Transforming the Telco MARTIN CREANER

www.centernode.org SPEAKER: Martin Creaner Background: Ex-President & CEO of TM Forum (www.tmforum.org) Motorola British Telecom Advisor to leading Telco players Chapter 1 Breaking through the transformation barrier Chapter 2 Understanding the Value of Transformation in an Industry in Turmoil Chapter 3 - The 10 transformation Journeys of the Digital Telco Chapter 4 Deciding on the right destination for your digital transformation journey Chapter 5 Making practical transformation happen Chapter 6 Driving Innovation in the digital telco Chapter 7 The Digital Services Landscape Chapter 8 Platform Federation and the Cloud Chapter 9 Closing thoughts Author Transforming the Telco Digital Transformation Delivering the Digital Economy Mapping the emerging digital economy Frameworx Distilled Telco Architecture NGOSS Distilled OSS/BSS industry models

10 Digital Transformation Journeys Multiple transformation journeys will be required for a Telco to successfully complete transformation www.centernode.org The customer engagement journeys require not only a new way of engaging with customers but a brand new approach to channels and how they are managed The technology journeys include infrastructure transformation to NFV/SDN, Data & Security Transformation, and the journey to open up the network & systems platform via APIs to 3 rd parties The operations journey involves the enormous challenge of changing the culture of the organization as well as the challenge of preparing the company to adopt new business models The digital services journey involves not only innovating and designing new exciting digital services but also learning how to manage the wider ecosystem of partners

www.centernode.org the likely destinations of the transformation journey Digital transformation does not have a single destination, and it s important to develop an informed view of where you want the digital transformation journey to bring you. a Telco that attempts to provide full portfolio of infrastructure & services, but underfunded to compete effectively. Low margin - high cost a Telco that offers a full and wide integrated portfolio of infrastructure and advanced digital services. High margin, ultra high cost a Telco that only offers a portfolio of digital services, but has dispensed with their infrastructure offering. High margin, low cost a Telco that focuses almost exclusively on providing connectivity on a wholesale B2B basis. Low margin - Ultra low-cost a Telco that supplements infrastructure and limited digital service portfolio with an open API platform enabling 3rd party to go-tomarket. High margin medium cost.

www.centernode.org Picking winning digital services Adopt a Clear & Consistent Methodology Digital Services Innovation Framework (DSIF): Identifying which digital services areas may be attractive for Telcos to pursue. Opportunities Map Telcos prioritized based on OTT/internet player competition and telco competitive advantage

Telco Capability Map Important to develop a good understanding of the valuable Telco capabilities Technical Advanced Network and Technical Capabilities Secure device & user identity Precision Location Seamless Global Connectivity Distributed Edge Cloud (MEC) Non-Technical Partnerships Ability to operate with Government & strong regulation Global Telco Partnerships Hardware development & manufacturing partners The telecoms industry has a unique set of key capabilities Unique Telco capabilities are valuable to ecosystem partners www.centernode.org Infrastructure Network infrastructure & mature OSS Advanced connectivity services & 5G Network virtualization & slicing Content delivery platform Business & Commercial Operations Retail distribution, fulfillment & incountry support Broad customer base with existing billing relationships Local expertise and field teams Trusted brand for sensitive data Leveraging these capabilities, telecoms operators possess significant control points in the market for new digital services

Important to Understand Ecosystems Develop an understanding of the key ecosystems players, and the structure of the industry www.centernode.org Value % in each layer of stack 3% 19% CRITICAL ANALYSIS STEPS 17% 20% 16% Develop an appreciation of the % of value in each value stack layer. 2% 11% 11%

