NCPA - National Center for Policy Analysis

AAA Cries For Regulatory Help Against Competition

January 10, 2001

The non-profit organization known as AAA, or the American Automobile Association, is having nightmares over threatened competition from car manufacturers who are offering a variety of push-button electronic emergency services to motorists in trouble.

The services -- called telematics -- use satellite technology to track stolen vehicles, summon roadside assistance and even unlock doors for forgetful motorists who have locked their keys inside. They also include navigation assistance, warnings about traffic tie-ups, voice-activated cell phones, electronic messaging and connections to the Internet so drivers can monitor e-mail and search the Web.

But AAA president and chief executive Robert Darbeinet is calling upon government regulators to help protect his organization against the competitive threat.

  • Although AAA has 84 clubs in the U.S. and Canada, 43 million members and $3 billion in annual revenues, it wants the Federal Communications Commission to consider telematics as part of its jurisdiction over telecommunications -- and slap down the upstarts.
  • Darbeinet fears the auto industry might create a monopoly and warns that recent history "has shown that limiting consumer choice unacceptable in the eyes of regulators and consumer groups."
  • AAA now gets about 30 million calls a year for road assistance after a vehicle mishap.
  • In order to counter the competitive threat, AAA has set up a subsidiary to test wireless and satellite services -- and may charge customers $100 annually for the service.

While car manufacturers will also charge a fee, General Motors is proceeding with its OnStar system and Ford with its Wingcast service -- much to the consternation of AAA.

Source: Cindy Skrzycki, "The Regulators: For Help, Who's Your Car Gonna Call?" Washington Post, January 9, 2001.


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