With Transatel, the leading Mobile Virtual Network Aggregator, it has never been easier to become an MVNO in the UK, as its offthe-shelf solution significantly reduces the cost and rapidity of entry on the market. Transatel offers a one-stop-shop for all MVNO requirements in their go-to-market strategy, including
airtime procurement, provisioning tools, customisation tools to enhance branding, full real-time prepaid billing capability, CDR generation and post-paid billing services, as well as web tools to enable customer care at a fraction of the cost of bespoke CRM systems. It has also integrated into various top up platforms (web shop or retail platforms) to enable maximum market penetration. Transatel counts several of the world’s leading Mobile Network Operators amongst its customers, including EE, Orange, Mobistar, and Base... and has a strong presence in the UK, Belgium, Switzerland and France. As a proof of its cutting-edge solution and services, Transatel was named Best MVNA, for a second consecutive year, at the MVNO World Congress in Berlin. Jacques Bonifay said, “As an MVNA, MVNE, and M2M enabler, Transatel has already contributed to the successful launch of more than 150 MVNOs across Europe in the last 10 years. As a result of this, we currently manage more than 650,000 active subscribers on our platform. Our partners can therefore benefit from our unique experience and expertise as a pan-European MVNO and as the UK’s biggest mobile virtual network aggregator (MVNA).”
>>>from page 1 TfL uses m-payments Contactless payments have operated on the capital’s bus network since December 2012, and have been used by around 825,000 customers for 17million journeys. Around 65,000 journeys a day are being made using a contactless payment card. A pilot of the system on the Underground and rail network which began in April involving around 3,000 customers has been successful. Customer feedback has been used to improve the service, including making the online accounts easier to use. Ahead of the launch on 16 September, TfL is continuing to remind customers that it is imperative that they only touch one card to the reader to avoid ‘card clash’. This simple measure
will ensure customers avoid paying with a card they did not intend to use. It will also avoid gates not opening or not giving a green light to proceed. An extensive customer campaign has been running since February to reduce the incidents of card clash and this will be enhanced further ahead of the September launch. Shashi Verma, TfL’s Director of Customer Experience, said: “Offering the option of contactless payments will make it easier and more convenient for customers to pay for their travel, freeing them of the need to top up Oyster credit and helping them get on board without delay. The pilot has been a success, with participants giving us really useful feedback. This is the
latest step in making life easier for our customers by using modern technology to offer the best service possible.” TfL and National Rail continue to work together to develop the programme to expand the system to the suburban rail routes where Oyster is currently accepted. TfL has worked closely with the payment card industry, including The UK Cards Association, American Express, MasterCard, Visa Europe and Barclaycard, on the development of contactless payment card acceptance on the transport network. London is leading the way in the area of transport ticketing and TfL will soon be one of the world’s largest single merchants accepting contactless payment cards.
