The future of connectivity: Far-reaching implications for almost every business The Dbriefs Technology, Media & Telecommunications series

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The future of connectivity: Far-reaching implications for almost every business The Dbriefs Technology, Media & Telecommunications series Craig

1 The future of connectivity: Far-reaching implications for almost every business The Dbriefs Technology, Media & Telecommunications series Craig Wigginton, Partner, Deloitte & Touche LLP Dave Couture, Principal, Deloitte Consulting LLP Dan Littmann, Principal, Deloitte Consulting LLP September 26, 2017

2 The Future of Connectivity is bigger than Telecom; every industry will be affected by how it provides and consumes connectivity Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 2

3 The world of connectivity is evolving From Voice To Data Present/Future Past Fixed Linear/OTT People Mobile Interactive/Immersive Machines While connectivity today is centered around smartphones and laptops, new technologies like AR/VR and M2M communications are set to take on a larger role in the future Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 3

4 A day in the life: How many ways do you connect in a given day? Ways to Connect Overnight Monitor sleep with fitness tracker Download latest software updates to smart car Automatic laptop backup to cloud Start coffee maker from phone Evening Remotely turn on A/C Check steps for the day on fitness tracker Use GPS/4G connection to get directions to new restaurant Stream directly to your TV Morning Order groceries via smart fridge Check s via home broadband Connect to in-car hotspot on way to airport Work from plane via in-flight Wi-Fi Afternoon Confirm package delivery via connected security system Use secured Wi-Fi at conference center Connect to public Wi-Fi to video chat with kids Types of Connections Home Home broadband Smart appliances Thermostat Smart TV Security system Work Corporate LAN VPN Personal hotspot Hotel Wi-Fi Personal Sleep monitoring device Fitness/wellness wearable NFC devices (e.g. payments) Mobility Smartphone Public hotspots Automobile Airport In-flight Wi-Fi Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 4

5 The future of connectivity can be considered across four dimensions Consumer Behavior Network Functions Network Technology Mobility Current Single carrier Largely differentiated on price Communications Entertainment Commerce 4G Wi-Fi (home/public) LAN (work) GPS Smartphone connectivity Future Carrier agnostic Different carriers for different use cases/features Smart homes Augmented/virtual reality Drones Digital currencies 5G Self-optimizing networks Heterogeneous networks Automated cars Smart cities Ubiquitous connectivity (home/mobile/work) Note: Examples are illustrative Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 5

6 Polling question #1 Which industries/sectors outside of TMT do you believe will be most impacted by the future of connectivity? Consumer and industrial products Retail Higher Education Healthcare Other Don t know/not applicable Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 6

7 Growth in wireless device connections and data usage offer an impetus for connectivity providers to invest over $2T US Data Connections 15B-60B Data Traffic (Petabytes/month) CAGR 82% 117% 58% % 0.69M 450M e 26% Landline Public Wi-Fi Private Wi-Fi Mobile Offload Cellular Sources: Carrier annual reports, FCC, CTIA, Cisco, WB Alliance, Akamai, Deloitte Analysis Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 7

8 and key technology trends necessitate investment in infrastructure, operating models and services Separation of Current state Application Network Separation of Device Network Carriers have no direct role in application production; all apps are OTT Devices no longer locked into a specific network, technically or contractually Infrastructure Capacity/reach Automation Analytics Operating models Flexible Consumption Ecosystems Digital Future Separation of Customer Network Devices and applications chose the network instead of customer choosing (e.g. licensed vs. unlicensed, Google Fi) Service innovation New competitors New services Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 8

9 Polling question #2 What do you believe is the primary potential benefit of 5G? Faster data speeds (e.g. faster than fiber to the home) Lower latency (e.g. support mission-critical services) Higher capacity (e.g. massive scale for IoT) All of the above Don t know/not applicable Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 9

10 Infrastructure: OK, so can someone finally tell me what 5G actually is??? 5G is the fifth generation of wireless technology expected to be deployed by the year G will have the highest speeds of any technology to date 5G will have the lowest latency of any technology to date 5G will have the highest capacity of any technology to date 5G is expected to have 7-10X the speed of 4G High speeds can enable HD streaming of an AR/VR experience 5G will likely have little to no lag (<1ms) New applications such as drones and connected vehicles will require extremely low latency 5G is expected to have 4x the capacity of 4G Higher capacity can enable the connection of 1000s more IoT devices Source: Forbes and PC magazine; Public reports from wireless service providers Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 10

