Chrysler Launching Wi-Fi on Wheels

Fortune Magazine

By Michal Lev-Ram

Like leather-trimmed interiors, navigation systems and sunroofs, in-car Internet connectivity will soon be just another add-on feature offered by automakers.

Chrysler plans to launch the first such service, called UConnect Web, in August. The company says it will make wireless Internet available on all of its 2009 models (including Chrysler, Jeep and Dodge vehicles) for $29 per month. To sign up for the service, customers will also have to pay $499 to have a router installed in their car.

That means people will soon be able to check their e-mail or play online games using a laptop or other Internet-connected device while on the road.

With an increasing number of states banning the use of cell phones while driving (unless drivers use a headset), a service that offers even more in-car distractions is already drawing safety concerns. However, the car maker - and the San Francisco-based provider of its in-car Internet access, Autonet Mobile - insist that UConnect is for the backseat, not the driver.

“Instead of buying DVD systems, parents can get their kids Internet access for the back of the car,” says Sterling Pratz, CEO of Autonet Mobile. Pratz says the service will enable backseat passengers to watch YouTube clips, look up social networking sites or play online games. “And moms and dads in the passenger seat will also be able to do things like make dinner reservations using their laptop in the car.”

San Francisco-based Autonet Mobile already provides in-car routers and Internet service to Avis Rent-a-Car, but this is its first deal with an automobile manufacturer.

Chrysler’s truck- and SUV-heavy business has been particularly hard-hit by the recent shift to smaller cars. It’s reported that the company’s CEO, Bob Nardelli, recently told employees that he anticipates U.S. sales in June would fall to the lowest level in 16 years.

Chrysler is hoping that offering a high-quality experience inside the car will help drive sales. While it’s the first automaker to provide built-in Internet access, it’s not the only one trying to differentiate itself with increased connectivity on the go.

Last year Ford (F) and Microsoft (MSFT) teamed up to offer Sync, an in-vehicle communications and entertainment system that lets drivers activate music using voice commands and have their text messages read aloud via text-to-speech technology. Ford has said it estimates that there will be one million Sync-equipped vehicles on the road by 2009.

“The average commute in America is now 30 minutes, and people want to maximize the time they spend in the car,” Jim Buczkowski, director of electrical systems engineering at Ford said in a company release about the service earlier this year.

While introducing more things for people to do while driving doesn’t sound like the safest trend, the reality is that Americans increasingly expect to stay connected to their e-mail, music and other personal content whenever and wherever they want.

Indeed, Autonet Mobile’s Pratz says the Chrysler deal should be the first of several: “They were the first ones to move.”