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Technology, Media, and Telecoms: A sector in transition Julian McGougan for Linklaters LLP 4 June 2015

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Page 1: TMT - A Sector in Transition

Technology, Media, and Telecoms:A sector in transition

Julian McGouganfor

Linklaters LLP

4 June 2015

Page 2: TMT - A Sector in Transition

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1 Television

2 Mobile

3 Tech:

- Start-Ups

- The Sharing Economy

- Fintech

- Internet of Things

- Connected Cars

- Smart Meters

- Smart Cities

- HealthTech

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TV: Much worse was prophesied…• To paraphrase Mark Twain:

– The report of Television's death is an exaggeration.

• Average UK viewing slipped below 4 hours/day in 2013 (the first time since 2009)• Vast majority still watched live (even in PVR homes)• “Catch-Up” viewing mostly within a day of transmission (so still relevant for advertisers)

– the linear success of Broadchurch was a high profile example of Catch-Up enabling consumers who missed opening episodes to join the broadcast schedule later

• Video-On-Demand (VOD) viewing still a minority pursuit– Netflix over-indexes in Sky Movies homes (so SVOD primarily not cannibalising TV subscription revenue)

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Revenue & investment in content• Commercial TV advertising has held a pretty constant share of total UK ad spend

for well over a decade– And online advertising is going video (so, looking like TV)– For advertisers future may be to back both horses e.g. Always #LikeAGirl

YouTube/SuperBowl

• TV spot advertising rose 3.8% year-on-year to Q3 2014• Launch of Sky Adsmart offers broadcasters some of

the attraction of online targeted advertising

• PSB investment in content slipping a little, but commercial broadcasters are investing more

• Squeeze on carriage so small channels look now at FTA & stimulating moves to D2C offerings

• Sky invested in LA Pluto.tv which builds linear "channels" out of online content, curated by humans (so reverse of the norm).

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But clouds on the horizon• BBC remains the cornerstone of UK Public Service Broadcasting (PSB)

– PSB funds most investment in UK-originated content, and takes lion’s share of viewing– BBC Charter Renewal (by end 2016) is an uncertainty the TV industry doesn’t need (especially with a

Conservative government)– DG Tony Hall recently announced an ‘internet-first’ strategy (follows decision to remove BBC3 from

linear)• Ofcom’s Consumer Experience 2014 reports that –

– proportion of households with digital TV in 2014 fell to 96% from 98%– among those aged 16-24 more now have no TV in the household (8% vs. 3% in 2013)

• For the US, TDG forecasts by 2020 commercial advertising placed in full-length TV-quality programming delivered via broadband will equal that of linear at c10 minutes/hour

• Access to Superfast broadband could mirror theoretical Freeview coverage by 2020– UHD now a consumer proposition for OTT services – but not with DTT reliability yet– High profile examples in recent months of OTT failing to match the resilience of Freeview or satellite

have been service failures affecting the German Grand Prix, the opening match of the World Cup, and Manchester City winning the Premier League.

– Are consumers and advertisers becoming more tolerant of picture loss – especially with live sport?– Broadband isn’t free, so no substitute for Freeview

• But Freeview faces giving up more spectrum to mobile• Risk of undermining its attraction to consumers & broadcasters• What is the likelihood that Freeview licences will be extendable beyond their current expiry

(by 2026)?

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What will consumers want in 10 years?

• Nielsen’s Global Digital Landscape Survey shows TV display remains consumers’ device of choice for watching video programming– 42% of Millennial and 38% of Generation Z respondents who watch video while sitting at

home say they do so on their mobile phone

• The latest Deloitte Digital Democracy Survey reports for those aged 14-25, nearly 60% of time spent watching movies occurs on computers, tablets and smartphones

• Then again, Decipher’s bi-annual media consumption report Mediabug shows that in the UK increasing usage of subscription VOD services (e.g. Netflix) has been solely due to those over the age of 35

• Good old linear TV will probably still be watched for hours per day by millions

• But consumers aren’t of equal value to advertisers• If the most attractive demographics source most of their AV content online, then that

is where advertisers will pay to reach them• If linear TV has a long-term future, is it public service only?

