Vodafone’s M2M deal with GM brings out the importance of multinational coverage

General Motors (GM) announced on 22 February 2016 that it is using Vodafone’s network for its GM OnStar connected car services in Europe.

This news further bolsters Vodafone’s credentials for major connected car contracts, and represents a significant setback for other major European operators – most notably, Telefónica, which had previously announced an agreement with GM for providing connectivity, says Tom Rebbeck, research director at Analysys Mason.

We estimate that the GM contract could, in time, be worth over EUR20 million per year in revenue to Vodafone. This article discusses how this agreement may strengthen Vodafone’s position as a provider of multinational M2M contracts, and highlights further implications that this deal has for other operators.

Deal overview: Vodafone will act as AT&T’s roaming partner for GM cars in Europe

GM’s OnStar system provides services such as emergency response, security, diagnostics and in-car connectivity. This new service will be operated in Europe by Vodafone, in partnership with AT&T. The agreement between AT&T, GM and Vodafone took effect when production of the new Opel and Vauxhall Astra began, before being expanded to all other models.

In the first year of activation, connectivity to this service will be offered through GM’s existing partnership with AT&T in the USA. The SIMs installed in each car will act as AT&T connections that roam on the Vodafone network, and in-car Wi-Fi connectivity will be included in the price of the car.

At the end of this first year, car owners will have the option to continue the service by buying connectivity directly from Vodafone. If they choose this option, then the SIM will become a Vodafone SIM, rather than an AT&T SIM roaming on the Vodafone network. GM’s share of the European car market was about 7% in 2014, and this potentially provides Vodafone with direct access to a significant M2M revenue opportunity.

Deal implications: This agreement highlights Vodafone’s position as a strong, multinational M2M player

There are several important points to note from this deal.

  • The contract could, in time, be worth over EUR20 million per year for Vodafone. If the deal covers all GM models sold in Europe (around 1 million cars per year), this could generate over EUR20 million a year in revenue for Vodafone, even if only a quarter of GM’s new cars include connectivity.
  • GM’s deal with Vodafone appears to be a setback for Telefónica. Telefónica announced in 2012 that it would provide connectivity for GM cars outside the USA. Vodafone’s news seems to supersede this previously reported partnership. It is not clear why Telefónica was replaced as the preferred service provider, but it comes at a time when Telefónica is gradually withdrawing from most European markets, with the exception of Spain.

    Tom Rebbeck
    Tom Rebbeck, research director at Analysys Mason
  • It reinforces the need for operators to have multinational coverage to win the largest customers. In our recent article ‘To win more IoT and M2M business, telecoms operators may have to adjust geographical focus’, we argued that multinational companies prefer a single agreement for a region, rather than multiple local deals. Vodafone, through its subsidiaries and partners, is able to fulfil such an agreement. It is unclear whether other alliances, such as the Global M2M Association, can move as quickly or as flexibly as Vodafone.
  • A small number of operators are dominating the connected car market. The connected car market is the largest mobile market by some margin – both in terms of number of connections and connectivity revenue. We estimate that connected cars will account for around 70% of all cellular M2M connections worldwide in 2020. It is also a concentrated market: just six companies – BMW, Ford Motor Company, GM, PSA Peugeot Citroën, Renault-Nissan Alliance and Volkswagen (VW) – account for over 70% of sales worldwide. Furthermore, connectivity contracts tend to be binary – for example, we would expect VW to have only one connectivity provider in Europe. Operators that are not part of an alliance seem likely to miss out on car contracts.
  • AT&T and Vodafone make an interesting match. Vodafone has partnerships with more than 40 operators in countries around the world, but notably lacks partners in the USA, despite its past shareholdings in Verizon Wireless. `Other car companies using AT&T for North American and Vodafone for European connectivity include Porsche and Jaguar Land Rover. We understand that Vodafone and AT&T’s contract with GM is a unique arrangement, and does not signify any broader co-operation. However, given their complementary footprints, we would not be surprised to see other agreements between AT&T and Vodafone.
  • The complexity of the deal will make the regulation of M2M more difficult. In the first year of activation, each connection will effectively be an AT&T SIM that roams in Europe. Over time, this could lead to hundreds of thousands of SIMs that are registered and regulated in the USA (because they count as US M2M connections), but active in Europe. This would complicate attempts to regulate the market.

The author of this blog is Tom Rebbeck, research director at Analysys Mason.

Comment on this article below or via Twitter: @IoTNow_ OR @jcIoTnow

RECENT ARTICLES

Sign-Up For Your Premier One-Stop Guide to the EV Landscape in 2022

Posted on: December 1, 2022

The race is on to establish the market leaders across various verticals in the Electric Vehicle industry, including the vehicles themselves, charging stations, third-party service providers, and the supporting infrastructure. This in-depth EV market guide and report by IoT Now explores all these trends to help determine the roadmap for the current state as well

Read more

Axiomtek launches compact DIN-rail IIOT gateway for data driven energy

Posted on: November 30, 2022

Axiomtek, a world-renowned specialist relentlessly devoted in the research, development, and manufacture of series of innovative and reliable industrial computer products of high efficiency is pleased to announce the ICO120-E3350, an extremely compact industrial IoT gateway powered by the Intel Celeron processor N3350 (codename: Apollo Lake-M). The ruggedised designs feature fanless operation, -40°C to 70°C

Read more
FEATURED IoT STORIES

The IoT Adoption Boom – Everything You Need to Know

Posted on: September 28, 2022

In an age when we seem to go through technology boom after technology boom, it’s hard to imagine one sticking out. However, IoT adoption, or the Internet of Things adoption, is leading the charge to dominate the next decade’s discussion around business IT. Below, we’ll discuss the current boom, what’s driving it, where it’s going,

Read more

9 IoT applications that will change everything

Posted on: September 1, 2021

Whether you are a future-minded CEO, tech-driven CEO or IT leader, you’ve come across the term IoT before. It’s often used alongside superlatives regarding how it will revolutionize the way you work, play, and live. But is it just another buzzword, or is it the as-promised technological holy grail? The truth is that Internet of

Read more

Which IoT Platform 2021? IoT Now Enterprise Buyers’ Guide

Posted on: August 30, 2021

There are several different parts in a complete IoT solution, all of which must work together to get the result needed, write IoT Now Enterprise Buyers’ Guide – Which IoT Platform 2021? authors Robin Duke-Woolley, the CEO and Bill Ingle, a senior analyst, at Beecham Research. Figure 1 shows these parts and, although not all

Read more

CAT-M1 vs NB-IoT – examining the real differences

Posted on: June 21, 2021

As industry players look to provide the next generation of IoT connectivity, two different standards have emerged under release 13 of 3GPP – CAT-M1 and NB-IoT.

Read more

IoT and home automation: What does the future hold?

Posted on: June 10, 2020

Once a dream, home automation using iot is slowly but steadily becoming a part of daily lives around the world. In fact, it is believed that the global market for smart home automation will reach $40 billion by 2020.

Read more

5 challenges still facing the Internet of Things

Posted on: June 3, 2020

The Internet of Things (IoT) has quickly become a huge part of how people live, communicate and do business. All around the world, web-enabled devices are turning our world into a more switched-on place to live.

Read more

What is IoT?

Posted on: July 7, 2019

What is IoT Data as a new oil IoT connectivity What is IoT video So what’s IoT? The phrase ‘Internet of Things’ (IoT) is officially everywhere. It constantly shows up in my Google news feed, the weekend tech supplements are waxing lyrical about it and the volume of marketing emails I receive advertising ‘smart, connected

Read more