TMT Outlook 2017: New Advances in Tech, Media & Telecom

TMT outlook 2017:
A new wave of advances offer opportunities and challenges
The Technology, Media and Telecommunications series
Sandra Shirai. Principal, Deloitte Consulting LLP
Scott Lippstreu, Principal, Deloitte Consulting LLP
Paul Sallomi, Partner, Deloitte Tax LLP
Craig Wigginton, Partner, Deloitte & Touche LLP
February 8, 2017

TMT outlook 2017:
Copyright © 2017 Deloitte Development LLC. All rights reserved. 2
Media and
entertainment outlook
Scott Lippstreu,
Deputy US Media and Entertainment
Practice Leader
Deloitte Consulting LLP

TMT outlook 2017:
14–18 19–25 26–32
30% 29% 28%
32% 38% 31%
Millennials spend more time streaming content than watching
live television
Live
programming
Streaming
Deloitte’s Digital Democracy Survey, 10th Edition, 2016

TMT outlook 2017:
10%
Smartphone
8%
Tablet
38%
Laptop/
desktop
Other devices
9%
Smartphone
8%
Tablet
39%
Laptop/
desktop
Other devices
44%
Television 56%
44%
Television
56%
Movies TV shows
Millennials aged 19-25 spend more time watching content on
devices other than TVs

TMT outlook 2017:
Streaming services are growing rapidly, especially among Millennials
Average number of paid video
subscription services by generation
Two
Two
Three
Two
Two
One
46%of US consumers
61%of Millennials
subscribe to a
streaming video service 14–18
19–25
26–32
33–49
50–68
69+
&

TMT outlook 2017:
Home Internet Pay TV Streaming Video Services
95%
of US consumers
79%
of US consumers
61%
of US consumers
92% 94% 94% 64% 61% 68% 66% 78% 56%
14–18 19–25 26–32 14–18 19–25 26–32 14–18 19–25 26–32
Millennials value their streaming video subscriptions more than Pay TV

TMT outlook 2017:
49%Only channels I watch
Traditional Pay TV packages are losing their appeal with
consumers as alternative models gain ground
39%Traditional package
of channels

TMT outlook 2017:
What does this mean?

TMT outlook 2017:
How many activities do you typically engage in while watching TV?
• One
• Two
• Three
• Four
• Five or more
• Don’t know/don’t multitask while watching TV
Poll question #1

TMT outlook 2017:
69%
of US consumers
& 77%
of Millennials
Pay more attention to
digital ads over TV ads
Four
Millennials
Consumers pay more attention to digital ads than TV ads and
Millennials are the most distracted while watching TV
Average number of
additional activities
while watching TV

TMT outlook 2017:
73%Online reviews within
social media circle
39%Television advertising
The buying influence of online reviews in social media has surpassed TV
ads for 19-32 year olds

TMT outlook 2017:
VR/AR and the
Future of Mobility

TMT outlook 2017:
Do you own a VR headset?
• Yes
• No
• No, but I plan to purchase one in the next 12 months
• No, but I might purchase when more content is available
• I don’t know what a VR headset is
Poll question #2

TMT outlook 2017:
Technologies driving change in Media & Entertainment
Virtual Reality
As of October 2015, 234 companies working
on VR had raised a total of $3.8 billion in
capital according to VentureBeat, with a
combined market value of $13 billion.
Future of Mobility
In the US, roughly 160 million hours are
spent driving from point A to B annually.1
That’s 46 minutes per person, every day.
1AAA 2015 Driving Survey
Telecom Auto
TechMedia

TMT outlook 2017:
Telecommunications
Outlook
Craig Wigginton, US and Global
Telecommunications Leader
Deloitte & Touche LLP