Develop Detailed Use Case Analysis Go beyond the generic digital services concept into detailed critical analysis in multiple verticals Agriculture 1 Continuous Crop Health Monitoring Mining 29 Open Cast Mine Planning Construction & Infrastructure www.centernode.org 2 Nutrient Mgmt / VRT Optimization 30 Mining Exploration/Maintenance 3 Targeted Pesticide Applications 31 Progress/Environmental Monitoring 4 Irrigation Management Efficiency 32 3D Underground Mapping 5 Sheep / Cattle Herding Oil & Gas 33 Gas Flare Inspection 6 Construction Site Management 34 Pipeline Leak Detection/Inspection 7 Railway Safety/Inspection 35 Oil Spill Monitoring 8 Bridge Maintenance/Inspection 36 Oil Platform Inspection Disaster Management 9 Flash Flood Recovery Real Estate 37 Aerial Photography 10 Lifeguard Assistance Security 38 Border Control 11 Search and Rescue 39 Traffic/Highway Surveillance 12 Wildfire Mapping / Fighting 40 Intruder Surveillance 13 Structural Integrity Assessment 41 Missing Persons Facial Recognition 14 High Rise Building Fire Fighting 42 Law Enforcement 15 CBRNE Disaster Tracking Telco 43 Critical Site Monitoring 16 Disaster Reconnaissance & Mgmt Infrastructure 44 Infrastructure Inspection Energy & utilities 17 Wind Turbine Inspection 45 Infrastructure Maintenance & Optimization 18 Power Line/Poles Surveys Transport & 46 Infrastructure Expansion 19 Substation Inspection Logistics 47 First Aid Delivery/Medical Logistics 20 Hydroelectric Facilities Inspection 48 Organ Transplant Delivery Insurance 21 Risk Monitoring 49 Parcel Delivery 22 Risk Assessment 50 Shipping Freight Delivery 23 Claim Adjustment/Validation 51 Food Delivery 24 Fraud Prevention Weather & 52 Wildlife Conservation Media & Entertainment 25 Cinematography Environment 53 Climate Change Monitoring 26 Journalism (Footage Gathering) 54 Shipping Emission Monitoring 27 Targeted Ads / Promotions Vehicles 55 Reforestation 28 Drone Racing/Entertainment 56 Weather Monitoring CRITICAL ANALYSIS STEPS Essential to develop a detailed analysis across multiple verticals of potential use cases

Some of the digital services recently analyzed www.centernode.org Drones Automotive AR/VR AI Video Analytics Federated Platforms

Drones Opportunity Summary www.centernode.org LARGE OPPORTUNITY: For Mobile operators to connect commercial drones to a centralized cloud platform, for the safe management of drones across verticals. Significant opportunity; forecast for the UAS technology market in 5+ years time at $41 114 billion globally Use Cases & Ecosystem Analysis 150+ Use cases grouped by vertical and 130+ key players identified in ecosystem Agriculture, Energy & Utilities, Oil & GaS, Logistics, Infrastructure, Emergency Example use cases of $100M+ in value include pest detection (agriculture) and wind turbine inspection (energy) Control Point Analysis Three control point platform opportunities within the 9 core domains using future state scorecards and determined the necessary component capabilities to build each offering. These include: Drone Data Platform Operator Marketplace Platform Flight Management Platform Market Opportunity / Profit Pool Analysis Significant emerging IaaS workload category; drone data platform substantial opportunity; potential for value creation could exceed $114B globally in 5 years Connectivity estimated to be 11% of the opportunity. 55% of the opportunity north of connectivity i.e. IaaS=16%, Data Platform=20%, Analytics=17% Business Model Analysis 3 business model opportunities for Telco segment Data Platform: Consolidated, open data storage and processing services for images, video, and sensor data collected. Marketplace: Two-sided marketplace Air Traffic Management: Regulatory policy and data security concerns drive opportunity for centralized ATM.

Connected Car Opportunity - Summary www.centernode.org LARGE OPPORTUNITY: Car data enabled services forecasted to be worth $450-750 billion. Telco s can leverage their connected car offerings to develop a multi sided platform powered by an automotive ecosystem. Use Cases Analysis The 160 use cases analyzed can be grouped into: Autonomous Driving, Car Upkeep & Usage, Consumer & Enterprise Services Use case need to go beyond connectivity Downstream use cases are all based on data Top 10 Use Cases 1. Platooning: Cooperative truck driving 2. Autonomous and Remotely Driven Vehicle Fleets (Shuttle Bus, Campus, Emergency etc.): 3. Software and Firmware Updates over-the-air: 4. In-car AR (information and entertainment services): 5. Car-view streamed video storage and sharing: Market Opportunity / Profit Pool Analysis Driver assistance is the fastest growing segment followed by safety Recurring revenue from new services will comprise the fastest growing segment of the automotive profit pool by 2030 ($450- $750 Billion market opportunity) Players with successful platform strategies will dominate 6. Seamless mobility and Seamless Global Connectivity: 7. In-car Digital Assistant: 8. Unconnected Car Platform: 9. Multi-mode Mobility-as-a-Service: 10. Uber for Freight: Intelligent applications match demand for freight services

