incode Consulting Announces Top 10 Industry Predictions for 2015

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1 incode Consulting Announces Top 10 Industry Predictions for 2015 incode Consulting (a division of Ericsson Inc.) today announced its Top 10 predictions for the game-changing events that will shape the information and communications technology (ICT) industry in These predictions cover key industry trends such as the price wars among wireless service providers, consumer adoption of mobile payments, and pay TV service providers launching over-the-top (OTT) subscription packages. This annual list of predictions is designed to provide insight into the future of the ICT industry. incode Consulting, a leading business strategy and technology consulting firm, has published its Top 10 industry predictions list since Report Highlights Pay TV Goes Over the Top Pay TV service providers will continue to expand their OTT play by offering additional TV services to out-of-footprint customers. In addition, content owners (e.g., HBO, Showtime, ESPN and Disney) will continue to expand their direct-to-consumer offerings in The Business of Business Gets Busy Major Service Providers in the wireless, cable and wireline spaces will revamp their enterprise service offerings as traditional networks evolve into software-defined networks. Virtualized customer premises equipment (CPE), cloud computing and network function virtualization and software-defined networks (NFV/SDN) will be the key enablers for these advanced services. Point-of-Sale Mobile Payments Drag on the Runway Contactless mobile payments at the retail point-of-sale (POS) fail to gather broad consumer adoption in Impediments include legacy phone compatibility, retailer support and POS upgrades that need to be overcome before mass adoption will occur. Cellular Price War Gets Personal One or more wireless service providers will offer a low price (less than $25) individual plan for voice, text and data. Despite significant recent price reductions, consumers in the United States and Canada still have some of the most expensive cell phone bills in the world. Wireless Charging for Mobile Devices Powers Ahead in 2015 Wireless power charging for smartphones and wearable devices will take off in 2015 as the technology becomes standardized. Expect more than double growth in 2015 among devices and accessories that are capable of wireless charging, as suppliers support this feature. TOP 10 PREDICTIONS

2 TOP 10 PREDICTIONS FOR 2015 CLIENT RELEASE 1 Pay TV Goes Over-The-Top Pay TV service providers will continue to go over-the-top (OTT) to offer TV services to out-offootprint customers. The pay TV industry is under attack from all sides with an increasing number of subscribers cutting the cord entirely, while others are pruning subscription packages. In addition, content owners (e.g., HBO, Showtime, ESPN, and Disney) will continue to expand their direct-to-consumer offerings in To counter this growing assault, pay TV providers have taken various measures, such as launching aggressively priced bundles targeted at cord cutters (e.g., AT&T) and out-of-home access to content using multiscreen capabilities (e.g. Comcast, Verizon). In 2015, we expect select pay TV service providers to further up the ante by launching OTT pay TV services to target out-of-footprint subscribers. At least initially, the move to OTT will slightly increase the overall service revenue pie as more subscribers will add new services than cut the cord. 2 The Business of Business Gets Busy Major service providers (wireless, cable and wireline) will revamp their enterprise service offerings as traditional networks evolve into software-defined networks (SDN). Enterprise demand for lower IT costs, more features and optimized operations, coupled with the service provider quest to differentiate enterprise offerings, will drive the launch of new and optimized enterprise services. Virtualized customer premises equipment (CPE), cloud computing and SDN will be the key enablers for these advanced services. Service providers (e.g., AT&T) are already testing select services such as dynamic capacity planning. In 2015, major service providers will commercially launch new services such as firewall on-demand and network ondemand. Service providers and vendors will need new processes and business models to align with the enterprise shift to on-demand software-based services. 3 Operators Solidify Support for Soft SIM One or more large wireless service providers will commercially support soft SIM for all their connected devices in 2015, including smartphones. Soft SIM, as used in latest Apple ipad, enables users to switch cellular operators without swapping SIM cards. OEMs such as Lenovo today offer soft SIM in their tablets and laptops. GSMA is working on a soft SIM standard for machine-to-machine (M2M) applications. During 2015, expect OEMs such as Apple, Google and Samsung to introduce soft SIM in their smartphones and other devices. Presently, only a few service providers are supporting the Apple SIM (Sprint, T-Mobile and AT&T), and these TOP 10 PREDICTIONS

3 only support ipads. Pressure from M2M OEMs (especially automakers) will drive service providers to support soft SIMs. This will lead to one or more wireless service providers seeking to be disruptive and support soft SIMs across all connected devices. The adoption of soft SIM will have sweeping implications for all players in the wireless value chain. 4 Test Driving LTE Without a License LTE over unlicensed spectrum (LTE-U) will be trialed by one or more service providers in Ever-increasing data traffic, spectrum shortage and advances in spectrum aggregation technology are the key motivations driving LTE-U forward. Support from OEMs, service providers (Verizon), chipset (Qualcomm) and network (Ericsson) vendors, and the 3GPP standards body, provides ample momentum to this new technology in Spectrumcrunched service providers without substantial Wi-Fi assets will be the first to jump onto LTE- U. However, there are still unresolved concerns, such as congestion, interference with Wi-Fi, and device compatibility, that need to be resolved for a wider deployment of LTE-U. Depending on how the standard deliberations proceed, LTE-U could emerge as a competitive or complementary technology to Wi-Fi. 5 In-Building Wireless Replaces Old Business Models Indoor coverage is critical as percent of wireless usage originates indoors. Alternate business models, such as neutral host, managed services and new channels, will drive inbuilding wireless deployments to grow by more than 30 percent in To increase the value of their assets, building owners and enterprises will push for indoor wireless deployments. This will give them an increasing say in the choice of indoor wireless technology (DAS, smallcell and Wi-Fi). The need to limit construction and keep costs low necessitates the need for a solution that hosts multiple operators. This forces service providers to work with third parties that will facilitate neutral hosting of wireless services. In 2015, expect service providers to rally behind these new business models and announce new partnerships to drive indoor coverage. 6 Point-of-Sale Mobile Payments Drag on the Runway Contactless mobile payments at the retail point of sale (POS) fail to gather meaningful increased consumer adoption in 2015, despite Apple's recent foray into this space. While Apple s launch of mobile payments is a key milestone in the mobile payment journey, it has many impediments to overcome. First, legacy iphones do not support Apple Pay. Second, many big-box retailers, such as Walmart, are supporting a different solution. Third, checkout systems, such as Square, do not support near-field communication (NFC), meaning millions of TOP 10 PREDICTIONS

