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On the road to success: as a first-mover in the navigation sector, Trafficmaster has benefited hugely from the boom in mobile services. But is it taking a risk in overlooking 3G services?
Getting caught in a traffic jam is time consuming and frustrating. But when it happened to David Martell on the newly opened M25 back in 1988, it was the inspiration for a business idea.
"It just seemed so bloody stupid that someone couldn't forewarn me that popping round the corner via the M25 was going to take a couple of hours," he reflects.
After a chat with a business friend, Trafficmaster was launched, placing sensors around the country's main motorways and A roads to calculate speeds and hence congestion.
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Getting mobile
The real breakthrough for the company has been the huge explosion in mobile phone ownership, one that no one could have confidently predicted back at the end of the 1980s. The new medium helped the company float in 1994 with a strategy that has remained virtually intact until this day.

"We're all about the dream ticket of not just providing navigation but also traffic information," explains Martell. "There are plenty of companies that can make and fit satellite navigation equipment, but we can actually tell that equipment there's a problem ahead and ask the car or truck owner if they want to avoid it. In our eyes, that makes us unique. Other companies have talked about offering information as well as navigation, but that's all it has been: talk."
Certainly the strategy that has come from this marriage of navigation and traffic information is unique. While satellite navigation systems generally rely on executives adding them to a list of accessories for their new top-of-the-range saloon, Trafficmaster has steered a unique route to market.
"We're the only operator to have seen the worth in what, in computing terms, would be called a 'thin client' strategy," insists Martell. "Our systems have a mini mobile phone in them, so you phone in routes to a call centre which displays them on the map for you. If a problem develops on the route, we have a channel to the car to warn the driver.
"It means we don't do all the calculations in the car, we do them on our computers, so the equipment doesn't have to be as sophisticated or nearly as expensive. We cost around 500 [pounds sterling], compared to 2,000 [pounds sterling] or more for our rivals. Our message is that you don't need all that expensive equipment sitting in your car when it just takes a quick call to us."
Like its rivals, Trafficmaster focuses on signing up manufacturers to otter its technology as an upgrade. It now counts BMW, Land Rover, Renault and, most recently, Citroen among its partners.
Similarly, it has partnered with the RAC to offer RAC Trackstar, which doubles as a tracking device, should the car be stolen, as well as a means of calling out the emergency service at the press of a button, which also tells the breakdown van your precise location.
"We realised early on we couldn't do it on our own," says Marteil. "There's no way you can run a navigation and traffic information firm unless third parties and manufacturers offer your product as an upgrade. We're now available in 1,500 locations, mainly car dealerships and specialist car audiodealers."
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While the mobile phone explosion of the mid 1990s onwards provided a cheap means of putting motorist, satellite navigation equipment and call centre in contact, it also provided Trafficmaster with that elusive commodity: information people will buy.
"The problem with traffic is it's just like the weather," complains Martell. "People want the information but it's something they expect to get for free. That's why the mobile phone services we have with Orange, O2 and Virgin are useful. We don't make a lot of money from them, but we do get a cut of the call, and it's good branding."
Another mobile revenue stream the firm is experimenting with is equipping smart phones and PDAs with its maps. So far the Nokia 7650, Sony Ericsson P800 and O2's XDA come with the option of signing up to Traffic master maps as part of a monthly tariff.
"It's interesting, but I still wonder where the money is going to come from," says Martell. "It's one of those things that people would quite happily have with a mobile, but I'm not convinced they're going to pay for it."
Text directions
On a similar level, Trafficmaster has also started offering an SMS service, whereby mobile phone users can receive a text alert if there's a problem on a route they often take, such as the school run or the drive to work.
Again, though, Martell thinks that the service is more interesting than lucrative. "It's not something I see us making thousands from," he says. "People will pay small amounts, but texting is an area where people expect to get it for virtually nothing or for it to be bundled with another service that they get included in their monthly tariff."
Indeed, the overriding feeling at Trafficmaster is that it has its strategy largely where it needs to be. As the only thin-client operator, it can keep the cost of in-car systems low and hopefully grow a little mobile revenue.

Little is the key word, because if people think mobile will be the next big thing in traffic, Martell has some words of caution.
"I don't even think 3G will make much difference to what we do," Martell insists. "People are talking up the power of mobiles, but we've experimented and we've always found that phones with GPS just aren't accurate enough to have in a car. We've experimented with Bluetooth, so there's a possibility the driver's mobile phone could get traffic warnings from our call centre and then communicate that to the navigation screen. But I'm still not convinced.
"Some companies are going mad talking about 3G, but we've devised our service so that we only send out very small chunks of information. I can't see how being able to send larger files will really help."
This is the one huge area in Trafficmaster's new media strategy which its rivals insist the first mover has got completely wrong.
Road rivals
Trafficmaster's nearest rival is ITIS Holdings. It owns the only UK licence to the TMC radio channel, which works with the RDS service most modern car radios are equipped with to deliver drivers regular local traffic bulletins.
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Using RDS-TMC, the company is the only operation in the UK that can 'talk' to top-of-the-range satellite navigation systems via the radio (the same frequency as Classic FM).
The idea is that someone with a route planned need not listen out for radio bulletins but can instead have their screen automatically warned of a problem, with an optional audio alarm asking them whether or not they wish to reconfigure the route.
Andrew Smith, automotive business director at ITIS Holdings, argues that radio gives his firm an advantage over Trafficmaster.

Latest Activity: Nov 27, 2018 at 3:58 AM

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