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In this article, we’ll take a quick spin through the exciting opportunities fuelling communication service providers’ interest in 5G connected cars. We'll also explain how mobile-optimised content delivery technologies will enable them to capitalise on emerging trends in the automotive sector.
The automotive industry is undergoing a seismic shift – one that will unleash a multitude of new revenue producing opportunities for communications service providers (CSPs). Amid the rise of battery-powered vehicles and autonomous driving technology, advancements in wireless communications are expected to drive some of the biggest changes in the automotive market over the next decade. 5G, a global wireless standard that offers faster connection speeds, better response times, and the ability to connect many more devices to the network, is fundamentally changing the way vehicle manufacturers view their role in the world.
Rather than simply building vehicles that get people from place to place, car manufacturers are increasingly focused on how vehicles can connect passengers with the world around them, not just physically, but also digitally. By connecting people using advanced wireless technology, automakers seek to position themselves at the centre of a growing value chain that is being driven by personalised in-vehicle services. Given CSP’s central role in the build-out of 5G networks, the on-going transformation toward 5G connected cars will generate new opportunities for ambitious network operators to work in partnership with automotive companies interested in delivering immersive media, entertainment, and transportation experiences to their customers. CSPs are poised to drive real revenue growth by aligning themselves to the specific needs of these automakers.
According to the latest report from GSMA Intelligence, CSP’s will spend nearly $1 trillion on 5G network technology over the next five years. Already, more than 160 service providers have launched commercial 5G services, and 5G rollouts are expected to continue at a rapid pace through 2026. By that time, 5G connectivity will reach about 60% of the world’s population and the global 5G subscription base will account for roughly 40% of all mobile subscriptions (Ericsson). Even with a temporary dip in deployment momentum caused the COVID-19 pandemic, 5G investment is expected to bring about the fastest mobile technology upgrade in history.
Beyond boosting the performance of mobile handsets and tablets, 5G investment is expected to greatly expand the range of devices that can be connected to wireless networks. Internet of Things (IoT) devices, including smart batteries, home appliances, security cameras, home automation systems, and yes – connected cars – represent substantial growth opportunities for purveyors of 5G. As reported by Markets and Markets, a global research firm, the global 5G IoT market size will grow from USD $2.6 billion in 2021 to $40.2 billion by 2026, registering an astounding Compound Annual Growth Rate (CAGR) of 73.0% during the forecast period. If you dig a little deeper into these figures, it’s clear that connected cars are a big portion of this growth. In fact, according to Gartner, by 2023 the automotive industry will become the largest market opportunity for 5G IoT solutions, representing 53% of the overall 5G IoT endpoint opportunity in that year.
In summary, a substantial portion of the growth opportunity surrounding 5G will be driven by connected cars, which suggests CSPs need to be focusing on this market segment as they build out their networks. To quote Stephanie Baghdassarian, a senior research director at Gartner, “as the automotive industry will be the largest sector for IoT endpoints and 5G IoT use cases in the long term, we recommend that communication service providers that want to be relevant in the 5G IoT market put this industry at the forefront of their investments.”
With their powerful 5G networks and proven experience in scaling out highly reliable services, CSPs are well positioned to generate incremental revenue by partnering with automotive companies that are interested in offering unique services and capabilities within their connected car products. There are lots of potential applications, many of which require some level of advanced functionality to be implemented within the 5G network. Some opportunities include:
The connected car opportunity is also driven by the rising use of ride-sharing apps. The global ride sharing market is projected to grow at a CAGR of 16.6% during the forecast period, from an estimated USD 85.8 billion in 2021 to USD 185.1 billion by 2026. With new car pricing up 5% and used car pricing up 27% since a year ago, ride-sharing represents a viable and less expensive alternative to owning a car for many people around the world. Passengers in the back of an Uber, Lyft, or other transportation service are prime targets for in-car entertainment, advertising, and even e-commerce. 5G connections installed in these cars provide the means to deliver revenue generating services to consumers as they are transported to their destinations.
Most of the 5G services mentioned in this article require a substantial amount of data to support. To support these in-vehicle activities and provide a premium consumer experience, 5G networks need to be responsive to requests, delivering content and data in real-time without interruptions. Content delivery networks, origin servers, ad insertion systems and middleware platforms all need to work together to deliver an ideal experience to consumers on the go. Fortunately, new mobile-optimised content delivery technology provides the means for CSPs to build out their networks to fulfill the unique application requirements for connected cars. Some examples of mobile-optimised content delivery technology include:
Manifest manipulation technology enables many of the personalisation features related to the connected car. For example:
Content recording and storage capabilities offered in network-based origin servers can be used to capture and relay a wide range of data from 5G connected cars, including video camera data, telematics information, or live video recordings. Data may require specialised protection based on regulations and the nature of the data being stored. Mobile-optimised origin server technology implements the specific protections required and ensures data can be recalled instantly when needed.