4 smaller retailers won't be accepting Apple Pay initially. Fourth, the significant cost of upgrading POS systems to support NFC will further delay retailer support. Finally, consumer awareness of mobile payments remains low, and even early adopters often revert to old habits once the coolness factor wears off. Expect mobile payment users to grow far less in 2015 than the estimated 40 percent. 7 Big Data Tries to Knockout Heavyweight Crime Enterprise adoption of big data analytics to secure their IT environments and databases will increase at a CAGR of 77 percent between 2014 and Recent high-profile data breaches at Target, Home Depot, Chase Bank and Sony highlight the need for sophisticated defense against hackers. The costs of these data breaches are increasing (average loss increased 33 percent year over year to $2.7 million per incident), and the implications are getting more severe. An example is the data breach at Target, which not only cost the company an estimated $148 million in losses, but also cost the CEO and CIO their jobs. Enterprises will leverage predictive big data analytics to efficiently identify, prioritize and investigate risks inside their organizations. In 2015, expect to see an uptick in acquisition and investment activity in big-data-enabled security companies. 8 Cellular Price War Gets Personal One or more wireless service providers will offer a low price (less than $25) individual plan for voice, text and data. Wireless plans in the United States have seen price reductions of approximately 43 percent within the last year. However, these reductions primarily have been focused on family plans. Even after these price reductions, consumers in the United States and Canada still have some of the most expensive cell phone bills in the world, suggesting the possibility for continued cuts. In addition, competition will further intensify as Wi-Fi-first providers expand their offerings. In a saturated and hyper-competitive market, wireless service providers will conclude that offering low-priced individual plans will attract and retain value-conscious customers. In turn, lower price plans will further amplify the need for extremely efficient operations to maintain margins. 9 Cars Get Cloudy but Visibility Actually Improves 2015 will be the year when leading automakers and suppliers integrate network connectivity with on-board advanced driver assist systems. Advanced driver assist systems (semiautonomous cars), such as parking assist, lane departure warnings and collision warning/prevention technologies, already are part of high-end cars. The sensors used in these TOP 10 PREDICTIONS

5 vehicle safety systems employ local data and process it within the vehicle. Adding network connectivity will allow suppliers to integrate local data with traffic and topological data in the cloud, improving accuracy and enabling advanced functionality, such as automated braking and road condition alerts. However, barriers, such as business model, privacy concerns and interoperability, still remain and need resolution to drive mass adoption. 10 Wireless Charging Powers Ahead Wireless power charging for smartphones and wearable devices will take off in Expect more than double growth (170 percent year-over-year) among devices and accessories that are capable of wireless charging as OEMs support this feature. The Wireless Power Consortium includes OEMs, such as Google and Samsung, and service providers, such as Verizon, and it has already established a global standard. In addition, public locations such as airports, hotels and coffee shops also have started adding wireless power charging outlets. Wireless power charging will unshackle devices from the power cord, adding convenience for consumers and further driving adoption of connected gadgets, especially wearable devices. Drones: Commercial Applications Gain Speed 2015 will be the year when the commercial use of robotic drones will gain speed. Although there have been extensive deployments of drones for military purposes, commercial deployments have been limited. Companies such as Amazon and Google already are conducting experimental studies outside the United States due to restrictive FAA regulations. In addition, the falling cost of drone-specific electronics is beginning to make it economically feasible to launch civilian drones on a wide scale. Small and medium-sized entrepreneurs will lead the way in adopting drones as they seek to enhance their offerings in areas such as photography, surveying, filming and monitoring. This usage will force regulatory agencies to pass swift regulations for widespread commercial use of drones. Robotic drones will open up a brand-new industry segment for service providers seeking to sell everything from connectivity to value-added applications. About incode Consulting Founded in 1998, incode Consulting (a division of Ericsson, Inc.) is a leading business strategy and technology consulting firm with unique expertise within the telecom, media and technology (TMT) industries. incode distinguishes itself with its combination of deep technological expertise and exceptional strategic vision. Our industry focus allows us to integrate business insight with technology foresight, delivering tangible impact and sustainable value to our clients. From private equity firms, to multi-billion dollar companies, decision makers have trusted incode s unique approach to tackling unprecedented business challenges. Please visit our website to learn more and read our past Top 10 Predictions TOP 10 PREDICTIONS