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HERE Brings the Network Effect

by Roger Lanctot | Feb 15, 2017

On the eve of the annual Mobile World Congress gathering in Barcelona the U.S. automotive industry is facing a crisis and a critical turning point. Low gasoline prices and a recovering economy have conspired to produce record vehicle sales. With those record sales has come a massive shift to sales of SUVs and crossovers and a steady and substantial rise in highway fatalities.

The Environmental Protection Agency is facing automotive industry pressure to relax Corporate Average Fuel Efficiency (CAFÉ) standards designed to save consumers money while reducing emissions. Relaxed standards would likely unleash an even greater avalanche of SUVs and crossovers - while sales of small cars and sedans languish.

The U.S. Department of Transportation is facing opposition to its proposed mandate for vehicle to vehicle communications intended to prevent particular types of vehicle crashes and save as many as 1,300 lives annually. Best case scenarios envisioned for the implementation of the technology foresee no immediate impact on current vehicle crashes and resulting injuries and fatalities.

Both the Environmental Protection Agency standard and the USDOT mandate are calculated to cost the automotive industry (and consumers as well) hundreds of billions of dollars. It’s unclear how resistance to the EPA standard will play out, particularly given the influence of the California Air Resources Board. Skepticism regarding the efficacy of vehicle-to-vehicle communications using Wi-Fi-like dedicated short range communications (DSRC) technology, though, is growing.

The regulators contend that inter-vehicle communications will be able – in 20 years’ time – to mitigate or prevent three types of crashes described as Intersection Movement Assist (red light running), Left Turn Assist, and Electronic Emergency Brake Light. There are other driving circumstances where V2V tech might be helpful, but these are the applications that the agency has chosen to focus on – although their implementation is not part of the mandate.

The objections to V2V have come pouring in on technical, financial and historical grounds including (to note a few):

The National Cable and Telecommunications Association – The Economic Costs and Benefits of a Federal Mandate that All Light Vehicles Employ 5.9GHz DSRC Technology - http://tinyurl.com/julysum

The George Washington University – Public Interest Comment on The National Highway Traffic Safety Administration’s Advance Notice of Proposed Rulemaking - http://tinyurl.com/gpbaxg9

American Action Forum – Mandating Talking Cars: Costliest and Most Beneficial? - http://tinyurl.com/h5u4p24

My personal objection to the technology is based on the irrelevance and fundamental inflexibility of the chosen 802.11p DSRC technology instead of TD-LTE technology. But the argument I find most compelling among the three listed above is that of the Washington University researchers who point to the importance of the network effect.

In particular, the Washington University researchers note the failure of AT&T’s Picturephone years ago. The product was only useful if both the caller and the called possessed a (relatively expensive) AT&T Picturephone. For this and other reasons the Picturephone failed.

But this, alone, is not the argument against V2V technology – which will only be effective if all cars are appropriately equipped. It can be argued that the fax machine succeeded where the Picturephone failed – and yet fax machines have largely been supplanted by email and other electronic substitutes. 

In other words, it is best that regulators not be overly prescriptive where technology is concerned. They note that even GM, while introducing V2V on a single vehicle, is simultaneously planning to introduce Supercruise technology on other models. But GM is just one among many examples cited by the researchers of car makers advancing the development of self-driving technology and advanced safety systems.

They conclude: “We cannot predict the future course of technological developments but the rapid advancement in technologies currently being tested suggests that NHTSA should tread cautiously as it considers whether to mandate a specific technology whose large scale benefits would not be realized until 2036, if at all.”

Progress is being made outside of the DSRC debate. The industry is poised, this year, to break down the main barrier to inter-vehicle communications – resistance to sharing data between car brands. Map provider HERE, co-owned by Audi, BMW, Daimler, Baidu, Intel, and Tencent has broken down that barrier by commencing the sharing of vehicle sensor data between the three car brands and proposing an open specification to extend that data sharing collaboration to the rest of the industry.

In fact, Daimler and BMW have gone further – enabling vehicle-to-cloud-to-vehicle communications of road hazard information to allow appropriately equipped Daimler’s and BMW’s to communicate to one another but only within their brands. Audi notably has opted not to follow this particular path to V2V communications.

BMW, Daimler, Audi and, most recently, Ford Motor Company have joined the 5G Automotive Association hinting at the telecom-based inter-vehicle/inter-brand communication proposition on the horizon. It will hardly be a surprise should Ford – a perennial MWC attendee – choose to announce its own plans to take a stake in HERE and join the data sharing revolution.

What is more likely is that a group of car makers will join the HERE consortium ownership model. Ford partner Toyota (aligned as they are in the SD Link Consortium) may well join the party and Renault-Nissan is another strong candidate. (No comment from any of these parties on potential future investments in HERE.)

Working in HERE's favor is the massive population of former HERE executives holding senior positions throughout the automotive industry. In addition, the alignment on map data coincides with self-driving car development activity.

HERE is effectively setting the stage for cars to communicate with each other via their telecommunications modules. Once embedded wireless connections evolve to 4.5G LTE technology, vehicles will be able to communicate directly at low latency levels (equivalent to DSRC 802.11p) thereby enabling a wide range of collision avoidance applications – previously only envisioned as part of mandated V2V deployments.

But for HERE to succeed, car makers must overcome their own resistance to sharing data – a resistance that will have to be surrendered even in a mandated V2V scenario. For crash avoidance applications to work properly car makers will have to align their data communications and their application development.

But aligning that development around a rigid and outdated technology like 802.11p ultimately doesn’t make much sense. The NCTA objections to DSRC are the most detailed and they point out that the cost of implementing DSRC includes not only the cost of the required hardware (~$300/vehicle) but also the added fuel cost and the cost (likely covered by collecting a small fee on new car sales) of setting up and maintaining the Secure Credential Management System.

(It should be noted that NCTA objections are animated by the association's desire to ease the growing demand for limited wireless broadband access by allowing unlicensed use of the same spectrum proposed for DSRC V2V connections.)

The AAF analysis concludes that the regulatory costs of the V2V mandate will make it the second most expensive regulation in more than a decade, just behind the EPA mandate. AAF summarizes the V2V costs and benefits thus:

Breakdown

  • Annual Costs: $5 billion
  • Annual Benefits: $71 billion
  • Total Costs (in year 2060): $108 billion
  • Per Vehicle Cost Increases: $288
  • Annual Lives Saved (in 2051): 1,321

In contrast to the proposed V2V mandate in the U.S., HERE is coordinating the creation of a global, industry-wide solution to inter-vehicle communications based on a proposed open specification and using off-the-shelf wireless technology. Perhaps the most promising note among the critical assessments of V2V is from AAF: 

“Manufacturers would have five years after the final rule for full compliance, although DOT will allow non-DSRC communication if it meets performance standards.”

It is becoming increasingly clear that 4.5G LTE technology will meet the required performance standards. All that is necessary now is for auto makers to agree to let their cars speak with each other with the goal of saving lives. Sounds like a no-brainer - except that all of this will eventually have to be explained and sold to consumers - a final barrier that most have until now overlooked.

Related report from Strategy Analytics: HERE Peeling the Onion of Enhanced Location Technology - http://tinyurl.com/jf34f4r

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