Monday, October 27, 2014

China Mobile, Deutsche Telekom Partner in Connected Car

China Mobile and Deutsche Telekom have signed an agreement to create an equally owned (each will have a 50 percent stake) joint venture (JV) company, which will enable the roll-out of connected car services in China. The JV, which will begin operating in early 2015, will leverage Deutsche Telekom’s Connected Car platform and telematics services and China Mobile’s 4G/LTE network. According to the operators, German-based Deutsche Telekom will also turn to its experience with European vendors to aid in increasing development and creating a broader market appeal, while China Mobile has promised to work with its country’s manufacturers and regulators to ensure the deployment of the connected car services. Additionally, the operators said they would explore the possibility of retrofitting connected car services in older vehicles.

We have written previously about the automotive industry as a major market sector for the Internet of Things (IoT) and about the increasing involvement of telecom companies in M2M communications, so it is no surprise that Germany and China’s largest operators would move into this very lucrative market. The JV provides telltale signs about each operator’s plans  and about the potential growth of connected car services. It is an expansion opportunity for Deutsche Telekom, which currently has more than 142 million mobile customers and operations in 50 countries, to brand itself in China, the world’s largest telecom market by subscribers (China Mobile has more than 800 million subscribers). For China Mobile, the JV is an opportunity to continue exploiting its 4G network, which the operator has been doing quite effectively since it launched the high-speed service earlier this year.
Overall, mobile operators have been scrambling for ways to become prominent players in M2M communications and not just settle for the “bit pipe” role in the IoT. Additionally, they are looking for new revenue streams to substitute for losses or stagnation they are experiencing with traditional sources such as voice. Deutsche Telekom and China Mobile have estimated that China will have 68 million connected cars by 2018, and as the operators take on dominant roles in connected car services that not only include navigational and infotainment aspects, but also the remote monitoring for safety, security and performance, we expect to see an increase in these types of partnerships between MNOs in addition to collaborations between MNOs and other types of companies that offer connected car services.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues: