By Adena DeMonte

Traffic.com forged a deal with NavTeq to be acquired for $179 million in cash and stock back in November. NavTeq develops maps that use predictive traffic technology.

Traffic information provider Traffic.com, founded in 1998, had received over $80 million in venture funding before it was approached for the acquisition.

On Tuesday, Traffic.com unleashed a service based on predictive traffic technology.

Red Herring recently caught up with Traffic.com CEO Robert Verratti to discuss the product launch and the future of the market for predictive traffic technology.

Q. How will adding predictive and historical traffic data to Traffic.com affect your company?

A. We have been collecting historical and probe-based data for the last four years, using it for our own internal testing. This is the first time that we’ve based it in our product and are making it available to customers. We can [now] give our business partners and eventually the end consumer a range of traffic information about what’s going on now and use proprietary algorithms to forecast traffic information for a day or two or three in advance.

Q. What is different about your new product compared to your previous ones?

A. It is the first comprehensive traffic solution that combines multiple sources of traffic data—historical traffic information, incident and accident information, and real-time flow data, all processed in our software-processing engine to provide accurate, quantified and current drive times. This also provides increased coverage from GPS-based sensors, our own Traffic.com proprietary sensor network, government sensor data and our own traffic incident and localized event data.

Q: Where will you be getting your real-time and predictive data from?

A: The real-time data we get from our sensors. Government sensor data—we get from various government agencies around the country. We integrate that data into our own software engine. We also take probe data from GPS-enabled [vehicles] and put that into our network. We monitor incident and accident coverage in real time, and put that into our software engine.

Q: What data is most important in predicting traffic in the near future?

A: If we can sense that cars on the highway are doing 60 mph but the density, the distance between one car and another is narrowing, we can use that information to predict what the effect is likely to have in 20 minutes, 30 minutes, or an hour. Speeds alone are not solely indicative of how traffic will form in the near term.

Q: One of the problems with predictive traffic technology is that drivers don’t always trust the traffic information on their navigation systems. What are you doing to make real-time and traffic prediction data more accurate?

A: One of the principal features of the new product is something we call a confidence factor. We take various pieces of information and through our algorithms, we assign it a degree of confidence that that information contained in that data is accurate. Some of the data is reliable, such as fixed traffic. If we take GPS probe data on a secondary road we put a lower confidence rating on that. In our navigation systems, it’s a customer’s choice as to what degree of confidence factor they would like to choose to give their customers.

Q: Where do you see the biggest future for markets for the traffic industry?

A: A lot of devices are converging. The car companies are pushing for in-vehicle presentation of data of all sorts, and that comes about through a lot of technology being developed. In radio, there are HD (high definition) initiatives. HD radio that will be installed in cars will be able to carry customized traffic information. Whatever is mobile is going to be the growth of traffic information.

Q: But will people pay for traffic and navigation both on their phones and in their cars?

A: That’s why we have a multiple revenue business model here. We can have a subscription fee or an advertising model. We’re very sensitive to the fact that consumers are inundated with choices on their cell phones, Internet, and TV. We try to be as flexible as possible to get [paid-for] traffic information out there.

Q: How big do you expect your market to be?

A: Look around, in the last three or four years when Traffic.com became something that people had knowledge of, there was hardly anyone else in this. Ever since we got funded and won Microsoft and Garmin, people said there must be a real future here. Logic would tell you as a consumer and perhaps a driver that there’s a need for more accurate information.