TMT outlook 2017:
Today’s Coverage of 2017 Telecom Outlook Items
Device usage
Smartphone
addiction
Phone
purchase
channels
Second-Hand
Phones
Connectivity
Biometrics
Mobile
operators
Content-
Based Telcos
SDN/NFV
Mobile
payments
Mobile Virtual
Reality
Media usage
on phones
Data privacy
Digital
Trans-
formation
Mobile
advertising
Apps
Privacy and
security
Smartphone
brand loyalty
Smartphone
Hub
Enterprise
Mobility
M&A
Wearables
IoT
5G Small Cells

TMT outlook 2017:
Device usage

TMT outlook 2017:
Nearly 50% of consumers surveyed look at their phone within 5
minutes of waking up. At night, consumers are slightly less
phone-tethered
Source: USA edition, Deloitte Global Mobile Consumer Survey
Base: Smartphone owners 2014: 2015: 1,458, 2016: 1,530
Typically how long is the interval between
waking up and looking at your phone for
the first time?
Longer than 3
hours
Within 5 minutes
Immediately
Within 15 minutes
Within 30 minutes
Within 2-3 hours
Within an hour
20162015
96%
41%
17%
59%
73%
93%
88%
97%
43%
18%
62%
76%
93%
88%
Longer than 3
hours
Within 5 minutes
Immediately
Within 15 minutes
Within 30 minutes
Within 2-3 hours
Within an hour
20162015
96%
32%
12%
50%
64%
87%
79%
95%
35%
15%
54%
68%
89%
81%
At the end of the day, typically how long is
the interval between looking at your phone
for the last time and preparing to sleep?

TMT outlook 2017:
33
66
44
32
24
16
12
46
84
58
44
30
22 19
47
82
64
51
35
20
16
-
10
20
30
40
50
60
70
80
90
2014 2015 2016
The 18-24 year old age group still dominates when it comes to
how many times a phone is looked at in a given day
Source: USA edition, Deloitte Global Mobile Consumer Survey, June 2016
Base Graph 1: Smartphone owners 2014: 2015: 1,458, 2016: 1,530
# of Smartphones Source: Statista, 2015
How many times would you estimate you look at your phone in a day?
6%
32%
25%
16%
10%
4% 3% 4%
2%
21%
27%
21%
13%
7%
4%
6%
1%
21%
27%
21%
14%
6%
4% 5%
0%
5%
10%
15%
20%
25%
30%
35%
Never Under 10 times Between 11 and
25 times
Between 26 and
50 times
Between 51 and
100 times
Between 101
and 200 times
Over 200 times I don't know
2014 2015 2016
With approximately 200 million
smartphone users in the U.S., this
means we look at our smartphones
nearly 9 billion times per day!
Total 18-24 25-34 35-44 45-54 55-64 65-74

TMT outlook 2017:
Surprisingly, ½ of consumers check their phones in the middle of
the night. Reasons vary, but they’re primarily personal activities
Source: UK edition, Deloitte Global Mobile Consumer Survey, May - Jun 2016
Base: All smartphone owners 1530
50%
1%
7%
7%
7%
8%
8%
11%
11%
13%
16%
16%
19%
20%
31%
0% 10% 20% 30% 40% 50% 60%
I don't check my phone during the night
Don't know
Respond to work email
Check other apps
Respond to personal emails
Read a book
Check games notifications
Read news
Read work email
Respond to instant messages
Play games
Check for personal emails
Check social media notifications
Check instant messages
Check the time
Which of the following activities do you do if you check your phone in the middle of the night?

TMT outlook 2017:
Penetration in the smartphone market continues to increase,
particularly for the older age group demographics
58%
76%
72%
64%
51%
42%
70%
89%
85%
77%
65%
53%
77%
88%
86%
84%
75%
62%
15%
8%
9%
15%
21%
21%
0%
5%
10%
15%
20%
25%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Growthrate
Penetrationrate
Smartphone penetration by age group
2014 2015 2016 CAGR
Source: Deloitte Global Mobile Consumer Survey, USA edition, Aug 2014, August 2015, August 2016
Base: All respondents USA, 2014: 2001, 2015: 2069, 2016: 2000
Total 18-24 25-34 35-44 45-54 55+
Which, if any, of the following devices do you own or have ready access to?

