Telematics Beyond Navigation

The telematics industry in China, South Korea and Japan is moving beyond the traditional navigation services to explore new opportunities on the commercial front. Commercial vehicle telematics finds applications in vehicle tracking, location based services, fleet management and more.

Telematics, in the broad sense, refers to sending and receiving information via a telecommunications device. This machine-to-machine (M2M) technology is widely used in vehicles today, and so telematics today refers to the application of the technology in vehicles. Telematics in vehicles provides drivers with real-time information regarding automobile accidents or theft detection, route guidance, traffic or daily living information, games and e-mail services by applying mobile telecommunications and global positioning system (GPS ) technology. Commercial vehicle telematics (CVT) is emerging as one of the fastest growing areas in the telecommunications sector today.

A vehicle telematics system consists of a GPS receiver and an SS M/GPRS modem installed in each vehicle. The technology is primarily used to track vehicles. Experts say that CVT, though in its infancy in the Asia-Pacific region, would give rise to a number of functions ranging from “vehicle and passenger safety to the ultimate luxury of sinful comfort and convenience features.”

BizAcumen, in its recent report on CVT, says that telematics technology has the potential to add the crucial functionality imperative for various emerging automotive system capabilities.

Applications

Telematics applications can be broadly classified into four areas: Navigation Service, Safety and Security, Information and m-Commerce, and Wireless Internet Services.

Navigation Service: This is one of the most popular applications of telematics. The technology helps drivers and vehicle owners get real-time traffic information and map directions. The GPS -enabled vehicle telematics provides round-the-clock information about road and traffic conditions, enabling them to make wise decisions while on the road.

Vehicle Diagnosis and Control: Vehicle diagnosis and control service allows users to check gear performance, engine, brakes and get fuel-related information. It enables them to control various parts and components including the doors, trunk, headlights and taillights.

Safety and Security: Telematics can be used in emergency rescue applications. Vehicles fitted with a remote control for automobile diagnosis are less prone to accidents due to mechanical failure. An automatic crash sensor is another important application of telematics for ensuring safety while driving. The safety and security service also enables vehicle monitoring and tracking in case of theft.

Information and m-Commerce: Telematics enables Location Based Service (LBS) on vehicles to provide information about places of interest to people. This may include details of restaurants, movie theaters, shops and more. LBS is emerging as one of the most lucrative marketing opportunities for such businesses.

In the form of m-Commerce, telematics can be beneficial to both businesses and customers alike. The technology can be used to provide hotel/air/train reservation and logistics services.

Another important application of Telematics is fleet management. This is important when there is largescale movement of goods from one place to another. Telematics helps manufacturers save money and time while transporting goods from one place to another. The technology also helps on-site service personnel communicate with each other and manage their fleet effectively. Instant communication among personnel deployed at different locations helps the company save significant time and travel costs associated with such services.

Entertainment: Telematics empowers vehicle owners with the ability to play music or video in the car without having to download it from mobile handsets, with the help of phone-automobile synchronization technologies via wireless networks such as WCDMA, WLA N and Bluetooth.

Commercial Telematics in South Korea

Commercial telematics was introduced to South Korea in 2003. Since then, the industry has matured enough to attract investors and customers. User expectations and technologies have been clearly defined over the past few years. A key factor that drives this growth is the popularity of GPS -enabled phones. They have helped small and medium enterprises maximize fleet efficiencies and minimize operating costs. The availability of LBS via mobile phones has enabled many service providers and hardware manufacturers to extend LBS applications to commercial fleets.

In 2003, SK Telecom, a leading service provider in the country, entered into the telematics market in Korea with the introduction of NATE Drive. Based on the advantages of wireless Internet services and operational know-how, NATE Drive is the world’s first handset-based telematics service, the company said.

South Korea has also initiated a major telematics project – Jeju telematics model city construction project – with an aim to energize the telematics industry in the country and create synergy effects between associated industries. A consortium of companies, led by SK Telecom, was designated as the operator for this telematics project initiated by the Ministry of Information and Communications.

The Korean government, ambitious to make the country the market leader in IT , has announced telematics as one of the nine new engines of economic growth. This move gives a strong positive signal to investors and global players interested in the telematics business in Korea. With maturing business models and a highly developed value chain, Korea is on track to becoming a major telematics player by the end of the decade. Domestic wireless operators and automakers are keen to rake in the profits from this highly prospective market opportunity.

Korea Telematics Business Association (KOT BA) is a non-profit organization established to encourage telematics in Korea. Established in 2003, KOT BA aims to standardize telematics technologies and services. KOT BA has about 60 members including automakers, telecommunication companies, terminal manufacturers, content providers and other telematics-related companies, research centers and universities active in the telematics industry.

According to Research and Markets, the low penetration of telematics in Korea, one of the top six passenger car manufacturing countries in the world, has created greater interest among key players in the region. The market expects explosive growth over the coming few years, the agency thinks. The telematics market in Korea will be spurred by its robust infrastructure, especially its world-class wireless communication technology and an extremely efficient and high-speed Internet.

