Broadband on wheels: Connectivity is the new MPG

March 12, 2014: 12:12 PM ET

Audi's new A3 sedan is first with 4G LTE high-speed connectivity.

By Doron Levin

2015 Audi A3 sedan

2015 Audi A3 sedan

FORTUNE -- The 2015 A3 sedan soon arriving at U.S. dealerships will offer a key option not available in the other models in Audi's lineup -- or, in fact, any vehicle now on sale: 4G LTE.

As the first vehicle with 4G LTE connectivity, the A3 portends an automotive era in which drivers and passengers will stream video, audio and use a wide variety of apps that weren't possible with 3G. Other Audi models may offer the higher-speed Internet in a year or so, the company says. General Motors Co. (GM) has announced that it will begin to offer broadband in its models later this year; others are expected to follow.

The feature is being offered first on Audi's lowest-priced model, which starts in price at about $30,000, because younger and entry-level shoppers are expected to have more interest in advanced connectivity than shoppers for larger, more expensive Audi models, such as the A8 sedan.

MORE: Meet the auto industry's leaders of innovation

Good-bye, FM radio. Hello, House of Cards. The A3's navigation system will enable operation of Google Earth and Google Street View, allowing drivers to view destinations, buildings, and landmarks on the car's display as photographs rather than as representations on maps.

When searching points of interest in navigation mode, drivers with 4G connectivity will be able to use Google's (GOOG) search function in the same manner as on a laptop or tablet.

Car-based Internet represents the next logical step for a digital technology that has become increasingly ubiquitous in homes and hotels, on airline flights, and at retail establishments like Starbucks (SBUX). At the same time, broadband in cars could also pose an additional distraction to drivers who already are using smartphones to navigate, text, and conduct phone conversations. Carmakers are bracing for criticism and, possibly, regulatory pushback.

Filip Brabec, Audi program manager, said "4G LTE in the car is an opportunity for the people who are coming along for the ride to have a seamless data connection and the ability to enjoy much more content on their devices. All the services in the car also naturally get a lot faster."

MORE: Renault-Nissan alliance pushes economies of scale to a new level

The service will provide a new revenue source for Audi, as well as for its partner, AT&T (T), which have agreed to split revenue generated from car-based broadband. After a six-month trial period, AT&T will charge A3 owners $99 for 6 gigabytes of data over a six-month period or $499 for 30 gigabytes of data over a 30-month period. Audi says the cost averages to about $16 a month.

Brabec noted that "digital technology and innovation is moving much faster than automotive." Thus, the usual four to five years between new vehicle introductions is too long to wait to introduce infotainment features that carbuyers want now. Audi said the new A3 sedan is the first with a self-contained module that holds the hardware and software needed for broadband and other infotainment systems. Previous systems were designed within an electronic network throughout the car and, therefore, were impractical to replace until the entire vehicle was redesigned.

With the new module, Brabec said, Audi will gain the capability of introducing entirely new digital features -- if it wishes -- in a 2016 A3, without other major changes to the car.

The automotive industry appears on the brink of being driven as much by bandwidth as by horsepower.

  • Car leasing is back with a vengeance

    And that's a very good sign for the automakers.

    By Doron Levin

    FORTUNE -- The Newport Beach, Calif. periodontist who trades regularly among the latest Mercedes, BMW, and Lexus sedans is typical of a client that prefers to lease, rather than to buy, vehicles. Now her assistant, who keeps his Honda Civic for a long stretch, is leasing as well.

    The recovering U.S. auto market has been characterized, in part, by a MORE

    Jul 22, 2013 10:37 AM ET
  • In Japan, electric vehicles seem to have run out of juice

    All-electric cars are being shunned in favor of hybrids.

    By Michael Fitzpatrick

    FORTUNE -- Japan -- a leader in the development of electrically powered vehicles -- has largely failed to fall for so-called EVs.

    Not that the Japanese don't care about CO2 emissions. Millions of dollars have been spent by the state to promote greener alternatives to the internal combustion engine, while hybrid car purchases remain the highest in the world. Last MORE

    Jun 3, 2013 11:34 AM ET
  • What to expect at the Shanghai auto show

    The growth of the Chinese auto market, once a playground only for the wealthy, is being fueled more and more by consumers who aren't elite. At the same time, the rich are buying more luxury than ever before.

    By Doron Levin

    FORTUNE -- Back in the day when Toyota (TM) and the rest of Japan Inc. appeared on the verge of capsizing U.S. automakers and suppliers, industry figures dutifully boarded airliners MORE

    Apr 18, 2013 10:41 AM ET
  • Ford and Toyota feud over whose is bigger

    A quibble between two of the world's most successful automakers.

    By Doron Levin

    FORTUNE -- Ford Motor Company can't be faulted for bragging that it sells more of a single car model, the compact Ford Focus, than any automaker in the world -- even if the claim is debatable, given Toyota's rebuttal that its Corolla compact is the true champ.

    The number of cars separating the two models isn't that large. Which MORE

    Apr 15, 2013 11:47 AM ET
  • The threat Hyundai faces now

    Korean auto giant Hyundai is still surging, but conflict at home could curb its growth.

    By Doron Levin

    FORTUNE -- The remarkable rise in popularity of Hyundai and sister brand Kia with U.S. car buyers has largely unfolded over the past few years against a backdrop of calm on the Korean peninsula. As tensions rise in the manufacturer's homeland, some are asking how unrest might affect Hyundai's surging global business.

    The prospect MORE

    Apr 4, 2013 7:22 AM ET
  • Why cars still matter

    Rumors of the automobile's demise are persistent but wrong. A review of Paul Ingrassia's Engines of Change: A History of the American Dream in Fifteen Cars.

    By Alex Taylor III, senior editor-at-large

    FORTUNE -- It has become an all-too familiar trope for the lazy writer or overworked editor: The American love affair with the automobile is over. The evidence for this assertion is usually shallow, and its half-life fleeting: a dip MORE

    May 11, 2012 7:42 AM ET
  • 10 hot rides for rent

    This fall business travel comes in a new flavor of recession-proof: high style. Rental shops on both coasts harbor every form of extreme machine, from green to gas-guzzling.

    By Sue Callaway, contributor

    An oxymoronic truism of the times is that indulgence these days is best experienced in moderation. So it should come as no surprise that the business of renting expensive sheet metal is booming. Ken Kerzner, managing partner of Midway Car MORE

    Sep 2, 2010 3:00 AM ET
Search This Column
View all entries from this: Week, Month
Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by VIP.