TMT outlook 2017:
Biometrics

TMT outlook 2017:
Biometric security reaches the billions
Prints charming:

TMT outlook 2017:
Mainstream adoption of smartphone biometrics will act as
a catalyst for the deployment of biometric sensors in
other environments
• Access to building
• Register exit
• Check in and out of classes
• Payment of food and stationery supplies
• Fraud detection, access to or opening of new accounts,
payment authorization
• Alternative to PIN entry in ATMs
• Authorization process for high value B2B transfers
• Tax payments, access to medial records, e-voting (might encourage
younger people to vote)
• National identity schemes
• India: facial, fingerprint and iris data; 2016: 1 billion registrants.
• Access to data
• Alternative to entering a password to get access to email or intranet
• Physical security: a way of controlling entry into a building
Schools
Financial institutions
Government
Enterprises

TMT outlook 2017:
How important would a faster wireless network (such as 5G)
be to you?
• Very Important — Today’s 4G speeds simply aren’t fast enough
• Fairly Important — 4G is okay, but I could use faster speeds
• Not Very Important — 4G speeds are sufficient most of the time
• Not At All Important — Today’s network meets all of my needs
• Don’t know/Don’t understand
Polling Question #3

TMT outlook 2017:
Future of connectivity

TMT outlook 2017:
In 2017, we expect to see continued progress toward 5G rollout
through completing market trials and beginning initial full-scale
market rollouts
Higher capacity: LTE-A Pro offers 10 times
the capacity of the fist 4G standard.
• Smaller cells – Allows for base stations
to be placed in stores in shopping malls,
lamp posts
• Carrier aggregation
• MIMO
• Greater capacity edges and hot-spots
• Higher frequency bands/higher speeds
Lower latency:
• LTE-A Pro – 600 microseconds
• LTE – 8,000 microseconds
Dedicated support for IoT: Low-Power Wide
Area Network – low bandwidth connections to
a large number of smaller, connected devices
• low-power transmission
• low-frequency transmission (for
basements and inside buildings)
‫‏‬What 5G Offers

TMT outlook 2017:
Based on Deloitte’s 2016 Global Mobile Consumer Survey, more
than half of consumers believe 5G to be important. Specific
demographics have even greater levels of interest in 5G.
If your carrier offered next generation wireless data speeds (e.g. 5G) how important would this be for you?
Source: US edition, Deloitte Global Mobile Consumer Survey
Base: All Adults, 18-75
27%
29%
24%
14%
6%
Very important Fairly important
Not very important Not at all important
Don't know
Category Value
% Diff from
Next Highest
Age Group
Age 25-34 19%
Region Northeast 4%
Household
Couple with
children
8%
Bought
phone in…
2016 17%
Income $250K-$299K 9%
IoT
ownership
Connected car
& wearables
(tie)
9%
Top interested demographics

29 Meeting with incoming RBC US General Counsel Copyright © 2015 Deloitte Development LLC. All rights reserved.
Small Cells: Big impact on seamless connectivity
Why small cells now?
Achieving advances in capacity and network
speed will require densification of networks
consistent with a 5G strategy over both licensed
and unlicensed spectrums—to patch coverage
holes, to optimize signal strength, and to
increase capacity to meet consumer demand.
Globally 10+million Small Cells
have been deployed so far.
The demand for network densification is only
going to increase exponentially in the future.
Small cell equipment market revenue was
around $2 billion in 2014 and is expected to
approach $10 billion by 2019.
Evolving organizational capabilities
The processes and tools for overseeing conventional network
deployment and rollout might not work so effectively in the new era of
small cells.
Impact on network design
Shifting from‫‏‬a‫“‏‬macro‫‏‬tower‫‏‬only”‫‏‬mindset‫‏‬to‫‏‬a‫“‏‬connect‫‏‬everything”‫‏‬
mindset will require looking beyond conventional ways of thinking
about network design and engineering, site selection, and deployment.
How innovation helps
Small cells offer the potential of providing speeds that pave the way for
wireline broadband substitution and enable the creation of a mesh network,
offering direct connectivity to the rapidly growing number of Internet of Things
(IoT) devices.
Small Cell Deployed on
Street Lights
Electric Poles
Traffic Light Poles
$10 billion
2019
$2 billion
2014
A diverse and potentially new
set of capabilities will be
needed, from such as process
automation, mobile apps to
support field workers,
regulatory processes, and real-
time performance monitoring
and analytics, just to name a
few.

