AT&T doesn’t just want to put an Internet connection in every car. It wants the people in those cars to watch its recently acquired television service, DirecTV. So, someday in the not-too-distant future, the wireless carrier plans to begin piping the pay-TV service into connected vehicles over its cellular network.
“We think that DirecTV is a great entertainment asset in our portfolio, and we’re actively working with them to identify ways to bring DTV content into the car,” said Chris Penrose, senior vice president of AT&T’s Internet of Things department, in an interview.
AT&T said there is no timeline for the integration yet. But for parents and families, it could mean for the first time giving restless youngsters in the backseat access to live, streaming television on long road trips. For AT&T, layering a data-intensive service on top of its existing wireless network means something else: More money.
Consumers can already pay AT&T to get DirecTV on their smartphones and tablets. AT&T recently made moves to tie DirecTV to its unlimited data plans as well, making the purchase of a pay-TV subscription a requirement of the unlimited data program. And those customers can now, as of last week, add their cars to the plan for $40 a month or $10 per gigabyte.
Analysts say that providing Internet connectivity in cars is a low-margin business, similar to the way Internet access is growing increasingly commoditized at home. In vehicles, the average revenue per user stands in the single digits, according to Tammy Parker, an analyst at the market research firm Current Analysis.
But telecom companies like AT&T believe packing that in-car connection full of value-added services will drive up consumption, making it a better investment for carriers. More than 8 million cars are on AT&T’s network and more than half of all new connected cars get linked to its network, the company has said.
“If you start turning the car into a WiFi hotspot and using Internet radio, doing real-time live traffic, and you start doing things with video capture or video consumption in the back seat of the vehicle, those become much-higher-bandwidth solutions that drive much higher [revenues],” said Penrose.
It’s the same logic driving much of the industry’s activity in wired, residential Internet access. Realizing that it’s no longer enough simply to be a conduit for Web traffic, companies from AT&T to Comcast to Verizon have been investing in digital media properties that will allow them to pump out exclusive content – and charge for it.