Management Q&A

Cellular phone coverage can be spotty. There are areas in every city and state where there is no cellular coverage, or where it is temporarily overloaded (a condition known as “surge”). And if your cell phone doesn’t work, chances are good that your onboard telematics system won’t work either. Boeing Satellite Systems (BSS) has a solution for this. Use a satellite system to back up “terrestrial” cellular systems so that mobile phones and telematics will work everywhere, all the time and in every situation.

The company will create ubiquitous coverage, which is especially important in emergency situations. BSS senior vice president of programs, Charles Toups, recently sat down with Automotive Industries to talk about ubiquity and surge and how Boeing can help the auto industry.

Q. What is Boeing’s plan for telematics?
A. Boeing is planning to enter the automotive telematics industry. We believe we have a lot to offer by bringing satellite capability to augment the terrestrial systems. OnStar operates off a terrestrial system today, and we believe that satellites would be an excellent complement to that because they provide ubiquitous coverage, say across the U.S. or, in fact, all of North America. With just two satellites you can provide full coverage over that area, from the top of Canada to the bottom of Mexico, and complement terrestrial systems. Obviously, it would be very expensive to build a terrestrial system to cover everywhere. They tend to be concentrated in urban areas.

Q. Can you provide full coverage and surge capability?
A. Yes. Say you have an area where, maybe it’s 5:00 p.m. rush hour, or maybe it’s a big sporting event, and the terrestrial systems supporting that area are overwhelmed — which seems to happen to me a fair amount when I’m trying to use my cell phone. When the terrestrial system gets overloaded, you can have a satellite system that’s smart enough that the telematics unit in the automobile is able to uplink to the satellite and get out. Let’s say a very critical situation — an airbag opens — you need to get a critical message out. You can design a system that’s smart enough to know how best to get that message up and out, whether it’s in a dense urban area that’s overloaded or you’re in the middle of nowhere. You have assured connectivity. OnStar is an example of a terrestrial system that I think is really coming on — I have that in my wife’s car, and I’m glad she has it. The more robust that system is, the more value it is to the consumer.

Q. Does anything change for the customer? Or is it transparent to the customer?
A. OnStar can continue to evolve in terms of what applications and services they provide, and we can evolve right along with them. I certainly believe that some other companies are looking at how and when to enter this. It’s a $4.2 billion market. Our notion is to complement the folks that are out there. We’re not trying to create our own telematics system. We’re trying to create a system that complements and enhances connectivity of existing systems, be it OnStar or anyone else who wants to develop services to put in automobiles or trucking fleets or whatever they want to do. We’re not trying to build a company where we’re selling directly to the consumer.

Q. What are other applications?
A. Another application, jumping way to a different place, and one that’s very interesting, is homeland security. You start thinking about what kind of information first responders would want in the event of a mass disaster or terrorist attack. You see the potential for buying these services or maybe adapting the system to work specifically for homeland security. That is a big potential area where we have a lot of creative minds thinking about the best way to help defend our country, to protect people.

Q. Do you need OEMs, telecommunications companies, etc. to buy in and invest up front before you can launch this?
A. We are talking to numerous telcos and auto companies, including GM. We do have a relationship there, since we’ve worked with various parts of GM through the years. We’re really at the formative stages as to whether it would go with one or a group. On the car side, look at XM and SIRIUS satellite radio —which is one-way communication — as a successful model. One of them teamed up with GM, the other with Ford, Chrysler and some others. I do believe in the long run that this will be in just about every make and model.

Q. Does your business case say, “We need X dollars,” and it doesn’t matter so much how much you get from whom?
A. Right. Let’s say one car company or one telco does want to do the whole deal with us, I think the others will say, “we’ve got to do this, too, somehow.” I think the right answer is going to be several groups coming together to launch this system. It won’t be every single one, but probably groups.

Q. Do you see suppliers getting on board?
A. Yes. Especially the ones who build components for onboard telematics. It gives them a competitive advantage for this killer application. It allows them to build many, many boxes for many, many cars, and they will then have set the standard. Companies like Yazaki, Motorola, who make a lot of controllers, for example, and auto electronics suppliers.

Q. Who else will be involved?
A. We have relationships with handset makers and are talking with them as well for telematics applications.

Q. Will the government be a partner?
A. The Federal government doesn’t tend to put money into a commercial venture like this. They buy time later. Or they buy an entire new system specifically tailored for them. A government application might be to put mobile communication in all government vehicles in the country, and they might also want to have telecommunications in all our F-15s that go up in a crisis situation. There are different things they might want to connect together. We’re exploring some ideas right now.