It's still unclear whether mainstream consumers are willing to pay for a 4G LTE connection to their car on top of their typical smartphone bill. But offer it for free, and you've got virtually unanimous interest.
That's what General Motors is seeing. In the four weeks that it began shipping cars with an AT&T 4G LTE radio embedded inside, 98 percent of its customers have opted to try out the free trial, which lasts for three months or 3 GB, whichever comes first, according to Mary Chan, president of GM's global connected consumer business."It's a scary high acceptance rate for the trials," she said in an interview on Monday.
Consumer willingness to try out the service isn't surprising -- it is free, after all -- but the true test will be how many stick around after the trial ends. It's like satellite radio or GM's OnStar assisted service, which typically come bundled with the purchase of a car for a limited time in the hopes that consumers will like enough to keep paying.
GM is charging $10 for 200 MB of data, with increments that go up to $50 for 5 GB of data (there's a discounted $5 plan for OnStar subscribers). Chan called the rates competitive, noting they were equal to retail pricing on data.
"We've done our benchmarking of dollar per megabyte," she said. "We've thought through that."
She's correct that pricing is competitive with a typical Wi-Fi hotspot device or smartphone pricing. But it's still unclear whether consumers will pay that premium when many already pay for a smartphone -- some of which can act as their own Wi-Fi hotspot.
The ability to connect up to seven devices -- including laptops, tablets, or anything else able to pick up a Wi-Fi signal -- justifies the service, Chan said. It's also able to broadcast a network up to a 50-feet radius, allowing you to maintain your connection when you're well out of your car, potentially at a construction or campsite.
Chan added there remains the option to buy a daily pass or a block of data through an OnStar representative. AT&T customers can add the car to their mobile share data plan for $10 a month.
Chan couldn't say whether there was a chance that other carriers could get into the shared family plan through some sort of cross-billing and cross-carrier agreement. She also declined to talk about the possibility of multiple carriers sitting on one antenna in the car.
GM would look at the data usage behavior, Chan said.
It's clear GM is fully backing the idea of a connected car. While Audi actually had the 4G LTE-connected car on the market, GM will have the broadest selection of connected cars, with 30 models hitting the market this year. Chan said the goal was to further expand 4G LTE-connection in the car lines next year.
Beyond the consumer, Chan said she sees an opportunity to sell its 4G LTE-connected car service to businesses that deal with vehicles, such as the trucking industry. GM has opened up its software programming to allow businesses to create apps that take advantage of a connected car. Chan gave the example of fleet management, allowing companies to see how long their drivers are on the road, and the condition of the car. The rental car industry could sell a 4G LTE hotspot as a premium service.
Down the line, Chan said there was a bigger opportunity to improve remote diagnostic capabilities, noting there's already an algorithm that can predict tire pressure. Eventually, drivers will get alerts that their engine is at risk or their battery needs to be replaced.
Just creating a wireless data hotspot doesn't seem enough for Chan. She wants to eventually be able to manage a car's health and even send over-the-air updates to help improve its condition. She also believes connectivity is an "important building block" to semi-autonomous cars.