Cars surpass phones as carriers’ growth driver in 2017: Chetan Sharma Consulting

According to research firm Chetan Sharma Consulting, 2017 was a landmark year for the wireless industry because, for the first time, operators added more cars than phones during the period. And connected cars will likely continue to be an important market, as the firm reported that smartphone penetration in the United States now stands at 93%, leaving little room for major growth.

“While ARPUs from such net-adds is quite low compared to postpaid net adds, it does reflect the changing dynamics in the industry,” Chetan Sharma Consulting wrote of connected cars in its report on the wireless industry’s fourth quarter.

The firm also noted that the wider “connected device” sector—which includes everything from cars to tablets to wearables to street lights; basically everything that’s not a phone—accounted for fully 67% of all net additions during 2017.

“This means that while there is a healthy smartphone sales pipeline, it is for existing subs and as such net-adds for the phone business is tapering off and we can expect that new net adds will continue to be dominated by the connected devices segment,” the firm wrote.

Chetan Sharma Consulting also pointed out that there’s one operator clearly in the lead in the connected car space: “AT&T dominates the connected car segment with 11 straight quarters of 1M or more connected car net-adds,” the firm wrote.

In its recent filing with the Securities and Exchange Commission, AT&T outlined its progress in the connected cars space: “During the third quarter and first nine months of 2017, we added approximately 1.5 million and 4.7 million wholesale connected cars, respectively, through agreements with various carmakers, and experienced strong growth in other IoT connections as well.”

And in the filing AT&T offered a peak into its connected car strategy: “We believe that these connected car agreements give us the opportunity to create future retail relationships with the car owners.”

Overall, AT&T boasts around 17 million connected cars on its network and 2.7 million connected fleet vehicles, alongside agreements with car manufacturers like BMW, Ford, Lincoln, Volvo, Tesla and others.