By Ivo Ivanov
What are the challenges the automotive sector may face in dealing with colossal amounts of data? What are the ways the automotive sector can address this challenge?
Industries worldwide are entering a new era of digitalization, everywhere, for everything, making performance, resilience, and security in network connections business-critical. Enterprises from segments like healthcare, finance, retail, logistics, and automotive are discovering the benefits of connecting with their digital value chain via an Internet Exchange (IX).
The digital car is a digital product for which the manufacturers cannot afford to cut corners on the performance, resilience, or security of their networks. The efficacy and the privacy of their connections to other networks are paramount to the provisioning of the many services and features that define the digital car. Any lapses will affect the reputation of the car brand.
Data and software as the key differentiator of the car of the future
The data produced and analyzed by a car is part of a market that will be valued in trillions of dollars. This data will be highly valuable for a variety of industry segments, starting with the marketing industry (to understand trends and customer preferences), down the road to municipalities (wanting to know which street needs repairing and up-to-the-second traffic flows); there’s the insurance industry (wanting a better understanding of driver behaviour); and then the finance industry (to know about consumption behaviour), just for starters.
On the other hand, analysts from Deloitte to McKinsey assure us that the future car customer is likely to place more emphasis on digital performance than engine performance in the purchasing decision – today, the differences when it comes to engine performance are no longer so significant. So, digital will be a key differentiator, and the competition will occur more on the software side.
We already see car makers transforming into software developers – like Daimler’s ambition to create their own operating system – and software developers, like Apple, building cars. From both sides, the trend is towards greater ownership of the entire ecosystem. We’ll see players that create a dominating position by owning both – as Apple successfully achieved through offering applications through the iTunes store and at the same time selling the devices on which those applications are used. The market leaders in the automotive sector certainly have the economic power and capabilities to become software market leaders in their own sector.
However, even the best software will not help the data performance and the level of security in a digital car without the proper infrastructure behind it. Infrastructure remains the foundation for digital performance because if the latency (response time) is too high, if the connection is not secure, and if the data volumes cannot be processed or stored, even the best software won’t perform well. It will be crucial for the end-user experience and the performance of the digital car that car makers use interconnection infrastructure directly and have their own setups in data centres around the globe. Because every single millisecond counts.
Infrastructure is the foundation for the digital car
There is no car manufacturer on the planet today who doesn’t realize the potential of digitalization and connectivity in relation to their products. Some major automotive manufacturers have begun to connect to interconnection platforms for their cloud connectivity needs, and for better control of their connections. It will be necessary for all carmakers to get involved in infrastructure, own their connectivity, define their interconnection approaches for evolving business models and services, interconnect application suppliers and the last mile providers, and control this data journey in the commercial sense. It’s about performance.
It’s about security, it’s about flexibility, and it’s about compliance. Without controlling the infrastructure, these four crucial components for becoming an integral stakeholder in this trillion-dollar business will not be manageable. The car manufacturers today want to moderate this data journey.
Interconnecting with partners via an IX enables aggregation in an improved latency to the location of the car, and therefore with improved stability. By choosing an IX that already has an established and vibrant ecosystem of diverse networks, a car manufacturer can be right on the spot, where the digital economy of the future is being moulded.
Automotive networks can thus meet in the most direct and shortest way with all the data suppliers and buyers that are important to them – and those that in future are likely to become important. With a direct interconnect, coupled with a Closed User Group (CUG) specifically designed for enterprise interconnection, the connection on the network side can be ideally optimized, reducing latency to the other provider networks and data centres involved.
Creating interconnection ecosystems for industries – the digital car as a model
We see three overriding challenges that carmakers are confronted with when exchanging vast amounts of data with many different partners:
- The provision of services and features smoothly and with fast reaction times (dependent on the performance and reliability of the connectivity to other networks)
- The fulfilment of compliance requirements for multiple regions around the globe where the car may be sold or driven (high levels of legal and regulatory complexity, increasing exponentially with the number of networks and service providers involved).
- The security of the network, in order to ensure that the car is protected from any form of unauthorized manipulation.
Previously, the automotive manufacturers’ approach was a best-effort solution involving Multiprotocol Label Switching (MPLS) and IP transit (upstream), with no end-to-end control of the traffic, flows between the car and the networks delivering data to or receiving data from the car. This creates challenges for the networks: The more intermediaries between two networks, the higher the latency, the greater the risk of performance and security issues, and the more complex compliance becomes. Because if you do not control the data value chain, you cannot control any of this.
The automotive manufacturer as custodian of personal privacy
However, using a CUG not only improves the latency and performance of your connections but also helps with the fulfilment of data protection and compliance requirements – giving you control of your data value chain. Connected vehicles collect a huge amount of personal data. Controlling compliance through connecting individually to each partner network and forging individual bilateral relationships – as was done in the past in the automotive industry – is not future-oriented for the digital car. Such a solution does not scale well to larger ecosystems involving more players.
There’s another solution: A CUG is a closed, secure, and private interconnection environment on the DE-CIX platform, in which policies for compliance requirements are enabled. This allows the fulfilment of policies to function as a prerequisite for all the participants of the group, which can be efficiently controlled.
Mitigating the risk of anonymous malicious third parties
The issue of security is even more critical. A highly charged threat scenario for the digital car is the potential theft of the driver’s identity or the car itself – that it could be hijacked, manipulated technically, or in the worst case even weaponized. The direct interconnection of the networks in a CUG allows security to be substantially improved. Minimizing the intermediary transporters means fewer possibilities for anonymous third parties to lurk in the shadows. This is not possible with traditional IP transit – where the only option is to place traffic into the hands of a transit provider, who, in turn, announces the packet requests back to the global Internet.
In a CUG, the manufacturer knows exactly which network has sent data – the connection having been checked using BGP and Layer 2 validation instruments. The risk of hijack or a DDoS attack originating from this network is much lower. On top of that, DE-CIX can provide additional security to protect networks from route hijacks, IP hijacking, and DDoS attacks, shielding the digital car and its ecosystem against the most significant risks of the open Internet.
Connecting partners – the digital car of the future is a network on wheels
Many of the challenges car manufacturers face in implementing connectivity for the digital car – the network on wheels – can be solved in this way. With the logic of secure interconnection within a Closed User Group located in a vibrant digital ecosystem – via DE-CIX, home to the largest neutral ecosystems in the world.
This same logic applies just as well to other transport sectors, like airlines and logistics suppliers. But also to all industries entering the platform economy – banks, e-health system operators, hospitality, e-manufacturing with global supply chains, and many more in future. Closed, secure, and private interconnection environments offer everyone the chance to grow and develop their digital business models with security and resilience baked in.
(Ivo Ivanov is CEO at DE-CIX International.)
(Disclaimer: The views expressed in the article above are those of the author’s and do not necessarily represent or reflect the views of Autofintechs.com. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.)