Korea boasts one of the highest broadband and 3G penetration rates in the world. As a leader in communications, Korea also surpasses several superior countries in convergence of technologies, voice recognition systems and remote care diagnostics. Service providers could also take advantage of these advanced technologies to design and offer unique services for their customers.

ABI Research expects that commercial telematics in Korea will show very strong growth, accounting for a high CAGR of between 38 percent to 42 percent in subscribers, hardware shipments, and market values.

Telematics Industry in China

Following in the footsteps of the developed countries, China stepped in to telematics services in 2009 with the introduction of GM OnStar and Toyota G-Book. The industry is hopeful about the entry of the two mainstream auto brands in the telematics market in China. However, the market is likely to witness tough competition in the coming years as more players enter. To succeed in this market, the automakers have to seek local partners, apply new rules to the game and try innovative business models. Telematics will get a boost in the form of government support as it complies with the Chinese government policy that mandates GPS devices on every public and special-purpose vehicle.

However, there are a number of challenges facing telematics in China. The country, with its varying economic and cultural conditions, poses a great challenge to international players entering the market. They have yet to identify the potential service areas that would appeal to the mass market in China. Wireless carriers can play a leading role in the Chinese telematics market. In the coming years, the industry will be active with partnerships and investments.

Recently, Korean telecommunications provider SK Telecom introduced the Mobile in Vehicle (MIV) service in Shanghai. The technology enables the remote control of vehicles via mobile phones. Compared to traditional telematics services, MIV offers a lot of advantages. With MIV, telematics offers mobile telecommunications technology, platform and content, representing a new concept of convergence services where customers can use their mobile phones to diagnose and control their cars, and use various multimedia services. The service is compatible with both smart phones and non-smart phones.

Sung-Chul Hong, executive vice president and head of next Internet business division of SK Telecom said, “The telematics service provided in the form of a package – offering mobile telecommunications technology, platform and contents – is promising. It can be used via both smart phones and non-smart phones, thereby making it highly compatible with all types and brands of automobiles worldwide.”

SK Telecom expects the promising convergence service market worldwide, which combines information and communications technology with the automobile industry, to reach US $15.4 billion by 2010. In 2007, SK Telecom acquired a 65 percent stake in Shenzhen Eeye High Tech, a GPS service company in China for $15.21 million. The company initially plans to implement the MIV-based security service on three or four kinds of automobile made by Toyota and Honda and then expand MIV to other brands as well. More MIV services including remote vehicle diagnosis, shortcut introduction based on real-time traffic information, and playing music and video on mobile phones via the vehicle A/V system, will be introduced successively, company officials said.

Telematics in Japan

In Japan, the government has initiated an Intelligent Transport System (ITS ) to solve transportation problems such as traffic accidents and congestion through the use of vehicle telematics technology. The National Police Agency, the Ministry of International Trade & Industry, the Ministry of Transport, the Ministry of Posts & Telecommunications and the Ministry of Construction are working together to achieve the goals of ITS.

One of the key focus areas of ITS is Vehicle Information and Communication Systems (VICS). Under this, the one that immediately preceded actual deployment is Electronic Toll Collection (ET C) technology. ET C enables vehicles to pass through tollgates without stopping to pay the toll and without getting stuck in the congestion at the tollgate. Tolls are paid through credit cards. The service is now available at almost all of the tollgates across Japan.

ITS is beneficial to the nation in many ways. By providing up-to-theminute information and alerting drivers about possible hazards, it helps reduce traffic and accidents on the road. Additionally, it enables drivers to drive efficiently, eliminating unnecessary acceleration and deceleration. All of these features will result in a reduction in fuel consumption and carbon emissions, and ultimately significant cost savings. Japan is aggressively preparing to complete the entire basic infrastructure by 2010.

ABI Research had forecast that in 2011 the aggregate Japanese commercial telematics market will reach $267 million, up from a 2006 level of just over $120 million, amounting to a CAGR of 17 percent.

Telematics Challenges

Currently in the nascent form, the telematics industry faces a number of challenges, the most crucial among them being the integration of various data such as road and traffic information, location-based businesses, and other information of particular interest to users. A standard infrastructure is essential to provide the information via a single and efficient source. The industry urgently needs private and public sector investments to drive down the costs of data accumulation and management. They should organize well to garner support from the government to set up adequate telematics infrastructure including live traffic information, antenna and camera systems. Telematics companies also have the responsibility to educate end-users about the new technology and the added features that provide them with safety, security and emergency assistance. They need to train and recruit sales personnel to inform new vehicle buyers on the benefits of telematics. Awareness created through these means would drastically affect buyers’ decisions.

Looking Forward

Going forward, telematics will spread to more areas like fleet management, emergency services and public utilities. With intense competition in the logistics environment, freight carriers in Japan, Korea and China are facing huge challenges in relation to vehicle allocation and operational management of trucks. Fleet management systems allow carriers to achieve more efficient vehicle allocation and lower distribution costs. Commercial telematics may also develop by including emergency medical services (EMS), public transportation, car rentals and municipal fleets.

Emerging telecommunications technologies such as WiMAX and LTE will further accelerate the growth of telematics in the Asia- Pacific region.