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4k or not 4k: that is the question

• Consumers didn’t buy HD displays because they were HD• They bought them because they were large thin flat panels

– they looked good in their homes.• Consumers won’t buy “4k” (Ultra High Definition or UHD) displays

for the higher resolution (if there were any programming) either• But given that they will already have large thin flat panels (HD),

what could induce them to “upgrade” to UHD:

– An even bigger screen?– Gimmicks like curved

screens?– Built in audio streaming?

• Ofcom remains sceptical of the value of HD, far less UHD

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Broadcasters can’t decide what their future is

• Broadcasters are like canal owners• And the railway has turned up

• Is their future:1. To stay in canals – they’re dependable, everyone knows

what they offer, there will always be demand for canals2. To get into rail – clearly superior, after all they aren’t in the

canal business but the transportation business3. A hybrid of the two – rail spokes connect with canal hubs?

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Perception matters• Tech companies & fixed line operators having been prophesying the end of linear

TV for years– A range of politicians, in love with the shiny and the new, have been receptive. Ditto some journalists.– Broadcasters haven’t been especially effective at putting forward their case.

• This matters because broadcasting:

– Has to cope with a considerable amount of legacy regulation (e.g. if broadcast TV went, would consumers still have access to content with subtitles or audio description? Is news impartiality worth regulating to preserve?)

– needs spectrum (a Crown asset)– Is universally available (not so for broadband)– Is free at the point of consumption (not so for broadband)– supports the UK film industry, and a vibrant range of technical & support skills– and not just in London: Game of Thrones maintains an entire mini-industry in Northern Ireland

• And ironically, the largest source of broadband data demand is video

commissioned by, and first shown on, “soon to be extinct” linear broadcast channels.

• The Government is working out how to take more spectrum (after 4G) from broadcasters to auction for mobile. What vision for television are they working to?

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A new copyright worry – or a fad?

• Periscope/Meerkat live streaming of video a development with implications for copyright:– Periscope – a million users within 10 days of launch– Periscope say they received 66 complaints from rights

holders during the Mayweather vs Pacquiao fight in Las Vegas & shut down 30 offending streams.

– 10,000 viewers for one stream, being filmed off anHDTV in Spain.

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1 Television

2 Mobile

3 Tech:

- Start-Ups

- The Sharing Economy

- Fintech

- Internet of Things

- Connected Cars

- Smart Meters

- Smart Cities

- HealthTech

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Mobile• Screens have evolved from the social &

passive (TV) to the personal & interactive.

• Ofcom reports 61% of UK adults now use a smartphone to go online & 37% also do so with tablets (particularly popular for 35-54s)

• Phablets eating tablet sales.

• Ericsson reports:– 74% of adults use their smartphones to get

directions or other location-based information– Monthly data traffic per smartphone in North

America: 1.6GB– 80% of consumers stream video several times

per week

• Opera Mediaworks reports (for 2014) –– Android had 62% of mobile ad traffic– But iOS accounted for 51% of all revenue and

monetization via mobile ads

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March of the Mobile Device• For digital natives, the smartphone has become the device of choice for pretty much

everything:– Always to hand, personal– The first & last thing looked at each day

• To paraphrase Charlton Heston:– “I'll give you my iPhone when you take it from my cold, dead hands”

• Smartphones & tablets have become the new casual gaming platform– Ofcom reports the mobile phone is now the primary device used for gaming (the largest increases have

been in the 25-34 and 35-44 age groups)– Nintendo finally caves on mobile games (on the way to becoming a software-only games house like

Sega?)

• It’s such a pity that

advances in battery technology haven’t kept up!

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Digital Connectivity• Demand for Digital Connectivity is changing: ubiquitous, faster, reliable – just there.

– Reliable access is becoming ever more important.– Theoretical maximum downlink speed is no longer the sole criterion– Coverage is ever more important.

• Increasingly consumers also come to expect3 layers of connectivity: fixed, mobile, WiFi.

