AT&T's connected car push shifts into high gear with Drive

LAS VEGAS -- AT&T is putting its money where its mouth is when it comes to its drive to turn cars into smartphones.

The Dallas-based telecommunications company on Monday unveiled AT&T Drive, a platform that allows automakers to add connected services such as in-car entertainment systems, over-the-air diagnostic systems, and other cellular-enabled features.

In addition, AT&T will open the 5,000-square-foot Drive Studio, where automakers can bring in vehicles and test out services and components. The company told CNET that it has invested several millions of dollars on the construction of the facility.

It's the biggest move yet for AT&T, which has had its foot firmly planted on the pedal when it comes to signing up partners and promoting connected car services. AT&T has partnerships with major automakers such as General Motors and Nissan, as well as upstarts such as Tesla, and is expected to announce further partnership deals here at the Consumer Electronics Show.

"Our goal was to be best partner we can be," Glenn Lurie, head of AT&T's emerging devices business, said in an interview with CNET.

AT&T sees the connected car business, which pushes the concept that a cellular-enabled car can provide a whole different slew of services and features, as a potentially lucrative new business, possibly generating billions of dollars in additional revenue down the line. The company is eyeing the opportunity as its core wireless service business shows slowing growth and becomes more competitive.

The Drive platform is intended to be a guide to help the automakers ease into the wireless world. The platform includes everything from safety, security, and diagnostics software, voice-command technology, secure firmware updates, application store capabilities, and billing systems, among other features. The idea is that an automaker can pick and choose the resources it needs from Drive, or at least get guidance on different wireless services.

"No matter what they need help on, we can help," Lurie said. "What we're finding with the auto [manufacturers], the technology is evolving so fast, they now have to move faster."

This year could mark the start of the connected car revolution. Following a deal that was announced in early 2013, the first GM cars with an LTE radio are scheduled to roll into dealerships later this year.

"More and more, the car will become a smartphone will wheels," Lurie said.

Roger Lanctot, an analyst at Strategy Analytics, warned that it would take a while before these kinds of services broadly make it in the car.

"2014 is the beginning of the beginning," he said. "Once we get a bigger pipe in the car, we will start moving aggressively on the path to contextually aware vehicles able to deliver a safer driving experience."

The idea of a connected car leads to multiple business opportunities, even within a single car. For instance, an automaker may structure a deal where it charges a driver for the safety and diagnostic system in the front of the car, while AT&T handles the charges for the entertainment and gaming services delivered wirelessly to the backseat.

The push to create a platform is a signal that AT&T isn't content to just be the connection to the car; it wants to get its hand in the more lucrative business of offering and managing services. The carrier isn't the only one looking at this area -- Sprint also has a platform to deliver similar services, and Verizon Wireless is ramping up its own business after acquiring Hughes Telematics in 2012.

AT&T hopes to set itself apart with Drive Studio. The Atlanta-based facility is situated across the street from its connected devices-based Foundry, or one of several technology and innovation hubs that draws talent from local innovators and entrepreneurs.

Drive Studio is expected to launch later this month.

Automakers will be able to schedule time at Drive Studio to bring in cars, or build connected cars from scratch, taking advantage of the facility's working garage and range of wireless testing equipment.

"This is a place to go to try and rip a car apart and replace things and test things," Lurie said. "We want to build the next generation of connected cars."

Also at the facility will be partners such as Ericsson, which will provide a framework to delivery apps to cars, natural language provider Voicebox, billing systems provider Amdocs, dealer portal service provider Synchronoss, and Accenture, which will help with car-centric apps and related data.

The most interesting part of this business: Most of the features and services that will end up in the car likely haven't been discovered yet. Lurie said he like the pre-app smartphone days, the industry is still playing around with the possibilities.

Lanctot similarly called CES 2014 a "transitional year" for announcements, with more intriguing things to come.

"The big funs aren't ready yet, but the labs are working overtime," he said.