The future of telematics is not going to be decided by a single entity. It’s going to be a group effort. Smart people in smart companies working together to build a connected vehicle world that is seamless for drivers.
Verizon Telematics is one of the companies which understands this, and as a result is agnostic in its technologies and partnerships. “We work with our competitors all the time,” says Mike Peterson VP and General Manager, OEM Business. “We’re the TSP (telematics service provider) to OEMs where we’re not the wireless carrier. We’re the carrier where we’re not the TSP. And we can work with just about any hardware. Currently we’re working with eight different telematics hardware protocols. We’re about as agnostic as you can get.”
To accomplish this, Verizon Telematics has nearly 1,500 people working in over 93 specialties in 250,000 square feet of office space dedicated to telematics. “A successful telematics program encompasses a much broader range of expertise than you might expect. We’ve seen OEMs want to control the whole thing, only to realize they don’t have the resources to properly support it,” says Peterson. “They might start off focusing on the engineering, where they have a great deal of expertise, only to get hung up on packaging the services for the consumer model, or handling the billing, or reducing subscriber churn. After all, OEMs are in the business of selling vehicles, not managing recurring subscription models. These are the components that are most difficult to create and launch from scratch.”
Verizon’s telematics customer base has driven over three billion miles on its proprietary telematics platform, which is the foundation for all its programs. “We’ve earned our gray hairs,” says Peterson. Verizon counts Mercedes-Benz, Volkswagen, General Motors, Hyundai, Toyota, and others as key partners in the connected-vehicle space in North America and with some in China. Their role with each is unique. For example, Verizon partners differently with both Mercedes-Benz and Volkswagen. “With Mercedes-Benz, we act as an outsourced telematics division,” says Peterson, “involved in nearly every facet of the Mercedes-Benz mbrace service – from engineering to vehicle provisioning, to sales and marketing and billing. VW is very different. We provide all the crucial telematics services, but are less involved in the consumer-facing components.” For OEMs like General Motors, Toyota, and others still to be announced, Verizon provides more modular telematics services like wireless carrier transport, engineering and security.
In addition to servicing OEMs, Verizon is continuing to drive telematics innovations across multiple industries and infrastructures. Verizon Telematics has two aftermarket solutions, In-Drive, which is core to their usage-based insurance (UBI) offering for a State Farm program called Drive Safe & Save, and a new direct-to-consumer service with the working name of Verizon Vehicle. Verizon’s commercial fleet telematics solution, Networkfleet, offers GPS-based fleet tracking, and helps companies find ways to more efficiently manage their fleet operations. Then there’s Verizon’s involvement with the State of Oregon, where Verizon Telematics is a key player in helping to launch OReGO, the nation’s first road usage charge (RUC) system.
Traditionally, transportation infrastructure projects, such as highways and bridges, have been funded by a fuel tax. But with increasing fuel efficiencies and the accelerated acceptance of electric vehicles this system is quickly becoming outdated. States are now scrambling to find new ways of funding these projects. Verizon’s In-Drive product helps collect the data needed to solve the problem.
Verizon is also launching a remote vehicle emissions program in Oregon. Instead of visiting an emissions testing facility every year, participants in the Portland and Medford Metro areas with the In-Drive device in their vehicles will have emissions data sent directly to the state. This eliminates the annoying yearly ritual of sitting in line, waiting to get your car inspected. States also save on inspection facilities.
“These projects with Oregon,” says Erik Goldman, Group President, “are fundamentally changing the way governments have been managing transportation for generations. It’s a complete paradigm shift, based on the availability of technologies we’ve been essential in developing since their inception.”
The Iceberg Model
Another big focus for Verizon Telematics is on what they call “The Iceberg Model,” which is highly relevant to OEMs. “As we all know, only 10-15% of an iceberg is visible from above the water line,” says Goldman. “In telematics, that represents the consumer business. At Verizon Telematics, we promote the idea that the remaining 85-90% of the value in telematics resides below the waterline, at the enterprise level.”
The data collected from telematics helps OEMs with topics as wide-ranging as vehicle design, logistics management, finance skip loss, and the reduction of costs associated with warranties. Verizon Telematics believes it can help engineers and product development teams fix mechanical problems, while at the same time avoid a major campaign. The existing system of reporting mechanical problems is slow and laborious, taking many months for important field data to make its way back to engineering teams.
Here’s how it works: Customers experience a mechanical problem caused by a defective part. Some may drive around for months with a check engine light on, so no data is reported. Some get the problem fixed at third-party shops. Again, no data is reported. For those who go to dealerships, the defective part is replaced. If the part is under warranty, it is sent back to the original automaker where it gets indexed and finally sent on to engineering. It can take many months to collect enough data to suggest that any given problem is larger than an isolated incident.
“Because our systems are capable of remotely collecting vehicle data, we have the capability to run complex reports on aggregated data,” says Goldman. “Those reports can spot trends in the issuance of vehicle Diagnostic Trouble Codes (DTC). Our OEM partner does not have to wait for customers to make it into the shop or for dealers to ship the part back or for critical mass to build. Using this feedback loop their engineers can potentially fix a problem in time for the release of next year’s model.” Verizon can also work with the OEM to track the problem down to a single factory as the source of the problem. From there, the problem can be fixed or the OEM can issue a micro-campaign, avoiding all the hassles and bad publicity of a major recall.
The benefits of having telematics data don’t stop there. Goldman says telematics data can help OEMs extend their business reach. “In the U.S. alone, we spend about US$2 trillion a year on the automotive ecosystem (including repairs, insurance, fuel, etc.). Only US$400 billion of that is from new vehicle sales. OEMs are looking for ways to expand their post-sale business into areas traditionally run by competitor shops or third party vendors, such as spare parts, roadside assistance, accident repairs and extended warranties. The key to those businesses is data, knowing who owns the vehicle, where it’s located, its health, and a host of other data points.”
Data can take years to build. “But, if an OEM supports the installation of an aftermarket device such as Verizon Vehicle in their shops and their Certified Pre-Owned programs, they’ll build their databases much quicker. Plus, they’ll be getting data on older model vehicles, which are the ones more likely to experience problems that feed revenue into the dealer service departments. Our partners are beginning to realize savings in areas like finance skip loss, vehicle logistics, and others. These successes help prove that, when effectively executed, telematics programs can often more than pay for themselves”.
Remotely Updating Vehicle Software
Two services Verizon Telematics is collaborating on with OEMs are remote over-the-air updates and security.
“Nothing excites automakers like being able to remotely updating vehicle software over-the-air, preventing a service visit and improving the owner’s overall experience with the brand” says Peterson. “At Verizon Telematics, we’re already remotely updating the TCU (telematics control unit). Now we’re working with many OEMs on the complexities of updating ECUs (electronic control units).”
Because Verizon regularly updates over 100 million mobile devices, it has plenty of experience with remote updates. As a result, Verizon Telematics brings carrier-grade technology and security to the OEM process. At the same time, Verizon is using its considerable security resources to secure the vehicle from hacking. Nearly 70% of the world’s Internet traffic flows through Verizon’s servers. As a result, Verizon is uniquely positioned to affect vehicle security protocols for the industry as a whole.
“Our overarching goals are to enhance the quality of the consumer driving experiences and to create dramatic enterprise value for our partners. We’re doing that with our expertise, our passion for excellence, and by partnering with OEMs in a way that offers the highest value services without disrupting their business practices and processes,” concludes Peterson.