Link (Source: Verizon)
with Kevin Link, SVP of Verizon Telematics
It's been more than two years since Verizon Communications (NYSE: VZ) acquired Hughes Telematics in a $162 million cash deal and created Verizon Telematics. Since the acquisition, Verizon has been quietly integrating the company into its fold. FierceWirelessTech's Editor in Chief Sue Marek recently talked with Kevin Link, SVP of Verizon Telematics about the company's connected car strategy, its vision for the future and more.
FierceWirelessTech: What makes Verizon Telematics different than other operators that provide connected car solutions?
Link: What is unique about us is that we have assembled over the last eight or nine years a number of assets that let the OEMs get to market quicker and add more value than just transport. As a result today Verizon has more connected customers in the automotive space than all the other carriers combined and we have more OEMs than all other carriers combined.
FierceWirelessTech: Can you tell me some of the OEMs that you work with?
Link: We have customers like Volkswagen come in and buy everything [i.e. platform, transport, etc.]. Some OEMs just buy transport or some just the platform or some the security platform. We still have several million customers with GM OnStar. We also work with Hyundai, Nissan, Toyota and Mercedes.
FierceWirelessTech: AT&T (NYSE: T) and General Motors have announced a big partnership where AT&T will handle future connectivity over LTE.
Link: Yes but we still have millions of OnStar customers.
FierceWirelessTech: Are you actively going after more OEMs? Or are you going after new customers like State Farm?
Link: Yes, we have taken the assets I've described and deployed them globally. We also have a fleet solution, which is growing very well. We also have an after-market solution and the OEM solution. They all use similar assets but we deploy those assets in different verticals.
The automotive area is still growing. Even though less than 20 percent of today's cars are connected, most major OEMs have a connected car strategy. Fourteen OEMS have 80 percent of the market share of the global automotive market and they all have a connected car strategies. Some of them have decided to do it all their own, like OnStar. Others have completely outsourced to us, like Mercedes.
Although they all have existing connected car strategies, many are in their second generation of and are looking for support for their third generation of the connected car. We have constant sales activities with OEMs from around the world. They are either migrating technology or changing. It's a big part of our business.
FierceWirelessTech: Tell me about the after-market business.
Link: We are one of the largest providers in that space. We have relationship with State Farm [Verizon powers In-Drive, a State Farm program in which a device is mounted in the car that tracks driving behavior and mileage. State Farm clients receive a discount based for using the service and for good driving behavior].
FierceWirelessTech: When you talk about value-added services, do you mean applications and entertainment services?
Link: That's not what I'm referring too. I'm talking about call center services or CRM or billing needs or business intelligence. We have created those types of services--like roadside assistance. Our connected car platform uses VoIP and we record every call and we have the ability to do quality assessment of that information and analytics on that information. We have a lot of fail-safe technologies too.
FierceWirelessTech: I'm not hearing anything about entertainment. I've heard car makers talk about entertainment as a differentiator.
Link: We have a content aggregator that lets us aggregate content. I personally believe that entertainment is something that will fade in popularity. If you look at telematics, they fall into embedded, where they embed the cellular transceiver in the car. Another is the tethered model, where you bring your smartphone to the car. We believe in a hybrid model. If you look to the future in 2020 or 2025 when we are going to have autonomous car and every car will have embedded device. I think those that currently have tethered devices are starting to realize they have to move to embedded.
Embedded will be there for diagnostics, safety and security and autonomous car. However, a tethered device is perfect for infotainment. They can bring their smartphone to the car and immediately get access to their apps.
A few years ago, every conference I would go to would have speakers talking about the app stores and how they were going to have an app store and you have to look at a screen. First, you don't want to compete with the big guys like Apple (NASDAQ: AAPL) and Google NASDAQ: GOOG). And secondly, that will get us into trouble with driver distraction.
Our company has not put much effort into entertainment because we see it as a dangerous fad. One OEM has already abandoned their vision for an app store in the car. It's dangerous from a distraction standpoint and it's hard to keep up and compete with the existing app stores.
FierceWirelessTech: What type of connectivity do you really need in a car? Do you need LTE or is 3G enough?
Link: I think that debate has been resolved because the world is moving to LTE. I think we will see more and more about making the car a Wi-Fi hotspot. Going forward I think we will see more connected devices where kids have their own tablet connected in the car for their games and movies. Not for the driver, but for the occupant.
We were the first to launch in China [with Mercedes] and I think we will see more of that in the coming year. LTE offers you that option and other capabilities.
But there are many services that don't need that level of bandwidth. But it's the next technology and OEMs are hesitant to put in 3G because they have lived through the analog conversion.
FierceWirelessTech: Is it possible to have an LTE module that accommodates all the various LTE bands around the globe.
Link: Yes, we are getting to the point where chipmakers are supporting global needs and global clients.