The recent announcement by AT&T to change its data plan structure and discontinue offering unlimited data plans for a fixed fee constitutes a trendsetting move that will exert a large impact on the telematics and smart phone industries, according to iSuppli Corp.
New Plans Likely to Shake Things Up
Starting June 7th, AT&T customers have the choice of subscribing to either the DataPlus plan, which includes 200MB of data per month, or the DataPro plan, which includes 2GB of data. DataPlus costs $15; if users reach their monthly data allowance, another 200MB is added for that billing period at an additional $15. DataPro costs $25 per month, while 1GB of additional data can be added for $10. Previously, unlimited data plans were available for a fixed fee of $30 per month.
In the new structure, tethering can be added to a data plan for $20 per month and will be available for the iPhone OS 4 in late June. Current data plan customers, though not required to subscribe to any of the new data plans, can do so without agreeing to a new contract.
AT&T states that currently 65 percent of its smart phone subscribers use less than 200MB per month while 98% use less than 2GB. While users with limited monthly data consumption will be able to pay less for mobile data access, heavy users might end up paying more if they decide to change from unlimited to one of the new plans. Existing users can continue to subscribe to the unlimited plan.
The Impact of Telematics
Cellular data plan redundancy has been a major obstacle in the mass adoption of telematics services. Historically, customers have been reluctant to pay for telematics service. As a result, current embedded telematics services use low bandwidth content and applications that do not require a data plan, and wireless fees are included in the telematics service fee.
This is a major reason why the Ford Sync system uses the drivers’ phone for its new applications that require a broadband wireless link. Ford has introduced Pandora Internet radio for its Sync systems, which will be available on several MY 2011 auto models.
New telematics services that require a data plan have excellent potential, but charges for the data plans remain too high. And while AT&T’s new plans are a step in the right direction, further improvements are needed before embedded telematics systems with data plans will take off in the United States.
How Much Data is Needed?
If customers hesitated to subscribe to a redundant voice plan, they will surely hesitate to subscribe to a redundant data plan. Up until now, most telematics applications could be handled on a voice plan, but with new services coming in from “the cloud,” a data plan will be a requirement.
Internet radio is one of those applications that use lots of data and could not be handled on anything short of a 3G cellular connection. Because of this, Internet radio in the car will primarily be supported by smart phone data plans.
The table summarizes how many hours of Internet radio can be supported by AT&T’s two new data plans. Three different bandwidth examples are used: 32Kbps is a low-end Internet radio quality link, while 128Kbps offers quite good streaming radio quality. Table 1 also compares how many hours of Internet radio would be available for the same fee as a month of satellite radio subscription, which amounts to $12.95 currently for Sirius Radio.
A Step Forward
The new AT&T data plans are a step forward for the future usage of embedded telematics data plans, but a data bucket plan that is part of the smart phone data plan is much more desirable and would be likely to kick-start embedded telematics data plan usage.
If Internet radio were the primary application, most consumers could get by with 1GB per month, assuming they listened for an hour or two each day while in the car. The 2GB AT&T data plan would be sufficient, therefore, for most auto apps usage in today’s apps environment.
However, as applications in the car become more interactive and as video-based content is used, much larger data plan buckets would be needed. For instance, video streaming requires 1- to 2-Mbps bandwidth, which is over 10 times higher than Internet radio. Also, drivers or passengers may be surfing the net extensively or using various other high bandwidth applications. Interactive web browsing needs about 1Mbps.
It is likely that other carriers will follow AT&T’s lead in introducing usage-based data plan pricing. It is also likely that these data plans will see regular updates with more megabytes or gigabytes for the same amount of money. To keep up with the expanding smart phone data usage, 50% growth per year in gigabytes for the same dollar amount probably will be needed.