Wifi Hot Spot Service Business for the Automotive and Oil Industries : A

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Wifi Hot Spot Service Business for the Automotive and Oil Industries : A Informatica Economică vol. 14, no. 3/2010 5 WiFi Hot Spot Service Business for the Automotive and Oil Industries: A Competitive Analysis Or: “Refuel the car with petrol and information, and the car maintenance * networks with information“ L-F PAU1, M.H.P. OREMUS2 1Mobile Business, Copenhagen Business School and Rotterdam School of Management 2Rolls Royce (BMW) Germany [email protected] While you refuel for gas, why not refuel for information or upload vehicle data, using a cheap wireless technology as WiFi? This paper analyzes in extensive detail the user segmentation by vehicle usage, service offering, and full business models from WiFi hot spot services delivered to and from vehicles (private, professional, public) around gas stations. Are also analyzed the parties which play a role in such services: authorization, provisioning and delivery, with all the dependencies modelled by attributed digraphs. Account is made of WiFi base station technical capabilities and costs. Five year financial models (CAPEX, OPEX), and data pertain to two possible service suppliers: multi-service oil companies, and mobile service operators (or MVNOs). Model optimization on the return-on-investment (R.O.I.) is carried out for different deployment scenarios, geographical coverage assumptions, as well as tariff structures. Comparison is also being made with public GPRS and 3G data services, as precursors to HSPA/LTE, and the effect of WiFi roaming is analyzed. Regulatory implications, including those dealing with public safety, are addressed. Analysis shows that due to manpower costs and marketing costs, suitable R.O.I. will not be achieved unless externalities are accounted for and innovative tariff structures are introduced. Open issues and further research are outlined. Further work is currently carried out with automotive electronics sector, wireless systems providers, wireless terminals platform suppliers, and vehicle manufacturers. Future relevance of this work is also discussed for the emerging electrical reloading grids for electrical vehicles. Keywords: WiFi, Fuel Stations, Business Models, Oil Company, Mobile Operator, WiFi Services, Regulations, Professional Vehicles Background Telenor, Deutsche Telekom, Mobilcom, 1 1.1 Hotspot areas Swisscom, as well as elsewhere Korea For several reasons (e.g. range and coverage) Telecom and AT&T; there are also many WiFi technologies were, until recently, smaller resellers. mainly used in private areas like offices (both large enterprise offices and SOHOs) and 1.2 Vehicles homes. Research and activities of leading Another aspect that forms the background for technology firms and mobile network this research is the fact that more people operators show that the interest into applying spend time in their vehicle(s). The number of WiFi within public areas is growing. vehicles (cars, buses and freight vehicles; no Especially the “hotspot areas” (e.g. airports, motorcycles) per 1000 people is increasing, shopping centers, congress centers, etc.) are in the Netherlands as well as in the other focus points. Among network operators European countries, although this in-vehicle operating large public wireless LANs now, or time is stable in USA. Related to that, the considering whether to do so in the near traffic intensity grew enormously. In The future, are European service providers Netherlands the traveling distance per year Orange, British Telecom, Telia Sonera, for passenger cars grew in the period 1997 – *This work was presented at a COST 605 workshop in Budapest in February 2010 6 Informatica Economică vol. 14, no. 3/2010 2007 by 24, 6%. The largest growth was for components are in line with the low costs of delivery vans with an increase of 107, 5%. most automotive components, while many The traveling distance for buses and truck public network terminals are not (even at increased with respectively 5, 4% and 7, 6%. modem level). GPRS/EDGE and 3G/HSPA services meets most of these requirements as 1.3 Wireless access for vehicles while “on well, with good coverage, with nominal data the move” rates up to 7 Mbit/s with wide coverage, but If we combine the two factors above, we can service provisioning by public operators conclude, based on simple technology only, and usually higher device costs. diffusion principles, that there will be an Bluetooth based Personal Area networks increasing demand for wireless services from offer a third route, limited to a collection of and to vehicles while on the move. devices at short range, but with no data Public voice services are already integrated connectivity or management. into vehicles in a way satisfying safety regulations (e.g. integrated hands-free 1.5 Examples of uses of WiFi in vehicle telephone sets), and with sometimes environments additional usage limitations protecting safety. In November 2001 Mercedes-Benz The growth of mobile Internet as well as demonstrated a c320 sedan that had been access to content on mobile terminals and outfitted with an IEEE 802.11a LAN. Web smartphones (often with GPS) show that this and media content can be radioed from penetration can only grow further. The roadside access points via an interface card to combination of the number of vehicles per the sedan’s onboard computer1. 