Telcos Can Drive Connected Vehicle Ecosystem

Telcos today have the opportunity to enhance the lives of consumers by providing new digital services to create a digital life portfolio of services.

New technologies coupled with robust mobile networks offer capabilities for new business models, giving telcos the opportunity to provide a network of resources to meet the needs of consumers across the globe. By embracing technology, telcos have the opportunity to strengthen new business models, create new revenue streams and increase the "stickiness" of its customers. One key area where telcos are building new revenue streams and a deeper relationship with customers is in connected vehicles.

Telcos today have forged partnerships with rental car services, car manufacturers and other vendor services to make the traveler's life easier. CSPs (communication service providers) are recognizing the key role they have today in building an ecosystem of partnerships with other telcos and vehicle networks to create an all-encompassing travel experience for drivers. The goal of the vehicle network is to consistently meet drivers' needs as they arise. Consumers are asking for their travel experience to include an array of services which are ultimately powered by IoT and smart technologies. CSPs have the opportunity to leverage their central role as the owners of the connectivity to become the focal point of an ecosystem of vendors offering new services to increase overall consumer satisfaction.

To drive innovation, CSPs must determine which services are most important to their customers, build out an ecosystem of reliable partners to provide those services, and play their natural role as network owner and aggregator of services.

Building the connected vehicle network
A connected vehicle network is a B2B marketplace of products such as connected apps and services, CSPs, automotive OEMs (original equipment manufacturers), travel vendors, navigation resources, gas stations and parking chains. A connected vehicle network offers advantages -- such as real-time network insights, omni-channel commerce, omni-channel customer service, and mobile technology -- by making it easier for drivers to get what they need at their fingertips.

Telcos play an important role in a connected vehicle, as the incorporation of these CSPs allows drivers to talk on the phone, without touching their phones, as well as act as the network for cross-communication while traveling. Telcos have the ability to connect apps and services through this communication network. For example, we're working with telco players such as Nokia Corp. (NYSE: NOK) and T-Mobile International AG , who announced at Mobile World Congress last year that they were partnering with Hertz, Concur and Mojio. Mojio and T-Mobile bring on-demand parking and fueling options for rental car drivers to the table through their app. Additional benefits include allowing consumers to have a seamless user experience, such as finding the closest gas station, paying for fuel at the touch of a button, or tracking travel expenses easily and securely.

The future of telcos in a connected space will also turn to the implementation of 5G -- a service that will allow connection between any device, specifically including vehicles and phones. By 2020, 5G is predicted to be the common place of connected devices. For example, 5G will be able to enhance the connected telco network through electric vehicles, connected cars, car sharing services and automatic driving. Those telcos at the forefront of vehicle innovation today will continue to increase their revenue growth in the upcoming years with 5G.

Putting the consumer first
Real-time network insights allow carriers and other members of the network to analyze consumer purchases and make predictions based on previous parking and fueling. More accurately predicting a driver's preferred fueling method based on past transactions can increase customer loyalty.

Embedded commerce allows CSPs to increase revenue with value-added services such as fueling, parking, valet and in-car commerce. Service providers in connected networks typically see a 5% revenue increase when partnering with additional vendors for quality vehicle advancement. Omni-channel customer service is created through a vehicle network, as adopters can gain insight to more than 10,000 mobile payment-enabled gas stations and parking garages. By offering easier payment options and easier navigation for drivers, the consumer experience is strengthened. In fact, consumer satisfaction is proven to grow 7% when consumer preferences and travel history are available at the point of interaction, according to our research

Industry analysts predict that by 2020 80% of all new vehicles will come with connected vehicle functionality built in. The future of communication through vehicles will be based through the driver's dashboard, without needing a phone nearby. Given this reality, telcos need to embed themselves in the value chain in order to capitalize on this rapidly evolving trend.

Placing technology at drivers' fingertips provides a seamless, hassle-free driving experience through smart technologies. For carriers to remain relevant, it's important for them to embrace the future of connected vehicles, but to also realize that this innovation cannot be done alone. It's equally important to join a network of services who are working toward a common goal in the telco industry to welcome the future of driving for consumers around the globe.

— Stephan Gatien, General Manager Telecommunications Business, SAP