Would American motorists be willing to pay a telematics company to provide real-time traffic advisories? In the United States, consumers have been cool toward telematics, but a British firm is launching a demonstration project in Detroit to generate interest.
Trafficmaster plc, a telematics service in the United Kingdom, plans to provide real-time traffic advisories to Detroit motorists later this year.
Trafficmaster expects to spend about $2 million to install tracking devices in a few thousand Detroit cars. The company's computers would monitor the location and speed of each vehicle, then use that information to calculate the density of traffic on each road. The motorists could use that information to avoid traffic jams and choose new routes.
Traffic advisory services are growing rapidly in Europe and Japan, and Trafficmaster is positioned to take advantage. Launched in 1988 with the aid of venture capital, the company signed its first agreement with an automaker - BMW - in 1996 to fit a screen-based system to 750i models.
Trafficmaster now provides service in the United Kingdom and Germany. This year, it will launch in Italy and France. After that, the company will fill the gaps in its coverage, extending to Belgium, the Netherlands, Luxembourg, Spain, Portugal, Switzerland and Austria. Meanwhile, an assortment of American cities are tinkering with experimental systems.
'The U.S. is behind Europe in telematics,' said David Martell, Trafficmaster's founder and CEO. 'Historically it has been reactive rather than proactive. So this is the first stage of understanding the U.S. industrial model before we go further.'
The United States poses problems for Trafficmaster, which previously had optimized its data gathering for European driving conditions. Many U.S. roads are rural, Martell said. 'There are a huge number of roads that see very little traffic. Our estimate is that 5 percent of U.S. roads see 95 percent of the congestion.' In the United States, Trafficmaster would concentrate on installing sensors on freeways in metropolitan areas.
The United States also has no standard mobile phone network, making roaming - switching from telecommunications provider to provider - more difficult than in Europe. Telematics relies heavily on mobile phone networks to deliver real-time traffic information. That's why Trafficmaster is counting on Europe to fuel most of its growth in the near future. The company is spending $100 million to fund new networks across Europe. In the United Kingdom, about 10 percent of the vehicles are fitted with Trafficmaster systems.
To exploit Germany's growing market, Trafficmaster has formed a new European operation, Trafficmaster Europe GmbH, with headquarters in Hochheim am Main near Frankfurt. In Germany, Trafficmaster competes with Tegaron Telematics GmbH, a joint venture between DaimlerChrysler Services and Deutsche Telekom, which was established in 1997. 'Germany will be the power base for European telematics growth over the next five years,' Martell said. 'Our German network already covers 11,000 kilometers of roads.'
In France, Trafficmaster acquired a 20 percent stake in Mediamobile S.A., a French telematics company. Other shareholders include France Telecom, Renault and Cofiroute. Trafficmaster also reached an agreement with Renault to provide telematics services to the automaker's customers in the United Kingdom and France. In Italy, the company has reached an agreement with Targa Services, a division of Fiat Auto.
Gathering live traffic information is just part of the telematics equation. The real growth will come when navigation systems can incorporate traffic information dynamically. This will allow navigation systems to reroute drivers if there is a hold-up on their route. Tegaron already offers such service to motorists in Germany. Last February, Trafficmaster signed an agreement with Robert Bosch and Motorola to offer motorists traffic information via Bosch's on-board navigation system. Initially this will be available as an aftermarket system, first in Germany and then in the United Kingdom, France and Italy.
Telematics may spread more quickly if the industry can reduce the hardware cost. On-board navigators with built-in instrument panel screens can cost $1,500 or more. But the motorist also can obtain telematics services such as live traffic information using a mobile telephone. This requires a minimal hardware investment by the motorist.
Motorola is a major proponent of this approach on both sides of the Atlantic. Trafficmaster will sell its traffic information to Motorola in countries where both have a service.
Telematics also will get a boost when customers can personalize information. For example, a motorist might not want to bother with traffic alerts about delays of five minutes or less. So the customer could instruct his service to alert him about longer delays.
You can e-mail writer Anthony Lewis at [email protected]