NEWS #TELECOMS TenTel looks to shake up UK residential telecoms with cheap no-ties service
A NEW RESIDENTIAL telecoms company to be launched next month is aiming to disrupt the UK telecoms market by being the first to offer customers same day telephone and broadband services without holding them to long-term contracts. TenTel says it will offer a unique “movein, turn-on” service with no enforced tie-ins or hidden extras, aimed principally at customers in rented accommodation. It aims to work in partnership with
landlords and letting agents, offering them a commission for each line of data they supply and for each of their tenants who signs-up, with deals that could increase their profitability by up to 40%, according to Tentel. The Selkirk-based company boasts the most competitive prices in the market with only a 30-day notice period for customers who want to cancel their service or switch providers. For those who want to sign-up to a longer term deal, The Advance bundle will give them 12 months telephone and broadband for as little as £250. According to data published by Ofcom, the average household in the UK pays £451.44p a year for those services. TenTel anticipates signing 20,000 customers in its first year of trading, generating a turnover of £9million, rising to 100,000 customers within five years. It will, initially, employ 18 people at its Borders HQ. The same business model has worked successfully in the energy market, with landlords agreeing similar deals with suppliers of gas and electricity, and TenTel is confident it can be replicated in the telecoms market. Letting agents that manage 1,000 properties would generate commission of £25,000-a-year, significantly increasing yields, according to the company. “This would be the equivalent to them managing an extra 250 properties without incurring any additional workload or
expense,” says Robert McKechnie, the company’s managing director. “This approach has worked successfully in the energy market, where the onus is on customers to opt-out, whereas ours is an opt-in model which assumes nothing and gives customers the choice to switch. He added: “This is a brand new approach in the telecoms market that offers customers a less expensive and more convenient service, while also providing a new income stream for landlords. “Because we don’t spend large sums on marketing campaigns or sales commissions to switching sites, we can pass on those savings in the form of cheaper deals to our customers and commission to our partners. It’s a win-win.” According to Tentel, there are 9million tenants in rented accommodation in the UK, 67% of whom will move within 12 months, giving the company a potential market of 6million people per year. Four out of five customers expect to be connected within five days of ordering telephone and broadband but the minimum wait from the ‘Big Four’ providers (BT, Sky, Virgin and Talk Talk) is 15 days, according to their terms and conditions. “It’s a business opportunity that is currently being missed and we can help landlords and letting agents take advantage of it by partnering with us. They can find out how much additional revenue they could be generating by using the calculator on our website,” says McKechnie.
#BILLING Bango launches one-click billing with Etisalat CAFE CHAIN Fernandez Bango, the mobile payments company, has launched one-click Direct Operator Billing for Samsung Galaxy Apps with Etisalat, the telecoms giant with operations in 19 countries in the Middle East, Africa and Asia. From today, Etisalat subscribers using Samsung Galaxy Apps, Samsung’s own app store, will enjoy frictionless payment for apps and in-app purchases, paying on their phone bill without the need to register personal details.
Bango announced a group-wide Etisalat partnership on 5 June 2014. This partnership has already seen Direct Operator Billing launched for users of Google Play and BlackBerry World, reaching tens of millions of consumers. This latest deployment, Bango’s first integration with Samsung Galaxy Apps, increases that reach still further. The Middle East is seeing dramatic smartphone growth, with device numbers expected to almost double this year, from 67 million in 2013 to 112.2 million in 2014 (IDC). Etisalat is
a regional telecommunications giant and is one of the largest corporations in the six Arab countries of the Gulf Cooperation Council. Ray Anderson, CEO of Bango plc, commented: “The partnership between Bango and Etisalat is accelerating the deployment of charge to bill payment, providing the very best user experience for the Middle East’s technology-savvy user-base. Deployments that elsewhere take months are now being launched in a matter of weeks.”
NEWS #PAYMENTS Goodgame Studios partners with Onebip to offer gamers fast mobile payments GOODGAME STUDIOS, a successful publisher of browser and mobile games including Goodgame Empire, is set to offer Onebip mobile payments for its games in key markets in Europe and Latin America including Spain, Italy, Turkey, Taiwan and Argentina. Players of existing games including Goodgame Big Farm and Goodgame Empire and brand new game Shadow Kings will be able to use Onebip’s mobile payment service to purchase additional Rubies and Gold in the Goodgame shop with minimum interruption to their play. Purchases are simple, fast and secure to make due to Onebip’s optimised user experience and next generation billing technology. One-time purchases are charged directly to the gamer’s mobile phone bill using carrier billing technology. Hamburg based Goodgame Studios have players from over 200 nations and
regions with 77 million registered users playing Goodgame Empire and 27 million Goodgame Big Farm registered users. The successful publisher of browser and mobile games will be releasing the new title, Shadow Kings, in August which is a free MMO building and strategy game in a popular fantasy setting. Dr. Christian Wawrzinek, COO and cofounder of Goodgame Studios explains: “With our player base growing steadily worldwide, we’re keen to offer our customers a simple and secure way of paying for their purchases in our stores to ensure the best user experience. We’re happy to partner with Onebip to offer our customers an easy-to-use global mobile payment solution so they can now pay via the convenience of their mobile phone bill.” “We’re very excited to be working with such a successful global publisher of browser and mobile games such as
Goodgame Studios that registered its 200 millionth player in June 2014,” says Massimiliano Silenzi, Head of Onebip by Neomobile. “The partnership between Onebip and Goodgame Studios will allow players of Goodgame Empire, Goodgame Big Farm and Shadow Kings to pay for their purchases using Onebip’s advanced mobile billing technology with minimum interruption to their play.”