• Why WiFi?– The mobile operators expect to run out of spectrum in Central London by 2020.– WiFi already plays a crucial role in meeting demand from mobile devices, where most

of that demand is generated while users are actually stationary.– Technology upgrades will enable switching from mobile to WiFi to be far more

transparent for consumers than it is at the moment.– Research in mid-2014 by Analysys Mason (on behalf of Arqiva) explored consumers’

perception of public Wi-Fi services - found that 4G subscribers are as likely as non-4G subscribers to use public Wi-Fi networks.

– The introduction of WiFi calling effectively extends mobile networks’ coverage.– Virtually all tablets are WiFi-only.

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Mobile coverage increasingly matters• UK mobile coverage obligations are all based on covering consumers

where they live, not where they work, shop, study - and certainly not public transport or roads.

• This has already proved politically suboptimal and worthy of recent public subsidy –– the Mobile Infrastructure Project– “national roaming” consultation

• Public transport (Tube, trains) is a cause of increasing consumer dissatisfaction (also sporadic on-board WiFi too)– Difficulty of industry accessing Network Rail and TfL land & other assets an

issue.

• Road coverage may have future implicationsfor Connected Cars.

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What price universal mobile coverage?• If access to broadband is now a public good which matters more

than ever, with considerable economic benefits, addressing rural drift & reducing social isolation, then...– With mobile becoming ever more fixed– & the operators increasingly sharing networks– & BT buying EE…

• Is the only practical future for access to broadband a single, regulated, universal infrastructure (perhaps fixed and cellular) –– a National Rail for broadband (but not State owned)?

• Competition would switch to service layer (as, substantially, it has already with fixed broadband)

• What would this imply for “technology & service neutral” spectrum auctions?

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5G• Apparently the next big thing for mobile• But it is years away from being specified

– Mobile standards take a lot longer than standards originating in the IT industry (e.g. WiFi)• Still lots to be wrung out of 4G

• 2 schools of thought - 5G will either be:

– Evolutionary – 4G on steroids, faster with lower latency• Probably what the marketing teams would prefer; OR

– Revolutionary – Greater availability, consolidating cellular+WiFi+new stuff with higher network densities• Revolution takes time, plus capex, and may require re-arranging spectrum

• 5G is apparently needed by 2020 and consumers don't want to pay any more.

• What would users want to do with 5G that couldn’t be done without it?

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Providing consumer WiFi increasingly matters to business

• Percent of consumers connecting ‘every’ or ‘most’ times when in…

Source: research conducted earlier in 2014 for Arqiva(Wireless Nation: http://info.arqiva.com/wireless-nation/retail)

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1 Television

2 Mobile

3 Tech:

- Start-Ups

- The Sharing Economy

- Fintech

- Internet of Things

- Connected Cars

- Smart Meters

- Smart Cities

- HealthTech

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What do we mean by “tech”?investopedia.com defines the Tech sector as:

A category of stocks relating to the research, development and/or distribution of technologically-based goods and services.This sector contains businesses revolving around the manufacturing of electronics, creation of software, computers or products and services relating to information technology.

But in terms of investor, political, media and (lately) regulatory interest, the Tech sector is often taken as a short hand for “start-ups” & “scale-ups”.

But the largest & most important UK tech firm was never a start-up: ARMARM’s technology is present in over 95% of today’s smartphonesThe shift to mobile access devices has been ARM’s gain & Intel’s lossThe Internet of Things will further benefit ARM

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So why so much focus on start-ups?• The Tech sector is the new engine of economic growth

– disrupting long established business models– with enormous potential also to drive efficiencies and new customer/tax payer relationships

in the public sector (e.g. Smart Cities, and Digital Health in the merging Health and care sectors).

• The Conservative government is a strong supporter of tech-led disruption, seeing this as challenging incumbents (often protected by regulation), increasing efficiency and putting consumers in control.– The sharing economy increases the efficiency with which existing assets are used, bringing

into commercial use personally-held assets, monetising down time.– Checking reviews of hotels & restaurants before booking raises overall standards.– Checking public transport before travel increases efficient use of time (& reduces consumer

frustration).– Knowing where the nearest empty parking space is will increase efficient use of time & reduce

pollution (& consumer frustration).– Sensors on bridges, rail lines etc warn of impending problems (e.g. stresses), enabling pre-

emptive correction, reducing cost & saving lives.– Digital Health will do the same for our bodies & must be part of the solution to plugging the

NHS funding gap.

