Alcatel, Toyota Tout 'Smartphone' Car

"If I am in a hazardous situation with ice on the road, the car behind me can be warned before it gets there," he said.

Alcatel, which swung to a loss in its recent third-quarter results, says that the driver's touchscreen doesn't work while the car is moving, good news for easily-distracted drivers.

It could be some years, however, before Toyota is actually selling LTE-connected cars. Executives at the New York launch event estimated that the first all-singing and all-dancing cars could make their debut around 2011.

"The whole automotive lifecycle is two to three years from concept to 'on the road,' " said Andy Gryc, product marketing manager for QNX Software, adding that other deals are in the pipeline. "We're not able to say who we're discussing that with [but] we're probably speaking to three or four automakers."

The proof of concept car is part of a broader 4G initiative called the ng connect program. The industry group comprises around 26 members and includes the likes of Hewlett-Packard(HPQ Quote), Samsung and Kyocera(KYO Quote).

Alcatel is not the only company focusing its efforts on automotive technology. Ford(F Quote) has also ramped up its technology story in recent years.