#PAYMENTS Indie retailers embrace m-pay solution Yoyo CAFE CHAIN Fernandez & Wells and Levantine Kitchen Hummus Bros are among the first retailers in London to roll out mobile payment and loyalty app, Yoyo. The app, which is already live across Imperial College London’s South Kensington campus, and is in the process of being integrated at the universities of Greenwich and Westminster, will soon be available at a total of 62 retail outlets across the capital - with even more locations set to follow, including Brunel University. The app will greatly simplify the process of paying for goods at Fernandez & Wells’ six London outlets, including its newest venture, a space inside fashion brand Jigsaw’s store on Duke Street, Mayfair. And, on top of cutting queues for coffee - particularly at peak times Yoyo will provide Fernandez & Wells with a marketing and loyalty platform that enables it to reward frequent customers. The founders of Fernandez & Wells, Rick Wells and Jorge Fernandez, first realised the potential of the mobile payment and loyalty solution when students from Imperial College London started asking to use the app in their Exhibition Road cafe.
“More and more of our Exhibition Road customers were asking if they could pay for food and coffees using their mobile phones,” said Rick Wells. “And of course it didn’t take us long to realise that we needed to speak to Yoyo.” “It’s not just the speed and ease of payment that makes the platform perfect for Fernandez & Wells, it’s the ability to connect with each and every customer who uses Yoyo. Instead of offering a fairly random promotion to customers or stamping a loyalty card, I like the idea of being able to reward loyalty in a novel way. With Yoyo, we can encourage a regular to try something they might not normally have; a glass of chilled manzanilla, for example, or a plate of grilled padron peppers.” Total integration across Fernandez & Wells’ six cafes and Hummus Bros four London outlets is underway. Jon Hassall, managing director at Hummus Bros, said: “I’ve met a number of companies offering us the next best thing in loyalty and payment, and in my mind, nothing comes close to Yoyo. As a retailer, it’s hard not to be impressed with the sheer amount of data and audience targeted
marketing that the Yoyo platform provides. However, I was even more impressed with how easy it made things for our customers and staff.” Founded in 2013 by Alain Falys (Founder of OB10, ex Visa), Dave Nicholson (Founder of Zopa, ex Egg) and Michael Rolph (ex PayPal, Barclaycard and First Data), and released earlier this year, Yoyo aims to simplify and speed up in-store transactions by combining payment and loyalty via one easy scan - resulting in a better customer experience. The app is already in the process of being made available to 90,000 students across the capital, and is currently handling an average of more than 30,000 transactions per month across 32 food and drinks outlets at Imperial College London. Last month, Yoyo announced that it had raised US$5m in seed funding, one of Europe’s largest seed funding rounds this year. The company is using the funds to continue to grow its partnership programme with Point of Sale software vendors and leading catering companies, before it looks to raise a Series A, later in the year.
NEWS #RETAIL Integration into loyalty programmes critical for coupons A NEW REPORT from Juniper Research has found that there will be 1.05 billion mobile coupon users by 2019, up from just under 560 million this year. The report – Mobile Coupons: Consumer Engagement, Loyalty & Redemption Strategies 2014-2019 – claimed that the surge in user numbers would in large part be driven by increased retailer engagement with the various mobile channels. It stated that retailers were now integrating coupons into loyalty programmes to a far greater extent, while focusing on delivering coupons direct to consumers rather than relying on aggregator sites. At the same time, the report observed that mobile coupon deployments were benefitting from retailers restructuring their businesses to reflect the wider transition to the utilisation of online engagement channels. It noted those businesses are becoming more agile, more efficient and able to implement change more rapidly than would have previously been the case.