• In 15Q1, London and Partners reported that, for first time, London start-ups attracted >$½bn of VC funding

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How are start-ups different?• Develop more quickly than traditional businesses ever could –

– a "just do it" mentality– Launch in beta, or launch late– Fail fast– Pivot if the original idea doesn't gain traction.– 85% of start-ups fail

• Start-up culture tolerates idiosyncrasies better than more established businesses do

• Millennial workers (1981-2000) place considerable emphasis on work/life balance, are naturally flexible, are not inclined to be lifers. The average employee stays at a start-up for 3.1 years

• Needs affordable accommodation, with superfast broadband, & no long lease tie-in• Collaboration is endemic, sharing ideas – even with potential competitors.• Employees have little or no benefits. Don’t mention the Working Time Directive.• CEOs all want their big companies to be creative & innovative – but do they retain and

encourage “right-brainers”, or are they first out the door when times get hard?

• This isn’t “work” as most socialist politicians, trades unions – or probably the CBI – understand it.

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• Rapid growth, fuelled by rounds of financing that don’t come from bank loans -– Less worried about monetisation (for

now), than burn rate and scaling– if the company has <6 months’ worth of

funding, then they are probably already out of business

– valuations may appear to have little relationship to likely near-term earnings• Pinterest recently valued at $5bn, even

though revenue only now coming in. – After a rise-and-fall of just 16 months,

anonymous social app Secret closed. Investing before a monetisation strategy emerges is risky. Then again so is investing in film or music, where one hit pays for many turkeys.

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Start-ups need specific skills• Curriculum (not just ICT)

– Coding for girls initiatives

• Import the skills– migrant entrepreneurs

starting UK businesses– startups hiring high-skilled

workers from outside the EU

– This challenges the prevailing public mood

• Many of today’s schoolchildren will do jobs which don’t yet exist – and require no formal educational qualifications

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The Sharing Economy• Technology enables existing infrastructure & people’s time to be used

more efficiently.• Bringing together willing buyers and sellers, those who have money

but no time and those who have time but no money.• But economists struggle to measure the efficiency gain. • Different types of sharing economy:

– Flexible renting of corporate assets e.g. Drivenow, Zipcar, Appear Here, WeArePopUp

– Share individuals’ assets e.g. Airbnb, Uber, HomeExchange, Love Home Swap– Smartphone as concierge – on demand food delivery, cleaners, laundry, nail

bar, masseur etc

• New UK trade association ("Sharing Economy UK" - www.seuk.org) is a

sign of the sector’s maturity.

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Uber: transport re-invented• Perhaps the most (in)famous sharing economy player:

• Cars are mostly under-utilised & stored expensively.• Uber takes 100,000s cars off European roads (with implications for future car sales), reduces emissions,

offers new revenue opportunities for existing under-employed workers.

• Uber drivers spend much less time waiting for jobs & can’t see your destination before accepting a request.

• The make, model and plate of the car appears in the app.• uberXL or uberSUV options: unlike taxis, cars with 4+ seats are matched with 4+ passengers• Customers rate driver on exit; drivers have the opportunity to rate riders. Uber accountable to both riders

& drivers.

• Credit card on file - no cash– reduced robbery risk for drivers– tax authorities know what drivers earn

• Use of data –– “heat maps” predict demand so drivers can be in place. To date, most cities have not had access to

granular data describing the flows and trends of private traffic.– Uber can share smart data with partner cities to help them manage growth, reduce congestion and

greenhouse gas emissions and expand public transportation.

• Complementing existing infrastructure (where Metro doesn’t go)– an increase in rides for underserved neighbourhoods

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The Sharing Economy challenges regulation• Regulations may stifle innovation & appear to protects suppliers more

than consumers.• Potential for regulatory capture (artificial scarcity), serving those who

own incumbent industry.• Cross-subsidies e.g. Copenhagen taxi drivers buy a new Mercedes,

free of tax, run it for about three years and 150,000 miles, and can then sell it, tax free, on the second-hand market for about what they paid initially.