TMT outlook 2017:
Technology Outlook
Paul Sallomi, US and Global Technology Industry
Leader
Deloitte Tax LLP

TMT outlook 2017:
Tech outlook 2017
Flexible Consumption Model offerings will have significant impact on tech
companies and their customers and will drive tremendous business and operating
model transformation
Cognitive Computing will enhance a wide array of enterprise and
consumer applications
Digitization of the enterprise will open new markets and create new
ecosystems
Cyber Security products and services are addressing the increasing threat
of attacks
New partnerships and collaborations across tech and other industries are
critical for driving topline growth
Mergers, Acquisitions, & Divestitures are on the rise as tech companies
choose to focus on what they do best
Exponential technologies, flexible consumption business models, cyber security and
ecosystem partnerships offer a continued set of opportunities and transformational
challenges for technology companies

TMT outlook 2017:
Which trend do you predict will drive the largest growth
opportunity in the tech market?
• Cognitive computing
• Cyber security advancement
• Automatic Emergency Brakes/Automotive technologies
• It-as-a-Service/Flexible Consumption models
• Mergers, Acquisitions, & Divestitures
• Don’t know/Not applicable
Polling question #4

TMT outlook 2017:
Deloitte Global predicts by the end of 2018, spending on IT-as-a-
Service for data centers, software and services will be just under
$550 billion worldwide. IT-as-a-Service is the fastest growing
example of Flexible Consumption Models
IT-as-a-Service: the half trillion dollar ‘niche’
A subset of flexible consumption models, potentially able to procure every aspect of IT on
a “you get what you pay for’ basis.
13% of companies using FCM for
more than half of their IT needs
23% of companies using FCM for
more than half of their IT needs

TMT outlook 2017:
Who it is that makes the decision to move to the alternative model seems to depend on the industry:
Adoption varies in a number of ways
IT-as-a-Service: the half trillion dollar ‘niche’
Healthcare
Industrial products
Technology
Financial Services
IT departments
initiate the move
31% of companies moved on
their own initiative.
8% of companies moved because
of pressure from vendors.
13% of companies moved on their
own initiative.
33% of companies moved because
of pressure from vendors.
Media and entertainment
In other industries the change is
led by the vendor:
$1-5 billion revenue +$5 billion revenue
Public cloud 7% 7%
On premise 19% 32%
Enterprise size also plays a role:

TMT outlook 2017:
Deloitte Global predicts that over 300 million smartphones (more
than a fifth of units sold in 2017) will have on-board neural
network machine learning capabilities.
Brains at the edge: machine learning goes mobile
Computer models that mimic aspects of the human brain’s structure and function
Allows smartphones
to perform machine
learning tasks

TMT outlook 2017:
The technology behind it
Brains at the edge: machine learning goes mobile
GPUs
(graphic
processing
units)
CPUs
(central
processing
units)
FPGAs
(field-
programmable
gate arrays)
Neural
networks
that fit
smartphones
Machine learning on-the-go
will not be limited to
smartphones.
Mobile phones are
becoming critical devices in
our daily lives, and need to
be able to perform machine
learning tasks all the time.
Special
software
emulators