1000 people and a high penetration of In 2001, Ten Square Inc. started rolling out mobile phone users with enhanced services, its point-of-sale network, called the OuterNet leads to the plausible fact that more and network, which allows drivers to do more drivers and passengers will use mobile everything from downloading a coupon for a services from and to a vehicle on the move, free cup of coffee from the receipt printer on at the same time as safety regulations impose the pump, to selecting MP3 and video files an integration of the access devices into the from the dispenser screen and downloading vehicles This impacts the deployment in the them wirelessly in the approximately 240 vehicles of Bluetooth technology for seconds that it takes the average gas tank to communication between devices in the fill up2. vehicle as well as between the vehicle and its Sensoria Corp. introduced its Telematics environment. Environment at DEMOmobile 2001. The Sensoria Telematics Environment is claiming 1.4 Service requirements and provisioning to be a standards-based platform for Many of the wireless services have a delivering next-generation telematics multimodal character with a variety of services over conventional cellular, requirements on communication networks Bluetooth and wireless LAN connections. It such as bandwidth, asymmetry and is claimed to bring new voice and data interactivity. Besides this, users expect a applications into the vehicle3. cost-efficient access to their information, Delphi Automotive Systems demonstrated entertainment, technical and communication services. WiFi (IEEE 802.11 standards) meet 1 “Mercedes-Benz shows new wireless technology at most of these requirements, by offering high Comdex”, November 2001, www.m- travel.com/11115.shtml data rates (11-100 Mbit/s), but at short range, 2 and with in several countries a regulatory “Pumps to deliver more than just gas”, January 2001, www.nwfusion.com/news/2001/0129pumps.html framework allowing value added services to 3 “Sensoria Corp. introduces the first telematics be deployed locally. Another fundamental solution to support advanced voice and data aspect is that the device cost levels for WiFi applications in vehicles”, September 2001, Lexis Nexis Informatica Economică vol. 14, no. 3/2010 7 automotive applications for wireless data 1.7 Players networks at the 2002 International Consumer When discussing the business models for Electronics Show in Las Vegas. On a wireless services in the automotive area, an specially equipped vehicle, Delphi showed essential aspect is the identification of the how licensed video files, audio files and players. Some of the technologies described other data seamlessly could be transmitted to above, such as public mobile voice service, and from home, office and future service- have already been in use for some years, and provider sources4. distinct players have evolved.. The new There is a big push by the world’s biggest mobile data services around WiFi will automakers to roll out telematics systems: however allow new parties, such as the oil General Motors (initial product OnStar industry, to enter the market, but will also navigations system), Ford, Volvo, Toyota, allow incumbents to broaden their outlet BMW, Nissan and Renault. reach. Who are the (potential) players? 1.6 Standardization and Government . Government and municipalities (licenses, funded Research safety, taxes, regulations) Besides the above-mentioned commercial . Oil Companies (WiFi services being activities and initiatives, there is also offered via “their” service stations”) development / specifications work done by . WiFi Service Providers (Third party that standardization or governmental might start offering the communication Organizations. The Dedicated Short Range service, but not the applications) Communications (DSRC) Standards Writing . Mobile Network Operators (might be group of the American Society for Testing threatened by WiFi or triggered to join and Materials (ASTM) was sponsored by the (connection 3G/WiFi at access terminal Federal Highway Administration to test IEEE level) or become WiFi Service Providers 802.11a products for telematics applications. themselves) This included vehicular public safety, . Service Station owners/operators (The electronic toll-taking, commercial vehicle
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