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4G in Cars Spells Easy Money for AT&T

By Rex Moore and Austin Smith - Feb 7, 2014 at 9:02AM

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Forget horsepower; high-tech is the new competitive advantage in the auto space.

Politics makes for strange bedfellows, and so does business. Just ask AT&T (T -1.91%) and other telecoms, who are suddenly finding potential new revenue streams as your car becomes your very own rolling Wi-Fi hotspot.

Motley Fool analysts Austin Smith and Rex Moore saw this firsthand at CES, where the partnership between AT&T and General Motors (GM 4.16%) was on full display. In this video from the floor of the exhibit hall, they discuss the huge implications of this marriage between tech and horsepower.

A full transcript follows the video.

Rex Moore: I saw you at the GM booth today, and they've got 4G connectivity in the car now; your own Wi-Fi hotspot, as you're traveling. That's amazing.

Austin Smith: Yes, absolutely wild. One of the things that's really impressed me is how quickly AT&T is getting on board this trend here.

You're starting to see some very easy subscriber growth for AT&T because people are going to be able to register their vehicle -- basically as another line in your household! You can start to see, 12 months down the road, basically like adding another family member to your line.

That's easy money for AT&T, and I actually see this as a wonderful competitive advantage for these automobiles, to start differentiating themselves. Historically, automobiles have always been 0-60 performance, or horsepower, or leather interior. But with CAFE standards you have to start dialing that back a little bit and think about other features to really differentiate your vehicles and make them appealing to consumers.

Having your car have Wi-Fi is a serious competitive advantage in today's environment. Your car becomes a mobile office, it can become a school for your child on the 30-minute commute. There are a lot of doors that are open with 4G connectivity; AT&T definitely getting out in front of it in a big way.

Austin Smith owns shares of General Motors. Rex Moore has no position in any stocks mentioned. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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AT&T Inc. Stock Quote
AT&T Inc.
T
$18.00 (-1.91%) $0.35
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