Meanwhile, the report argued that while the use of MMS for couponing was expected to cease, disruptive technologies such as NFC (Near Field Communications) and Beacon had the potential to boost in-store engagement in the medium term. According to report author Dr Windsor Holden: “While NFC has failed to achieve traction thus far, the emergence of a cloud-based secure element through HCE (Host Card Emulation) is likely to stimulate greater integration into wallets. We believe that this in turn will provide the visibility that should encourage brands to run campaigns using the technology.” The report also finds that Geotargeting has provided SMS-delivered coupons with a new lease of life, with retailers seeing high redemption rates from coupons pushed to consumers near their stores. Brands are increasingly leveraging the retail database to deliver targeted coupons. Lack of adequate POS redemption technology remains the key hurdle to greater deployment and adoption.
#PAYMENTS Easy secure micro m-pay MOPOWERED, a mobile paymentscum-commerce specialist, has launched MoPowered 3DS, which will enable secure transactions to be actioned more easily on mobile and tablet devices. Many online payments made with bank cards require the transaction to be authenticated with the purchaser’s card-issuing bank. The system used to do this is generically known as 3D-Secure and is branded as “Verified by Visa” for Visa cards, “SecureCode” for Mastercard cards and “SafeKey” for American Express cards. The completion of a 3D-Secure process typically requires the submission of letters and numbers from the purchaser’s password so that a transaction may be completed. Historically, 3D-Secure processes have been difficult to complete on mobile devices because the pages have not presented well on the wide variety of smaller screen sizes; it has been hard to enter the
password credentials; and screen flow to and from the 3D-Secure page has been awkward. Where this has previously had a negative impact on the payment process, MoPowered 3DS provides a solution to these problems and is easy to integrate into broader mobile commerce systems to make higher levels of conversion possible. The solution retains all of the security features of 3D-Secure. MoPowered has already signed a two year initial contract, with a major international remittance business, who is the initial thirdparty adopter of MoPowered 3DS. The contract provides for payment of a modest monthly retainer with the bulk of the revenue expected to come from fees levied on a per authentication basis, ranging between 25 pence and 10 pence, depending on volume. In addition, the Group has received interest in the technology from other large organisations in the payments, gaming and retail sectors.
OPINION
FROM THE EDITOR
Apple iWallet: if its true it could be a game changer THE SUMMER USED TO BE silly season for news, but the rumours circulating this week that Apple is poised to enter mobile payments with a iWallet built into the phone – the iPhone 6, due out as early as September in 4.7 inch format at least – seems to ring true. Payments, as we all know, is the hot mobile topic du jour and has been revolutionised by the web and mobile. It would seem foolish for alpha male handset maker Apple to not be part of this. The plan it seems is to include iWallet software on the device itself, with a secure element built into the phone – probably the same one they use to store the fingerprint information – that will store or act like a credit or debit card. It will also probably use that self same fingerprint recognition technology to authenticate the user. Visa are rumoured to already be on board, but other than that, details are scant. There is no real meat in any of the Apple stalking sites as to exactly how it may or may not work in practice. Most allude to it being a wallet that will allow you to buy things online and in stores, but there is no detail as to how (NFC? Bluetooth? SMS? Magic?), so its hard to really know what to make of the news. But should it be true, this could be super disruptive – certainly to the myriad m-payment projects launched or about to be launched. Alright, not every one has an iPhone, nor will everyone get an iPhone 6 straight off the bat, but what this could do is herald