AT&T already has more than 14 million connected cars on the road, but there’s still plenty of room for the carrier and rivals like Verizon and T-Mobile to grow, Wells Fargo indicated in a Tuesday note.
Recounting meetings with Licht & Associates President Mark Licht, Wells Fargo Senior Analyst Jennifer Fritzsche noted penetration in the U.S. telematics market is still under 20 percent. And with less than half of new vehicles being produced with telematics included, she said there’s still a long runway for companies like AT&T and Verizon to increase their presence in the space.
Fritzsche, though, noted the carriers thus far have taken different approaches to the market. On one hand, Verizon has gone after telematics acquisitions, recently purchasing companies like Fleetmatics, Telogis, and Hughes Telematics. These companies have given Verizon more of a services bent, she said. Licht estimated the carrier pulls in around $30 per month per fleet connection. This has been reflected in Verizon’s IoT revenues, which grew to approach $1 billion in 2016. The carrier said in its earnings releases it pulled in $195 million in the first quarter, $205 million in the second, $217 million in the third, and $243 in the fourth last year.
Verizon seems key to grow that figure further, moving last week to revamp its Hum connected car offering with new tiers and features. The details on that can be found here.
AT&T, on the other hand, has positioned itself as more of a “’pipe’ provider” for telematics companies to ride on, Fritzsche said, and has managed to hit connected car milestones faster than it hit the same figures (for example, hitting the 10 million mark) with popular devices like tablets. AT&T has also sought to make deals with vehicle manufacturers to have the connection built into the vehicles, and at Mobile World Congress this year announced plans to take its connected car vision global via what it called the Bridge Alliance. The Alliance consists of a group of Asia Pacific, Middle Eastern, and African carriers that have pledged to help streamline global deployments of connected car technology. More on that is here.
On that last point, Fritzsche said Licht pointed out car OEMs may see AT&T as less of a threat and be more willing to partner since Verizon’s service focus has the potential to cut into moves the manufacturers are planning.