11 Infrastructure: Heterogeneous Networks (HetNets) are one potential avenue to help provide ubiquitous coverage Current State CO Future State CO Copper Coax Fiber LTE Microwave link Unlicensed (WiFi, LAA) BBU Macro Cell Tower Multiple networks (TDM and IP); mixed wireless coverage limits revenue potential All-IP network with fiber backbone and ubiquitous coverage 5G cells (licensed/ unlicensed) Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 11

12 Infrastructure: Unlicensed and mmwave spectrum will become key components of the wireless ecosystem and likely spawn new competitors Telcos have invested $100B to earn a dominant position in licensed spectrum today Total Available Spectrum 12.6 GHz but unlicensed spectrum is expected to limit the control they have over the future landscape Major Players Telcos Cable Tech Unlicensed use today is primarily limited to inhome Wi-Fi from wireline providers Unlicensed mmwave New & Existing Players Telcos Cable Cross-Industry New & Existing Players Telcos Speculators Cross-Industry 7GHz of unlicensed spectrum represent significant opportunities for new entrants mmwave requires new capabilities and assets Major Players Wireless Providers Speculators Source: FCC Ownership of licensed spectrum has given the operators significant control in shaping network capabilities to date 1.3 GHz Today Licensed mmwave Unlicensed Sub-5G Licensed Sub-5G Future New & Existing Players Telcos Cable Cross-Industry New & Existing Players Telcos Cable Speculators LTE-U technology represents an unproven opportunity New and existing players will likely be looking to leverage existing assets in the new landscape Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 12

Infrastructure: 200K to 300K small cell sites are expected over the next decade 60% of Towers in major CMAs 5 Year Deployment Plan 10 Year Deployment Plan Plus mmwave Spectrum ~70K Macros Sites ~43K

13 Infrastructure: 200K to 300K small cell sites are expected over the next decade 60% of Towers in major CMAs 5 Year Deployment Plan 10 Year Deployment Plan Plus mmwave Spectrum ~70K Macros Sites ~43K Macro Sites in Major CMAs ~50K 70K Small Cells ~100K 120K Small Cells ~200K 400K Small Cells Small Cell: Macro Cell Ratio On base of total macros 1:1 ~1.5:1 ~5:1 On base of major CMAs 1.2:1 ~2.5:1 ~10:1 Initial focus will be in areas with a population weighted density of over 10,000 people per square mile (i.e. top 10 cities) These cities comprise about 4,300 square miles and contain almost 35 million people, requiring ~30-35K small cells over the next decade Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 13

14 Infrastructure: Providers can leverage Software Defined Networks (SDN) and Network Function Virtualization (NFV) to drive these networks Traditional Application Layer Business Applications Network Layer Control and Infrastructure Layer Message Router Mobile Streaming CDN SDN/NFV Application Layer Business Applications Network Mapping Control Layer Message Router Mobile Streaming Radio Access Network Nodes CDN Carrier Grade NAT Infrastructure Layer Demonstrated Benefits Flexibility Scalability Costs Savings Time-to-Market Improvements Dynamic resource scaling without physical hardware dependencies Deploy network resources whenever and wherever needed Lower CAPEX for off-the-shelf hardware. Reduced OPEX from lower power consumption Simplified integration of standardized components Radio Access Network Nodes Carrier Grade NAT Network Routing Data Center Storage Security Control security of the network and applications from a central point SDN/NFV decouples the network layer into the control and infrastructure layers, offering flexibility and scalability while helping reduce costs Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 14

15 Polling question #3 Will connectivity have a greater impact on increasing revenue streams or reducing costs through operational improvements? Increasing revenue streams Reducing costs through operational improvements It will impact both revenues and costs equally Neither revenues nor costs will be impacted Don t know/not applicable Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 15