the arrival of the wallet as the de facto way to do mobile payments. Should Apple actually do this (and let’s not forget this time two years ago when iPhone 5 was poised for launch, the press was alive with rumours about NFC being built in), then it could set the standard in how mobile wallets work, garner enough interest to see others copy it and generally persuade the great unwashed that this was indeed the way to pay. And boom, that would be the end of that for almost all other payment tools – with the possible exception of carrier billing for micropayments. However, the form is not great for big players entering mobile payments. Look at Google’s wallet. And what has become of Weve? In fact, mobile payments hasn’t really worked for anyone, including many of the highly-funded start ups that have also looked to coin it in in the space: none have so far really gained any traction. Zapp shows promise, but that doesn’t launch until September, so who knows. And this could be the Zapp killer. Or the m-pay killer. Apple does have a knack of getting things simplified and right. Well, it did under Jobs and his minimalist approach to life. If Apple has managed to imbue its wallet with the Jobsian magic of making it super simple yet super clever then it will be the way to pay. The key to mobile payments has always been that it has to be more simple than chip and PIN and more convenient and safer than cash. None of the other products out there has managed to pull this off – and that is why we don’t really see many people using m-payments. If Apple can do it then its pretty much a home run. And the fact that, as our lead story points out, Transport for London (TfL) is opting to use contactless payments, rather than contactless Oyster cards going forward, shows that simplicity is the key. Link a card to iWallet and link that to NFC and suddenly you are riding the underground using just your phone. Or maybe this is all just silly season conjecture. We will have to wait until after the holidays to find out. One to ponder while taking in the sea air.
Editorial Editor Paul Skeldon paulskeldon@me.com | Sales & Marketing info@telemediamagazine.com | Production Director Annika Micheli annika@telemediamagazine.com | Publisher Jarvis Todd jarvis@telemediamagazine.com To subscribe, please go to www.telemedia-news.com What we’ve been listening to Fat Bottomed Girls, Queen | What we’ve been amused by Hearing my four year old sing Fat Bottomed Girls very loudly | Who we’ve been following @Mrskeldon | What we’ve been reading about 131 by Julian Cope| AUGUST 2014 will bring... Another camping holiday
OPINION SMS
The Good, the bad
AND THE UGLY
Self confessed SMS geek, Alex Kinch, CEO of Ziron, takes a wry look at some of the latest developments around SMS and assesses what they mean for the technology –this month he gets his suitcase out and heads to foreign climes on his holidays
ITS BEEN A MIXED BAG, for SMS this month with the majority of news, unsurprisingly, being linked to the holiday season as execs up and down the UK finally get to give their holiday itch a good scratch. Of course, if you are going to Europe, you shouldn’t need to worry too much about bill shock. The latest round of EU roaming caps came into effect on 1 July, which means that the cost of sending an SMS has now reduced to a maximum of €0.08 to €0.06 per message - great news for those that feel the need to keep us updated with every sangria and grain of sand they step in. There are also some great Euro-travellers packages out there – which allow you to take your inclusive UK minutes, data and texts with you - but you should check the small print as most state you can’t tether to a laptop for data usage. With that in mind, if (like me) you need to take the office along on holiday too, you should consider one of the dedicated international data SIM offerings, like Globalgig, and use it via a MiFi. The good If you are paying anything over 3p for UK high-quality enterprise SMS then it’s time to have a stern chat with your supplier as the price of wholesale SMS from the main UK operators is now at an all time low. Prices have been falling for the last few years, and whilst it is not guaranteed that it is stay this way forever, why not make hay while the suns shines? There is no excuse for these prices not to passed along – just as with fuel, there is an industry cynicism that providers are quick to increase prices when the wholesale cost rises, but aren’t as speedy to pass on the savings when the wholesale cost falls. If you aren’t getting a good rate then its time to negotiate with your supplier or shop around – while prices are this low it’s a great time for developers to consider adding SMS alerts and reminders to their web application. The bad For many reasons, I recently ditched my high-street bank and
