Russia’s navigation market: growth through unity of global navigation space
EXPERT REVIEW 2017
The navigation market will develop by cohesion of every navigation system in the world, advancement of telematics-based transport systems for purposes of digital transformation of vehicles, consolidation of the ERA-GLONASS and Platon systems, and commercial services based on the ERA-GLONASS system.
Global navigation space
The number of applications and spheres of navigation satellite services has been growing year on year. The market of services based on navigation data will grow to tens of billions of dollars a few years from now. For instance, the European GNSS Agency’s report released in May 2017 forecasts that the number of devices using navigation services will reach 5.8 billion worldwide by late 2017. Almost 400 million devices will be installed in vehicles. The development of telematics-based transport and autonomous driving systems, as well as the use of ERA-GLONASS emergency response e-call systems mandatory in some countries will increase the number of navigation devices annually installed in vehicles by average 11.4% within the next five years. Over 1.5 vehicles are sold each year in Russia alone, and every one of them has to connect to the ERA-GLONASS system starting January 1, 2017. In all, more than 9 billion navigation devices will be in use by 2025. The market of services using navigation data will be expanding even more rapidly, by average 20% or more depending on the sector. The global market of LBS services will reach $61.8 billion by 2022, according to the Allied Market Research. The report estimates the annual market growth at average 26.6%. The market will be driven by the increasing number of mobile computers, and the growing popularity of mobile advertising among enterprises based on the clients’ proximity constitutes a market trend (according to the GLONASS GNSS-Forum Association website).
As Russian experts indicated at the 11th International Navigation Forum, transport, agriculture, indoor navigation and unmanned navigation systems are the most promising segments of the navigation market. Such infrastructural projects as ERA-GLONASS and Platon and their consolidation, in addition to the development of a single navigation space and technologies (V2X, LTE, LBS, ADAS), new business models (PAYD, PHYD, sharing economy, on-demand) and online consumer positioning services are propelling the market of satellite navigation, an integral part of Russia’s digital economy.
Commercialization of navigation data will be bolstering the Russian market. There are plans to create a domestic information telematics platform on the basis of ERA-GLONASS for future design and production of commercial navigation services, such as Euro-protocols registering road accidents, road assistance services, evacuation, security guard services, etc.
However, experts have pointed to a number of problems, such as a lag in laws and standardized collection, processing and transfer of data coming from navigation and information systems, and development institutes’ failure to fund navigation projects. These factors are slowing down market growth and reducing the competitive edge of Russian companies amid the tightening GNSS 4+ competition in the navigation device at a time when such countries as India, China and Japan are developing their own satellite navigation systems. Negotiations are being held on the joint development and production of an integrated circuit. For instance, Vnesheconombank (VEB), non-profit partnership Assistance for Development and Use of Navigation Technologies (NP GLONASS) and China’s Norinco Group concluded a cooperation agreement at the 2017 SPIEF. They are set to develop a strategic partnership and establish an international center for design of navigation technologies, which would be receiving and processing signals of the GLONASS satellite systems.
“The encouragement of investments in rapid development technologies is a priority of the VEB 2.0 strategy. The areas where Russia can become a global leader are our focal point. Our joint project with NP GLONASS will be offering evaluation services and investment advice to the partner on ways to structure transactions based on shareholder capital and borrowings,” Vnesheconombank CEO Sergei Gorkov said.
“International consortia of the kind and the targeted use of Russian development institutes for funding a new generation of navigation chipsets supporting the GLONASS system and end solutions on their basis, which will eventually lead to the emergence of a navigation techno-park accumulating the scientific and technological potential, training personnel, and fostering academic schools, have paramount importance. In the end, domestic companies, which can advance GLONASS technologies in the highly competitive environment of the global market, will be developed,” NP GLONASS President Alexander Gurko said.
The project will be implemented inside and outside Russia, for instance, in China which has demonstrated an interest in the project. Norinco Group (China North Industries Corporation, 中國北方工業公司) represented by its 100% subsidiary NORTH ELECTRONICS RESEARCH INSTITUTE Co, developing and commercializing the ground infrastructure of China’s Beidou satellite navigation infrastructure, engaged in the undertaking.
Russian companies will not secure their competitive edge without support from the government and development institutes. A special fund investing in navigation projects is the way to bolster the position of Russia.
Telematics-based transport system for digital transformation of vehicles
There is no march for vehicles as the means of transportation in the modern world, so it is not surprising that the range of services for drivers and their passengers has been daily widening and new ways of using vehicles have been suggested.
As Russian Deputy Minister of Industry and Trade Alexander Morozov said at the 11th Navigation Forum, traditional forms and methods of vehicle operation will need to be improved in the near future and new points of growth will need to be found to ensure successful development of the car industry and beef up the efficiency of the transport complex and living standards in Russia in general. “The implementation of telematics solutions, which increase the efficiency of vehicle operation and city infrastructure as a whole, could be one of such points,” Morozov said.
There are a number of governmental initiatives proposing telematics-based transport systems, which will constitute a single transport environment. “We believe that the prospective emergence of the environment in which information will be collected, intellectually processed, analyzed and exchanged between vehicles and telematics-based infrastructure will give rise to smart insurance products and innovative consumer services in Russia. Navigation is the foundation of smart technologies. Hence, it is important to pool efforts towards rapid development of the sector. If that is done, mobility rates will increase, vehicle ownership costs will reduce, legislative and other barriers slowing down the motor insurance market will be either lifted or mitigated, new services and innovative business models will emerge, functions of existent services will be expanded, passenger and cargo traffic will acquire a new level of efficiency, and, most importantly, transport will be safer and cost-effective,” NP GLONASS President Alexander Gurko said.
Market actors need to be active at international organizations and associations in order to increase the output of telematics-based transport products in Russia and encourage the demand for telematics technologies. This is the way to ensure compatibility and reconcile with international regulations and standards.
The GLONASS/GNSS Forum Association is providing navigation support to Russia-China border checkpoints within the joint committee on satellite navigation projects. The project involves Russian and Chinese authorities and businesses which plan the project’s pilot zone. “The pilot zone of the project in the Russian Far East will not only develop infrastructure of the region but also become a major structural project at some point to further the nation’s transport potential,” GLONASS/GNSS Association Forum Executive Director Vladimir Klimov said.
ERA-GLONASS: outcomes and development perspective
ERA-GLONASS is a success story of Russia’s navigation project. The network has infrastructure across the country and commercial applications. Eight years of effort by Russian companies have yielded a strategic project on the Russian navigation market, which will lay groundwork for future innovative services and technologies. The Russian information and navigation service network ensures collection, intellectual processing, analysis and data exchange between elements of the environment of telematics-based vehicles.
The operation of ERA-GLONASS has been unfailing. The network has received and processed more than 226,000 calls between January 1, 2016, and June 5, 2017. As many as 1,350 emergency calls reporting real road accidents have been made, and 485 of them have been made in the automatic mode from heavily damaged vehicles.
The network initiation period has actually come to an end for manufacturers of vehicle-based devices, car manufacturers, and users. So the number of test calls has been declining, and the percentage of real emergency calls has been rising.
As of early June 2017, over 542,000 vehicles connected to emergency services were registered with the ERA-GLONASS network.