(Bloomberg Opinion) -- If you’ve bought a new car lately, chances are it has some basic communication skills. One day, cities and highways could be full of self-driving vehicles, all talking directly with each other to coordinate traffic and prevent accidents.
Do they all need to speak the same language? In Europe, lawmakers may be about to make them pick one. The implications and costs for automakers, telecom carriers and equipment makers could be substantial. Hopefully, officials will allow a range of tongues to coexist while the technology emerges from its infancy.
The European Parliament will decide next week whether to approve a law to mandate the use of wi-fi connectivity between cars. Were they to reject it, a combination of technologies, including 5G, would be allowed to operate in tandem.
It’s like the battle between VHS and Betamax – the dueling 1980s videotape formats – except where the worst-case scenario results in a VHS user getting accidentally rammed by a passing 1.5-ton Betamax.
The European Commission prefers wi-fi, known for these purposes as dedicated short-range communications (DSRC). The body says it can be deployed more quickly and therefore prevent more accidents. It’s already in use – if you have a box on your dashboard to pay bridge tolls automatically, you have this system.
Were lawmakers to be persuaded by the EC’s arguments, a wave of investment would ensue from a range of stakeholders, spanning cities to carmakers, to deploy the system. Traffic lights, toll booths, roundabouts, blind corners and garage doors would all get kitted out with the gear, as would vehicles. Although the standard has been around for some 15 years, very few actually use it to communicate with other cars and trucks.
There are, however, other interests at play. For carmakers, tech and telecom firms, the law is the opening salvo in a battle over as much as $750 billion in additional revenue that McKinsey estimates connected cars will generate annually by 2030.
These companies are jostling for prime position to win the most lucrative pieces of the automotive data market: for example, delivering vehicle performance software, entertainment content and ads, while gathering up valuable user data. The closer a company is to the development phase of these standards, the greater chance of winning a slice of the pie.
Lobbying efforts on both sides of the equation have been in overdrive.
A handful of mass-market carmakers, including Volkswagen AG and Toyota Motor Corp., are in the DSRC camp – perhaps unsurprisingly, given that they helped formulate the standard. VW has already invested significantly in the solution, and had planned to start putting it into cars this year.
A powerful voice on the other side of the issue is the telecommunications industry, led by firms such as Deutsche Telekom AG and Vodafone Group Plc. The prize for skipping DSRC and going straight to 5G is the ability to participate in developing the new standards – and the potential to align them with carriers’ existing capabilities. Wireless operators are in a better position than carmakers to profit from the new technology, which can also talk to the broader cellular network, according to Bloomberg New Energy Finance analyst Andrew Grant. Still, BMW AG and Daimler AG are among the luxury carmakers that are on their side. The 5G standards fit well with the C-V2X, or cellular vehicle-to-anything communications, already in use with top-of-the-range vehicles.
What should lawmakers do?
If it were simply a question of superior technology, then they would surely reject the law. 5G promises rapid communication of large gobs of data, and can be used for more than just car safety.
Though it isn’t yet widely available, the infrastructure is already on its way for mobile communications and the Internet of things. The spending to roll out DSRC tools might ultimately prove redundant. And it’s easy to overstate how quickly the latter can be introduced – it takes some time for laws to take effect, and the technology isn’t widespread in cars now. By the time both happen, 5G could already be the prevalent technology.
Allowing multiple standards to develop in tandem would be a relief for Nokia Oyj and Ericsson AB, who are justifiably fearful that insisting on DSRC would delay the widespread rollout of 5G.
It’s worth remembering that we are a long way from a time when autonomous cars roam the roads freely. So backing a particular standard would be foolish when the full requirements aren’t yet known. An agnostic approach to regulation is therefore absolutely sensible.
The advantage of rejecting the regulation is that it still leaves all options on the table. Could it make life harder for the likes of VW? Yes. a standard mandating DSRC would make it easier to stave off the competitive threat from the telecoms industry.
But lawmakers should recognize that in the long term, it’ll be better for everyone.
To contact the editor responsible for this story: Jennifer Ryan at jryan13@bloomberg.net
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.
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