joined First Direct (advertising works.) Upon opening one of the first letters they sent me I was really surprised to read the following: “We recommend that you suspend Text Message Banking if you are taking your mobile phone outside the United Kingdom. This is because the security of any foreign telephone network through which text messages might be transmitted to your mobile phone cannot be guaranteed.” Whilst it’s possible that this rather stern disclaimer might just be due to a rather over-cautious legal team, it does add to my increasing concern that there’s a lot of misunderstanding about the security of SMS. Rather than pointing the finger at foreign carrier networks, we actually need to be looking much closer to home, as the greatest risk lies in user behaviour. Wherever they are, users need to exercise caution by not letting people read their banking texts over their shoulder (iPhone users: go to Settings > Notification Center > Messages and set ‘Show Preview’ to off!), but also consider taking further precautions by deleting messages containing confidential information and making sure they’ve chosen a secure PIN or password. Banks and other financial institutions also need to ensure that the aggregators they work with to deliver these messages are correctly audited to ensure the relevant systems and procedures are in place to protect user data. And somewhere in the middle I was really interested in the announcement last week from market analytic specialists, Tapstream, about its new SMS-based user acquisition platform. Called WoM, for word-of-mouth (marketing genius!), it works by enabling app users to send SMS recommendations to friends. It claims that it has far more click-thrus than traditional ad-based methods, and the quality of users acquired is also significantly higher. Tapstream also claim that developers can deploy the platform in “a few clicks,” and that no money is paid unless the user converts. Of course my first question is ‘who is paying for the SMS?’ However, there’s a bigger concern: we’ve all got a friend on Facebook who constantly sends us invites to the latest game or app – will this now extend to SMS, and will I have to start blocking messages from my contacts? That said, it’s certainly an interesting use of the technology and another indication that SMS is here to stay. In this monthly column I aim to share the most interesting updates on SMS – but if you can’t wait to the next issue please do follow me at @ alexkinch, albeit I warn you now I talk about tea, a lot, like a ridiculous amount. I am quite obsessed.
ANALYSIS CONNECTED CARS
Driving new
BUSINESS?
The next lucrative market for mobile and telemedia technology – well, for technology generally –is the connected car. But are users ready for it? Paul Skeldon takes a look at the latest research from Telefonica and finds that they are. And opposite gets the views of leading car makers on what the future holds
THE TERM THE CONNECTED CARhas been a buzzword within the automotive industry for several years, but the big question is: are consumers ready? Research released last month suggests they are. According to a study by Telefónica, there is sufficient global demand for connected car services, with more than 70 per cent of drivers surveyed saying that they are interested in using, or are already using, connected car services. In fact, around half of consumers now consider connected features, such as inbuilt connectivity and the ability to plug in a smartphone, a key part of their next car purchase. Features such as increased safety, early warning systems and smarter navigation are cited as the most popular, with almost three-quarters (73%) of drivers listing safety and diagnostics features as the most important.
