US carmakers to offer mobile connection

Barcelona (Financial Times) -- The ubiquity of the mobile internet has been thrown in to sharp relief at the Mobile World Congress trade show by two deals between US carmakers and digital and online service providers.

Spotify on Monday teamed up with Ford to give European drivers of Ford vehicles access to the music streaming service via voice and in-car controls.

Meanwhile AT&T, the US telecoms operator, said it would bring superfast mobile broadband to General Motor's vehicles from mid-2014.

Together, the deals represent a significant step towards building the next generation of "connected cars". The AT&T deal, in particular, marks the first large-scale deployment of the latest 4G mobile internet technology in vehicles, which have traditionally employed older technology when compared to consumer electronics.

"We see the car as another wireless device, like a (big) smartphone," Glen Laurie, president of AT&T's emerging devices division, said. "Our goal is to take the car to the next level."

The moves allow carmakers to make online entertainment a selling point. Douglas R. VanDagens, global director of connected services for Ford, said the carmaker had been trying to partner with Spotify for a year and a half.

"They are the most successful streaming music supplier in Europe . . . it's just a perfect relationship for us."

For Spotify, the deal is the first collaboration with a carmaker and will be seen as a win for backers of the multi-platform subscription model. Ford said the first car to use the new technology in Europe would be the EcoSport, a compact SUV expected to go on sale this year.

Connecting cars to the internet, however, also opens up the possibility for services such as navigation and remote diagnostic capabilities. Some car insurers, such as Progressive Insurance in the US, already use sensors that report back on how abruptly drivers brake or whether they are heavy on the accelerator to help it set insurance premiums.

"In addition to allowing consumers to bring in and connect to personal mobile devices, the vehicle will also act as its own mobile device, enabling embedded vehicle capabilities," said Mary Chan, president, global connected consumer, General Motors.

Mr Laurie said AT&T believed telematics would ultimately grow to be a $1bn-a-year business. AT&T already has wireless deals with carmakers including Ford Motor and Nissan Motor, but the GM agreement is its biggest deal so far.

Industry analysts say vehicles will be one of the next big growth areas for mobile operators which, at least in the US, have seen subscriber growth slow markedly in recent years.

© The Financial Times Limited 2013