If for some reason the FCC decides to broaden its definition of a wireless handset to include embedded telematics devices, the results could be financially disastrous for the already struggling OnStar. Telematics service providers (TSPs) would be forced to retrofit all analog-only subscriber vehicles with digital-enabled hardware. Additionally, the scope of the mandate may also include legacy analog OnStar devices that aren't currently activated (this could easily total 1 million units or more since OnStar's launch in 1997), and would only compound OnStar's problems. Parent GM would have to seriously reconsider its commitment level to the OnStar project, which has yet to produce a profit.

Although OnStar's example is not the ideal telematics business model, the company is responsible for making telematics mainstream in the United States and for creating considerable consumer awareness for the technology.

Going forward, all new embedded telematics devices are digital and will not have any notable difficulty in meeting E-911 requirements, since all have autonomous GPS capabilities. However, the volume of current analog-only devices practically guarantees that wireless carriers will not be able to meet the 95 percent penetration rate requirements slated for the end of 2005 because of deficiencies in analog cellular networks. If this is the case, then it would not be surprising to see some carriers dissolve existing agreements with TSPs in order to meet the mandate.

That would put wireless carriers in a precarious position, since they are looking to become more than just data pipes in the vehicle. The fact is, the emerging trend of outsourcing content creation and delivery to wireless carriers may actually be the shot in the arm the U.S. telematics market needs. Wireless carriers have a distinct expertise in customer relationship management, content creation and services delivery in a mobile environment, and telematics' future may very well lie in the mobile device.

The telematics industry has only recently begun to show signs of recovery with the advent of new wireless technologies and the potential they bring. To force OnStar to retrofit existing embedded analog devices would only serve to rub salt on the wounds of an already vulnerable telematics industry. Potentially, mandating that legacy units comply with E-911 requirements may serve to drive OnStar out of the market. That would severely hinder the U.S. telematics movement and cause significant repercussions in other global regions.

Frank Viquez is Director of Automotive Electronics at Technology Research firm Allied Business Intelligence Inc. (Oyster Bay, N.Y.).