The findings have been unveiled as part of Telefónica’s Connected Car Industry Report 2014 featuring independent primary research and contributions from six of the world’s largest car manufacturers. The report builds on some of the topics covered in Telefónica’s inaugural Connected Car study from 2013, which predicted that that the number of vehicles with built-in connectivity will increase from 10 per cent of the overall market in 2013 to 90 per cent by 2020. This second report provides insight, from a driver’s perspective, into the car industry’s biggest transformation in over a century, detailing the opportunities, challenges and predicted trends for the sector. According to the report, there is sufficient global demand for connected car services, with 71% of drivers surveyed saying that they are interested in using, or are already using, con-
ANALYSIS
CONNECTED CARS
nected car services. 80% of consumers expect the connected car of the future to provide the same connected experience they are used to at home, at work and on the move via their mobile phone. Across all markets surveyed, there was clear consensus about the three features most in demand: increased safety, early warning systems and smarter navigation. Almost threequarters (73%) of respondents chose safety and diagnostics features as the most important, giving a clear indication of the areas they would expect connected services to focus in the future. Usage-based insurance models are also very popular, with 54% of UK drivers choosing it one of the connected car features they would be most interested in. On average 35% of drivers expect not to own their own car by 2034, and instead predict they will be using alternative options such as car sharing services The dashboard is the favoured way for accessing connected services, particularly for safety, navigation and vehicle diagnostics, with more than 60% of respondents across all markets preferring to access features in this way. Drivers in different countries will prefer to pay for connected services in different ways. Most Spanish drivers would prefer a one-off payment (49%) while those in America, Germany and the UK would favour basic connectivity with the option to choose additional services. Brazilians are split between the latter and a full-on PAYG model, suggesting a degree of flexibility not seen in other countries. Pavan Mathew, Global Head of Connected Car at Telefónica explains: “Through looking at the connected car from a driver’s perspective, it’s
ANALYSIS CONNECTED CARS
Views from the other side of the dashboard
What the car-makers think “We are seeing a drive from consumers to actually have the same level of connectivity in the car that they would have whilst walking down the street, whilst sat in their front room, whilst sat on public transport. So just because they are spending two, three hours a day in a car, they don’t want to be disconnected from their normal life.” Ian Digman, General Manager, Nissan
“I see a huge expansion beyond legacy telematics such as vehicle health reports, safety and security, crash notifications into active safety and automated driving aspects. I also think vehicle-to-vehicle communication is going to grow very quickly in the next five years. The beauty of that technology is that the communication protocol can be used for a host of other services beyond vehicle communication, so it benefits the wider infrastructure too.” Henry Bzeih, Chief Technology Strategist, Kia Motors
“For us it comes down to the things that make the car a better vehicle. When we talk to customers about connectivity they say well it’s a car and so what I need it to do are the things I bought a car for. They want it to be safer, more intelligent and more economical. Connectivity is a chance for OEMs to look at how we can help to reduce costs for customers and make cost of ownership lower by giving advice on how to drive more fuel efficiently, or helping you find the lowest cost source of fuel or the most efficient route. Can I, by providing data for things like usage based insurance or pay as you drive insurance, can I save you money on insurance?” Greg Ross, Director of Product Strategy and Infotainment, GM
“Autonomy obviously has implications for car ownership, and as a 110-year-old company we’re obviously taking our heritage extremely seriously as we look forward to the next 100 years. But over the next decade I think we’ll see autonomy overshadowed slightly by the use of smart materials in vehicles. Things like materials that deflect water, refract light or change colour. And then beyond that I think we’ll start to see some very cool stuff around nano electro-mechanical materials where you could start doing things with self-forming circuitry and self-morphing materials. These advances start to change our perceptions of how form and substance are influenced by the environment, overhauling what we understand about the current dimension of physicality.” John Ellis, Global Technologist and Head of the Ford Developer Program, Ford Motor Company
clear that the demand for connected services in cars is unquestionable. Even though we’re just moving off of the starting line, people are ready for it and know what they want. But challenges to widespread roll-out remain. “Many consumers currently think of connected car services in terms infotainment and WiFi, but this changes when they are made aware of the variety of options that the technology can offer,” says Mathew. “Safety and diagnostics appear to be the most attractive features to drivers, illustrating just how important factors such as road safety and vehicle maintenance are in consumer purchasing decisions.
“We can expect to see a gradual creep of connectivity into vehicles over the next few years but there won’t be an explosion over the next 12 months,” adds Mathew. “The reason for this lies in the complexity of the challenges that connectivity is trying to address. “While OEMs still have a way to go before they break out of their traditional role as a manufacturer and become a full, connected service provider, they certainly have a strong, trusted base to build from.” Earlier this year Telefónica announced an agreement with Tesla, the world’s leading electric vehicle (EV) manufacturer, to provide connectivity for the Tesla Model S in Europe.
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