• Airbnb –– University of British Columbia research suggest that Airbnb pushes up rents

slightly in some major cities (by $6/month for a 1-bed in NYC, by $19/month on average about in SF)

– Santa Monica bans rentals of <30 days, licences (and hotel tax) required to let spare rooms

– London to reform planning laws to enable homeowners to let out their residences for 90 days p.a. without need to first obtain planning permission.

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The interface is where the profit is• The Sharing Economy blurs the distinctions between

employees, freelances, contract workers• Where is the liability? Is tort law up to the job? In this

regard, is Uber like a franchise operation?

• A successful interface is a platform that calls out for expansion –– UberEATS (cashless delivery of food)– more services to come…– Uber isn’t just a taxi substitute, but a logistics solution.

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Fintech• Tech is disrupting investing, payments, lending

– JP Morgan: “Silicon Valley is coming”– Goldman Sachs: Over next 5 years, 7% of annual bank profits (>$11 billion) may be at

risk to non-banking entities.

• Silicon Valley has no financial services background.• But London does.

• London is the world’s leading foreign exchange hub –– handling $2.6 trillion/day, more than double that of NYC– Accenture estimate over 5 years investments in UK fintech increased by 3x the global

average and 5x that of Silicon Valley.• 2015 Budget proposed –

– an open bank API (allowing fintech companies to use bank data on behalf of consumers to deliver better services)

– research into cryptocurrencies– FCA to look at technology to facilitate the delivery of regulatory requirements

(“RegTech”) .

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Internet of Things(“Internet of Everything”, if you work for Cisco)

• Every object connected & capable of unilateral communication.

• Principal uses:

1. Status updates –– “I’m full, empty me” (rubbish bins)– “I’m empty, fill me” (parking spaces, vending machines, public soap/toilet roll dispensers …)– Battery life (smoke detectors)– Sensors (diesel particulate, pollen, temp., water levels …)

2. “Asset” tracking –– Pets– Kids (e.g Trax www.traxfamily.com)– Reducing duplicate capex purchasing mislaid items– Improving QoS by real-time asset tracking (parcels, field force…)

3. Fault detection (bridges, damaged train track, human health)

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Customer requirements for IOT will be diverse

• Network coverage/international roaming• Cost of modules/data connectivity• Battery life (“fit and forget” applications may

need 15+ year life)• Security requirements• Size & frequency of data packets

• Different requirements will lend themselves to different connectivity

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Both mobile and low-power wide-area(e.g. SIGFOX) networks will be needed

• Millions of IoT devices will require their connectivity to the Internet to be low cost or where long battery life will be essential.

• The mobile networks aren’t ideally suited to meet this type of demand for either case.

• As the IoT market develops, the majority of messages sent by connected devices are expected to be small and infrequent packets of data where those devices must be energy efficient because re-charging them wouldn’t be a practical option (such devices are “fit and forget”, e.g. rubbish bins, smart parking, sensors)– tiny amount of bandwidth required to signal location or status (e.g. “I’m full, empty me”

or “I’m empty, re-fill me”).

• These criteria will certainly apply to many of the connected public services which will be an essential component of Smart Cities –– smart waste management, smart parking– the many connected sensors which will fill cities e.g. traffic flows, air quality, water

quality, rail infrastructure monitoring, bridge stress.

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IOT will take time to take off – but will be utterly transformative

• Unlike many technology waves, IOT does justify the hype.• Its potential will take longer than some expect to be achieved• Media and political focus is on consumer adoption

• But consumer adoption will probably lag Enterprise adoption, where ROI is clearer– Health (“MedTech”) will have slow adoption, but must play a part in plugging the NHS funding

gap, driving efficiencies as investment is re-focussed from cure to prevention, from emergency/tertiary care to care/primary health

• Most consumers will need to see a clear benefit before paying more for connected devices

• That benefit may be increased when things learn consumer behaviour…• Consumers may little tolerance for telling devices something they’ve already had

plenty of opportunity to learn for themselves• Why shouldn’t smoke alarms make emergency calls for you? And while we're at it, shut

off mains electricity?