16 Operating Models and Service Innovation: As connectivity evolves, new opportunities will emerge Example Services Enabled: Increased speeds Download a 4K movie in a matter of seconds X-y-z axis location Help first responders identify the exact locations of disaster victims Video Conferencing $7.8B by AR/VR $35B by Mesh networks Direct connectivity of IoT devices enabling improved identity management and security Reduced latency Rely on your autonomous car to react in a split-second to changing road conditions Autonomous Driving $42B by Successfully capitalizing on these new services could be a financial windfall Sources: 1. Goldman Sachs 2. Transparency Market Research 3. Bloomberg News Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 16

17 Operating Models and Service Innovation: The future of connectivity affects companies across a range of sectors and industries when things are networked, that has an impact on how actual value is produced. In many cases, it is no longer the industrially manufactured product that is the focus, but rather the web-based service that users access through that device 1. Telecommunications Spectrum planning Develop NFV/SDN OTT content Small cell network design and development Media Targeted marketing Personalized content Big data analysis Predicative analytics 1. Harvard Business Review, How the Internet of Things Changes Everything, May 7, 2013 Manufacturing Predictive maintenance Supply chain optimization Asset tracking Automate workflows Personnel safety Auto/transport Dealership of the future Remote diagnostics Fleet management Autonomous vehicles Safety enhancement Smart cities Congestion relief Energy management Smart parking Smart waste Healthcare Clinical trials Patient experience Equipment diagnostics Remote monitoring Inventory management Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 17

18 Operating Models and Service Innovation: This will likely result in a plethora of connectivity-based use cases and ecosystems 1 ms Autonomous driving Drones Augmented reality Virtual Reality Tactile internet (e.g., remote surgery) 10 ms Disaster alert Real-time gaming Multi-person video call Delay 100 ms Device remote controlling First responder connectivity 1,000 ms Monitoring sensor networks Video streaming Wireless cloud based office <1 Mbps 1 Mbps 10 Mbps 100 Mbps Bandwidth throughput >1 Gbps Source: GSMA Legend: Services delivered by legacy networks Services that can be enabled by 5G Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 18

19 Polling question #4 What do you see as the biggest impediment to growth in the future of connectivity? Lack of site access (e.g. poles, conduit) High cost of legacy networks Lack of access to capital Other Don t know/not applicable Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 19

20 Future of connectivity a top of mind topic A network of networks: How will carriers handle the evolution to 5G? Deloitte University Press report The 5G era: Age of boundless connectivity and intelligent automation GSMA Intelligence report Wireless technology fuels industry growth and innovation Deloitte report Use of spectrum bands above 24GHz for mobile radio services FCC Commissioner release Deep deployment of fiber optics is a national imperative Deloitte report Record shares of Americans now own smartphones, have home broadband PEW research report Small cells, big changes: Navigating a new environment, maintaining momentum Deloitte report Americans wireless data usage continues to skyrocket CTIA Annual wireless industry survey Emerging wireless protocols: New thinking on application and business model designs Deloitte report Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 20

22 Join us December 11 at 1 p.m. ET as our Technology, Media & Telecommunications series presents: Trends in mobile: The evolution of connecting everything Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 22

23 Eligible viewers may now download CPE certificates. Click the CPE icon in the dock at the bottom of your screen. CPE Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 23

24 Contact information Craig Wigginton Partner Deloitte & Touche LLP Connect with me on LinkedIn Dave Couture Principal Deloitte Consulting LLP Connect with me on LinkedIn Dan Littmann Principal Deloitte Consulting LLP Connect with me on LinkedIn Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 24

25 This presentation contains general information only and Deloitte is not, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this presentation. Copyright 2017 Deloitte Development LLC. All rights reserved. The future of connectivity: Far-reaching implications for almost every business 25

About Deloitte As used in this document, Deloitte means Deloitte Consulting LLP and Deloitte Services LP, which are separate subsidiaries of Deloitte LLP. Please see www.deloitte.

26 About Deloitte As used in this document, Deloitte means Deloitte Consulting LLP and Deloitte Services LP, which are separate subsidiaries of Deloitte LLP. Please see for a detailed description of our legal structure. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright 2017 Deloitte Development LLC. All rights reserved. 36 USC

Global Mobile Consumer Survey, US Edition Overview of results

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