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3 ways AT&T wants to cash in on connected cars

July 24, 2015, 12:05 AM UTC
Buick Owners Stay Connected With OnStar 4G LTE
Starting this summer, owners of 2015 Buick LaCrosse, Regal, Verano and Encore may stay connected by the high-speed data of OnStar 4G LTE. A built-in Wi-Fi hotspot will allow passengers to pair up to seven devices within the vehicle, allowing them to browse the internet, play games or send email.
Courtesy of General Motors

On its quarterly earnings today, AT&T boasted of 2.1 million new subscribers. That’s an impressive feat in a saturated phone market – until you realize that most of those subscriptions aren’t for phones at all, but instead for tablets and 1 million “connected cars.”

The arrival of connected cars is intriguing as both a technology breakthrough and as a business opportunity, and AT&T is poised to be a prime beneficiary. On an earnings call Thursday afternoon, the company set out three car-related revenue streams it hopes to tap:

1) Selling data and marketing information to car makers

While most people likely associate “connected cars” with information that flows to an automobile, a lot of it actually goes the other way. According to an AT&T executive, the company will provide car manufacturers and dealers with large pools of data from fleets of cars, including map updates and other driving-related information. One advantage of such arrangements for AT&T, said the executive, is that the bulk data transfers won’t tax its networks because the transfers will take place during off-peak hours.

2) Adding cars as another “connected device”

Your data plan already covers both your phone and your tablet – so why not add your Jeep as well? That’s what AT&T is thinking. On the call, an executive talked up the potential for cars to fit into what is called its “Mobile Share Value Plan” and its “connected life strategy.” The prospect of extending a phone data plan to a car may prove tempting to many, and could provide a new way to hold on to existing subscribers.

3) Selling à la carte internet for cars

The AT&T executive added that the company saw “prepaid opportunities” for people who wanted temporary internet access in a vehicle that didn’t already have it. Presumably this would apply to situations like rental cars or, as can be the case with satellite radio, your cheapo relatives have it but won’t pay to turn it on.

If you’re curious about learning more about how the connected car market evolved its origins in 1996, when GM offered a humble OnStar service, check out Kevin Fitchard’s worthy backgrounder here.

Meanwhile, the rest of the AT&T earnings call related primarily to wireless cell phone subscriber numbers (yawn), but did include a few other interesting tidbits. These included:

  • Executives say sales for AT&T’s fiber-to-the-premises internet service, which is being rolled out to 25 cities, is “exceeding expectations” but refused to provide specific figures
  • The share of AT&T phone subscribers with unlimited data plans is down to 12%. The company dearly wants to get this number to zero, but regulators are fed up with its heavy-handed tactics to force its consumers off those plans.

AT&T is about to receive final approval for its acquisition of DirecTV (DTV), but executives on the call said they can’t for now discuss the deal or Chairman Wheeler’s proposed net neutrality conditions. AT&T shares (T) rose 2.3% in after-hours trading after it beat analyst estimates on profits.