• So who else benefits who may then subsidise? Maybe insurance companies…• Will smarter homes be easier for older consumers or those with disabilities to

comfortably live in?

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At the time of a fire in a home,one in four smoke detectors isn’t working• Connected detectors benefits consumers & their

insurance companies• It’s worth those companies incentivising adoption by

their customers.

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Intrusion detection

• But there is a security loophole where consumers’ existing WiFi is used for connectivity, as WiFi routers can be switched off

• There are already examples of business owners calling the Police as they watch their businesses being burgled live on their smartphone while at home.

• It’s worth insurance companies incentivising adoption.

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Asset tracking: 4 layers1. Consumer notices asset isn’t where they think they left it.

Calls intermediary. Intermediary “pings” tracking device to locate asset & may call police.– e.g. Tracker service for cars

2. Consumer notices asset isn’t where they think they left it. Pulls out smartphone & locates asset themselves.– e.g. Tile, Trax, Mojio. Similar to existing telematics.

3. “arm” a tracking device when leaving the asset it’s attached to unattended. Device notifies owner’s smartphone of any motion before owner returns– e.g. Bike Hawk.

4. Asset learns consumer behaviour. Recognises when it’s probably not where it should be, alerts owner’s smartphone.

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Connected Cars• Cars are now 4-wheeled app platforms offering:

– Better directions, informed by traffic data + find parking spaces– Asset tracking – never lose your car (or, indeed, misplace it in a car park)– Automatic crash notification– Remote lock/unlock– Entertainment pumped in (to challenge the in-car position of radio)– Enables usage-based insurance– Vehicle diagnostics.

• IHS Automotive predicts that 20 percent of vehicles sold worldwide in 2015 will include some form of embedded connectivity– Then again, there are >1 billion vehicles on the world’s roads– And in the US, connected cars have an average sticker price of $55,000

• Mojio brings connectivity to older cars.• NOT the autonomous vehicles which have grabbed media & political attention, but which

may leave most consumers as indifferent as they are to the connected fridge.

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How connected cars could provide a public service• Combine front-facing camera• + number plate recognition software• + a connection to the database Experian runs for

insurance companies:• And your car could tell you when the vehicle in

front has no insurance.

• How would you react?– Good. That's exactly how your insurance company

wants you to react.

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How secure would/should a connected car be?

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When will the UK have the connectivity to support Connected Cars?

• The UK doesn't have reliable mobile connectivity available from any single mobile operator on enough roads.– Do Connected Cars need multiple SIMs? Roaming?

• Highways Agency (about to be given more independence from Ministerial oversight) has a fibre network running alongside over 3,000 km of motorways and trunk roads.– Current contract expires March 2016– Is it too much to hope that the new contract will include

enhancements to mobile coverage?

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Smarter Cities – will London lead the pack?• Improving the lives of citizens in endless ways, from the convenience of finding a parking

space quickly to monitoring waste levels in rubbish bins to checking how public transport is running to monitoring air quality.

• Providing opportunities for businesses to benefit by connecting devices in public spaces, from tracking stock levels in vending machines to ensuring that electronic advertising billboards keep working.

• Consumers’ travel patterns will be informed as never before.• Low cost, low power, long battery life sensors will be everywhere

– Monitoring air quality (including diesel particulates), water quality– Providing fault warnings for roads, bridges, trains, buses …

• Recent research from Gartner forecast that by 2017 start ups will account for half of the Internet of Things sector.– Additional support for Internet of Things would therefore complement government’s long-standing

support of the UK’s tech industry.– London has an opportunity to establish a lead in this booming sector.

• The GLA has a major influence on making London the Smartest City in Europe, including:– With London Councils encouraging, assisting, sharing best practice across the 32 Boroughs + City.– Build on the open data initiative (the UK’s exemplar) for much more sensor data.– Public investment in access infrastructure where the market won’t deliver.– Stimulating demand for connectivity with digital public services.– Encouraging easier and quicker means of access for communications infrastructure to public land

(including TfL), street furniture and buildings.