TMT outlook 2017:
Deloitte Global estimates that, by 2022, a sixth of the US cars and light
trucks will be equipped with automatic emergency braking (AEB).
AEB will contribute to a reduction of annual US motor vehicle fatalities by 6,000.
Safety first: the road to self-driving starts with a stop
16% decline on the
likely death toll as
compared to 2017
Forward-facing cameras Millimeter wave radars
Laser ranging and imaging systems (LIDAR) Associated vision processing systems
AEB technologies

TMT outlook 2017:
The bottom line
Safety first: the road to self-driving starts with a stop
• AEB is a critical first step towards the fully autonomous vehicle
• Technology sector stands to benefit with wider deployment
−Automotive semiconductor market growing faster than rest of chip market at 6%
annually until 2019
• AEB will not require rewriting laws, regulations and liability
−It could be a successful transition technology
• Telecom implications: cars in 2020 may be connected to the network or to other cars
generating 0.6 exabytes per month in the US or 9% of all wireless traffic

TMT outlook 2017:
Deloitte Global predicts that in 2017 Distributed Denial-of-Service (DDoS) attacks will
become larger in scale, harder to mitigate and more frequent.
DDoS attacks enter the terabit era
1 Tbit/s attacks per month
+10 million attacks in total
Average attack size of 1.25 – 1.5 Gbit/s
(enough to take many organizations offline)

TMT outlook 2017:
The bottom line
DDoS attacks enter the terabit era
Organizations increasing its dependence on the Internet should be aware of a potential spike
in the impact of DDoS attacks
They should consider a range of options to mitigate the impact:
• Decentralizing
• Bandwidth oversubscription
• Testing
• Dynamic defense
• Fallbacks
• Protecting
• Detecting
• Repelling
DDoS attacks are likely to increase in intensity in 2017 and beyond

TMT outlook 2017:
The new growth strategy
Partnerships, M&A and Divestiture Activity
Efforts to advance new technology fields
and build end-to-end customer solutions
are driving:
• Unprecedented wave of partnerships between
technology companies and other industries
• New forms of consortiums and collaborations
• Partnerships between traditional competitors in
emerging fields
• Increased M&A and divestiture activity
Companies that are open and adept at this type of
teaming or restructuring will be able to find a
broader network of growth opportunities for their
products and services

TMT outlook 2017:
Question and answer

TMT outlook 2017:
Join us April 26 at 1 p.m. ET as our
Technology, Media & Telecommunications
series presents:
Media consumption trends:
Multigenerational perspectives
and implications

TMT outlook 2017:
Eligible viewers may now download
CPE certificates.
Click the CPE icon in the dock at the
bottom of your screen.
CPE

TMT outlook 2017:
Contact information
Sandra Shirai
Principal
sshirai@deloitte.com
Paul Sallomi
Partner
Deloitte Tax LLP
psallomi@deloitte.com
Scott Lippstreu
Connect with me on LinkedIn Connect with me on LinkedIn
Connect with me on LinkedIn Connect with me on LinkedIn
Principal
slippstreu@deloitte.com
Craig Wigginton
Partner
Deloitte & Touche LLP
cwigginton@deloitte.com

TMT outlook 2017:
This communication contains general information only, and
none of Deloitte Touche Tohmatsu Limited, its member
firms or their related entities (collectively, the "Deloitte
Network"), is, by means of this communication, rendering
professional advice or services. Before making any
decisions or taking any action that may affect your
finances, or your business, you should consult a qualified
professional adviser. No entity in the Deloitte Network shall
be responsible for any loss whatsoever sustained by any
person who relies on this communication.

Copyright © 2017 Deloitte Development LLC. All rights reserved.
36 USC 220506
About Deloitte
As used in this document, “Deloitte” means Deloitte Consulting LLP, Deloitte Tax LLP, and Deloitte & Touche LLP which are separate
subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of our legal structure. Certain services may
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TMT Outlook 2017: New Advances in Tech, Media & Telecom

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