As the transition to the era of autonomous and connected cars accelerates, Internet of Things (IoT) for vehicle control is emerging as a new opportunity in the communications market. Not only communication companies but also automobile manufacturers are entering the vehicle control IoT business, approaching 10 million lines this year.
◇ Rapidly growing 'budget phone vehicle control IoT'
According to the Ministry of Science and ICT on the 21st, the number of domestic vehicle control IoT lines recorded 9,582,898 in December last year, an increase of about 15% compared to the previous year (8,367,456). Compared to just about 1.79 million lines in 2018, it has more than quintupled in six years. Vehicle control IoT is a communication line used to implement telematics services, such as in-vehicle navigation, entertainment, remote control, inspection, and upgrades.
In contrast, the number of mobile phone lines in December last year reached 56,195,179, including the three major mobile carriers and budget phone providers, which was only a 0.1% increase compared to the previous year (56,156,794). A telecommunications industry official noted, "The only line of business growing annually by double digits in a saturated telecommunications market is the vehicle control IoT."
Notably, automobile manufacturers have directly ventured into budget phone (MVNO; mobile virtual network operator) operations after receiving permission about 5 to 6 years ago, renting telecommunications networks to sell vehicle control IoT. As a result, the number of budget phone lines for vehicle control IoT, which was only 230,000 in 2018, increased to 7.34 million as of last December. Budget phones account for about 76% of all vehicle control IoT lines, including mobile carriers. Mercedes-Benz Korea, Ssangyong Motor, Hyundai and Kia, and Tesla are among those offering vehicle control IoT services after obtaining budget phone business permits.
A representative from the automotive industry remarked, "Nowadays, most new cars come equipped with vehicle control services by default, and it has become customary for manufacturers to offer a certain period of free service upon purchasing a new vehicle. However, using carrier services increases the cost burden on manufacturers," adding, "After the free service period, IoT fees can reach 5,000 to 10,000 won per month, making it a win-win situation."
◇ SK Telecom and LG Uplus double their line count… KT down to one-third
Mobile carriers are also focusing on vehicle control IoT as a future growth area. Among the three major carriers, SK Telecom holds the most vehicle control IoT lines. As of December last year, SK Telecom had 1.51 million vehicle control IoT lines, an increase of about 2.8 times compared to 540,000 in 2018. During the same period, LG Uplus also increased its lines by 2.25 times (from 200,000 to 450,000).
In contrast, KT's line count decreased to 260,000 in December last year, a 67.5% drop from 800,000 in 2018. KT explained, "We used to provide vehicle control IoT services to Hyundai Motors, but the line count drastically dropped due to Hyundai Motors receiving budget phone business approval and starting direct services in 2020."
However, some industry insiders believe that the policy of KT CEO Kim Young-seop to "exit unprofitable businesses" has also influenced this situation. In December last year, KT restructured by abolishing the strategic and new business departments, which included the AI Mobility Business Unit overseeing vehicle control services, merging it into the enterprise sector. During this process, the head of the AI Mobility Business Unit, who was in charge from the establishment to the operation of the organization, was transferred to KT Telecop. The AI Mobility Business Unit was established by KT in 2021 to drive vehicle control operations, including connected cars. The average revenue per user (ARPU) for the vehicle control IoT business is reported to be significantly lower compared to the internet or mobile phone businesses.
A representative from the communications industry stated, "Compared to remote control and wireless payment IoT lines, vehicle control IoT has a higher unit price, and demand for new lines reliably arises when older vehicles reach the end of their lifespan and are replaced, making it an attractive business." They further noted, "Although currently the ARPU is lower than that of telecommunications products, it is anticipated that vehicle data consumption will increasingly surge, indicating significant growth potential."