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Smart Cities will change public service provision• Instead of a council's Direct Labour Organisation’s Refuse Collection crews driving

the same route every Monday, they’ll drive a route determined by which bins communicated the previous day that they needed emptying, so either –– Councils deliver better service with the resources they currently have; OR– Deliver a similar level of service to now with fewer resources.

• Something that a Council can only consider implementing when contracts for Refuse Collection are being re-tendered?– If so, needs to be considered before the OJEU public procurement process

starts.

• Given the efficiency gains to be had, should Central Government provide encouragement to every council, in the order in which those contracts come up for re-tendering?

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Also IOT: Smart Meters & Smart Grids• The deployment of smart meters will be followed by investment in smart grids, the

additional intelligence made available from the edge of the electricity distribution network:– more rapid and cost-effective fault detection– coping better with increasing volatility in local electricity distribution networks due to

emerging electric vehicle charging and local energy generation.

• There seems no reason why, after a smart grid has detected a fault, a message to that effect couldn’t be flashed up on the smart meter In-Home Displays of affected premises, providing reassurance to consumers and forestalling those consumers calling their energy supplier (currently the way that power cuts are usually detected).

• Smart water meters will start to be deployed in a similar timescaleto smart energy meters– These will greatly improve leak detection and reduce the growth in demand, while also

potentially reducing the size of investment needed by the water companies in new reservoirs.

– Thames Water deployment will help water supply in London to be better placed to meet the demands of a rapidly growing population.

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HealthTech (“MedTech”)• The National Health Service and Social Services departments are struggling to

meet demands from an ageing population + urban baby boom.• Connected health is starting to revolutionise this.• An awareness that investment in prevention is more cost effective than

investment in cure, aligns with a growing desire by many consumers to monitor their health.

• A backdrop of falling equipment costs, including the chipsets/modems that go into machines to enable IOT communications.

• The emergence of new IOT connectivity technologies that are making it economically attractive to connect devices with low-bandwidth requirements.

• Connected devices can monitor’ long term conditions such as diabetes, blood pressure, blood glucose, weight or pace-maker performance, and offer preventative health checks for common complaints.

• Advance warning can be provided for heart attacks, epileptic fits…• This will all bring huge benefits, diverting £ from

secondary/tertiary/intensive care to social & primary care….

• ….but require public structural changes and investment.

• Connected health encompasses smartphones, wearables, and in-home devices Co

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Not just diagnostics, medical research too

• Apple’s ResearchKit lets consumers give permission for their iOS devices to join medical studies and send (encrypted) data directly to the researchers:– Conditions include diabetes, asthma, breast cancer,

Parkinson’s disease and cardiovascular disease– One doctor has commented that a traditional study

would take a couple of years to get 500 to 1,000 participants, while his Asthma Health app in ResearchKit got more than 3,500 people within 72 hours of the ResearchKit launch

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Data

• Accenture: With an influx of big data, software intelligence will make it easier for machines to make better informed decisions

• Companies could be flooded by terabytes of data.• Companies will need to identify what will really add value.• What are the privacy concerns?

– Information Commissioner's Office struggles to find the resources to deal with today’s problems (including the “right to be forgotten”).

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Can legacy companies survive disruption?• How much investment should legacy companies make in

digital?– If a company was never a start-up in living memory– If it has expensive assets meant for another age

• The answer is probably: a lot more than now.

• Creative consultancy Radley Yeldar recently benchmarked every FTSE 100 company against 49 criteria including web, social media, mobile apps and intranets– Overall, the index’s companies

were deemed “digitally immature”.

– Although no doubt self-serving, it’s a message CEOs need to get.

• Google new mobile-first algorithm• Bing now also boosting

prominence of mobile-friendly sites.

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…and then there’s corporate culture• How to instil a culture of innovation?

– Buying start-ups to acquire innovative culture will fail unless the corporate culture learns from the acquisition

– Otherwise when the Earn-Out kicks in, innovation walks…• Management may balk at placing their future in the hands of an upstart platform

– e.g. NYT, BBC etc content (at article level) trial with Facebook (which becomes the front page).

– Is the journalist now the brand?• Which CEO is going to admit they’re the wrong person to ensure the company has a future?

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Thank you