Summary of Other Market Opportunities www.centernode.org AR/VR AI Video Analytics Ecosystem Analysis 260+ companies identified in the AR/VR ecosystem Ecosystem Analysis 200+ companies identified in the AI ecosystem are organized across 8 domains and 32 corresponding Elements Ecosystem Analysis 180+ identified companies in the AR/VR ecosystem are organized across 8 Use Cases Analysis The 50+ use cases divided into 11 verticals Home VR is the immediate telco battle ground. Opportunities also exist in communications, gaming, sports, office productivity and retail Use Cases Analysis 56 use cases analyzed divided into 13 verticals Deep learning will be the most important AI technology. Professional services are the next big emerging opportunity in AI Use Cases Analysis The 60+ use cases divided into 13 verticals With Retail, Transport and Consumer sectors predicted to offer the best initial use case opportunities Market Analysis $120 Billion market opportunity by 2020 Hardware represents 50%+ with software and services making up the rest Largest markets are Video Games, Live Events, Video Entertainment and Retail Players with successful platform strategies will dominate the market Market Analysis $36.8 Billion market opportunity by 2020 Virtual Digital Assistant Market set to Reach close to US$16Bn by 2021; almost every industry will be impacted Players with successful platform strategies will dominate the market Market Analysis Video analytics retail market revenues are forecast to be the largest slice at around $1.2Bn USD by 2022 Transport analytics forecast at around $525m by 2022 Consumer video analytics forecast at around $235mn by 2022

DATA REV SHARE VALUE PAYMENT REV SHARE VALUE PAYMENT REV SHARE VALUE PAYMENT REV SHARE VALUE PAYMENT Federated Platform Business Models * Platform business models will dominate many of the new digital services * Telcos will struggle to develop successful platform business models that can operate globally Telco 1 Telco 3 Telco 2 Telco n Multiple platform common elements across many different types of services. FEDERATION PLATFORM + PARTNERS PAYMENT 3 rd Parties

www.centernode.org Critical Telco Capabilities for Enhancement Telco needs to prioritize certain capabilities to enhance their competitive advantage in key digital service ecosystems Precision location Utilizing the network to deliver assured cm-resolution device positioning. Telco has a unique opportunity with many geographically dispersed locations, good connectivity & power, install & maintenance teams. Distributed Edge Cloud Bring Cloud nodes closer to the workload consumers, increasing reliability, reducing latency and minimizing data backhaul Distributed locations with good connectivity & power are ideal for edge cloud deployments Assured Identity Leverage the telco consumer relationships, with device- and networkderived behavioral data to provide more reliable identity Video Analytics Video analytics is key to many emerging use cases (including automotive) On-demand consumption is emerging as the preferred model for highly compute-intensive video operations Strong synergy with edge cloud AI AI will be increasingly important across many verticals over time AI offerings are largely cloud-based and consumed as a service Strong synergies with edge cloud to deliver the high computation required Ecosystem Governance Management, enablement and governance of the ecosystem is essential if it is to be effective and grow

www.centernode.org Summary A fundamental rethink of Innovation will be one of the most important journeys in telco digital transformation The telco needs to develop the ability to work with multiple innovation partners to successfully bring new digital services to market DevOps excellence is likely to be a critical element of a successful digital telco service provider A laser-focused methodology for delivery must be applied to help the telco to pick the winners Telco needs to focus on enhancing a number of key capabilities to be increasingly attractive to ecosystem partners Must consider a strategy of going beyond connectivity in order to generate sufficient return in any chosen opportunity