Industry Trend Analysis - Public And Private Impetus To Drive Connected Cars Adoption - AUG 2017

BMI View: Being a leader in LTE, in terms of coverage and adoption, the UK is well-placed to become a major player where connected cars become mass market. The role of BT will be crucial, as its investments into expanding LTE, and offering the right type of services, will serve as a driver to its rivals in the market.

As part of the May 18 2016 Queen's Speech, the UK government introduced the Modern Transport Bill, which looks to make the country a leader in terms of new automotive technology, including autonomous and electric vehicles. We believe that the UK is in a good position to be a leader at least in Europe, because of the high level of development in both the passenger cars and mobile data markets, and the role that BT/ EE can take in leading the market (see 'Consolidation Helping BT/EE's Investments' May 10 2016).

A Mature Market In Both Industries
Passenger Cars And 3/4G Penetration, 2014-2020
e/f = BMI estimate/forecast. Source: BMI, National Sources

The UK is a mature and developed market both in the automotive and telecoms industries. Because of this, we believe the move to more advanced services, such as connected cars, require drivers; this is where BT has a strong role to play. The carrier, having gained scale following its acquisition of EE, has also recently won part of the contract for emergency services, which will enable 95% LTE geographical coverage. This can be leveraged to provide connectivity to a myriad of objects, including cars, and can boost the development of connected, autonomous and driverless vehicles.

We believe that for connected cars to take off, operators must have the right fundamentals in place in terms of connectivity and adoption (see 'Connected Cars: Operators Must Get Fundamentals Right' September 22 2015). As its rivals will not want BT to have a monopoly on LTE coverage in certain areas, they will need to expand their own networks. BT will also drive the market in terms of services, as part of its connected strategy include the development of better shared data plans, as we pinpoint bundling as a core part of any successful connected objects strategy (see 'BT And EE Make Premium Moves' June 10 2015).

Leading In Western Europe
LTE Penetration (%), 2014-2015
Source: BMI, operators

Compared to other Western European rivals, the UK market has one of the highest uptakes of LTE services amongst subscribers, with EE the only operator breaking the 50% mark. This suggests the UK would be ready to expand the technology beyond traditional devices, and BT's plans to expand its lead give it an extra impetus. High LTE uptake, coverage and a clear driver in BT makes the UK one of the most attractive markets for the development of connected vehicles, with a forward-thinking plan of going beyond pure technology, by changing the rules for insurance for the development of autonomous and driverless cars, as regulation will also need updating.