Wi-Fi is a hot topic among car OEMs and a small number of luxury brands have already launched LTE-based Wi-Fi hotspot solutions during the past twelve months. Most major OEMs plan to follow suit with some, such as GM, claiming that it will start offering LTE-based Wi-Fi hotspot solutions in its vehicles in 2014.

Car OEMs are looking to replace expensive rear-seat DVD players with Wi-Fi connected screens and are keen to leverage the latest 802.11ac Wi-Fi technology. The 802.11ac protocol offers a number of benefits compared to some of the older Wi-Fi protocols, including higher data throughput and reduced latency. Coupled with LTE connectivity this will allow a host of new high-bandwidth services to be delivered to rear-seat passengers as well as provide a higher level of interactivity, enabling passengers, for example, to play games online or connect to social media networks.

Applications such as Wi-Fi-based rear-seat video streaming can consume large volumes of data and thus the transmission costs of such services are likely to be high. “Although some early adopters and premium customers might be willing to pay an extra $15 to $30 per month for the convenience of built-in Wi-Fi connectivity, most drivers will not be willing to pay for an automotive wireless plan on top of home broadband and mobile phone subscriptions,” comments Gareth Owen, principal analyst at ABI Research.

Passengers will also have other options to access Wi-Fi connectivity such as directly via their smartphones or by tethering them to the head-units, although there are a number of downsides to this including weaker signal reception and possible service interruptions (when voice calls are made or received). “If the in-car Wi-Fi market is to develop, car OEMs will have to work with mobile operators to develop new initiatives such as the introduction of shared data plans which would enable consumers to add cars to existing tariff plans,” adds Owen.

These findings are part of ABI Research’s Automotive Infotainment Research Service.  ABI Research’s automotive infotainment database provides detailed installed base and forecasts of the car infotainment market.