The Connected Consumer and Smart M2M Services Mike Ueland Vice President & General Manager Telit Wireless Solutions

Connected Consumers are Mainstream 91% US wireless penetration; 25% of all households are wireless only 92% of population is covered by 3G network 6500% Rate of AT&T”s wireless data growth past 3 ½ yrs 89% of the handsets on wireless carriers’ networks are Web capable Sources: CTIA, AT&T, ABI Research

Regularly visit community sites (Facebook, MySpace, YouTube) Kindle eReader sales tripled in the first half of 2010 and are outselling hard covers Over 300,000 iPads sold on the first day (April) Consumers are creating and consuming digital data and media

Sample Applications M2M Functions Track usage Upload data Report changes Monitoring and notification Transactions Digital displays Location tracking eReaders/ emerging devices

Moving to M2M 2.0 Communication Batch Customer benefit Productivity Market size Niche Real-time Usage based pricing Broad M2M 1.0M2M 2.0

M2M 2.0 Market Drivers New OEM automotive telematics incorporating 3G (Audi) Opens up new applications Emerging 3G Next generation 2G/3G modules driving down size/power/price Carriers open to innovative pricing models (i.e. Kindle) Airtime & Equipment Costs AT&T (EDO), Verizon (ODI), Sprint (Emerging Solutions) have all reorganized their structures AT&T expects to boost subscriber penetration to 500% Operators Engaged Legislations such as the eCall mandate in Europe, Resolution 245 of the Brazilian government and local initiatives in China create huge market potential Regulatory Changes

M2M‘s Impact on the Connected Consumer  Recent reductions in the cost to deploy are enabling more consumer-focused applications  Applications have the potential to make a BIG impact on choices we make in our daily lives  Applications can produce positive benefits to individuals and society  Many of the new applications are driven by the principles of behavioral economics  Behavioral economics is a field of economic research that looks at how individuals make economic related decisions – what does this really mean…. m2m Enables Economic Incentives and Influences Positive Consumer Behavior

What is Behavioral Economics? Behavioral Economics A classic example is the difference between opt-in and opt-out in a program such as organ donation. If you tell people that they can opt-in to donating their organs if they are killed, a few will feel strongly enough to do it— most people won't. If you switch that to opt-out the reverse happens—very few people opt out. All of economics is meant to be about people’s behavior. Right?? So, what is behavioral economics, and how does it differ from traditional economics? Traditional Economics Conceptualizes the world populated by humans that are rational that behave in a way to maximize their individual self-interest Framework ignores or rules out virtually all behavior and includes unrealistic traits Behavioral Economics Assumes individuals don’t always make “rational” decisions because of being influenced by other factors/context Markets are inefficient

Example – How Choices are Presented Influence Outcomes Director of food service for a major city school system influenced what students ate by changing how the food was presented in the cafeteria line Putting fruit before desserts or moving carrot sticks to eye level District found they could increase or decrease the consumption of food items by 25% without making changes to the menu Practice of giving people freedom of choice but steering them toward decisions that benefit themselves and society is called “libertarian paternalism” Director of food services is a “Choice Architect” by arranging food choices that resulted in healthier selections- organizing context for decision making

Applying Libertarian Paternalism to M2M Applications Provide Incentives for People to “Do The Right Thing” Pay as You Drive captures driving behavior and encourages better driving habits through lower rates i.e. Progressive Insurance with MyRate Program Congestion-based tolls to reduce traffic accidents, congestion and pollution Demand response programs in the utility sector encourage people to shift electric power usage to nonpeak periods Pay as You Throw households that throw out more pay more for trash collection encourages recycling Medical reminders to patients encourages better overall health i.e. mHealth solution from Vitality, GlowCaps

Pay As You Drive Insurance Launched in 2008; currently in 22 states Easy self-install by the consumer into the vehicles OBD II port Voluntary program offering 15-25% discounts based on driving habits Captures driving data, distance, time, sudden acceleration, and braking Benefits Progressive by better calculation of risk, lower loss ratio, improved segmentation Benefits consumers through lower premiums Societal benefits could be fewer accidents, lower car emissions and less road maintenance

Payment Assurance As condition of loan, finance company requires black box Auto disabler prevents car from being started Locate and recover asset when payments are not made Encourages on-time payments Expanding from “Buy Here, Pay Here” to traditional auto financing million car sales a year, 20 million are sub-prime

mHealth Solutions – GlowCap by Vitality GlowCaps use light and sound to signal when it is time to take a pill – relays status to Vitality’s secure network GlowCaps can even call with refill reminders and connect the patient to their pharmacy as pills deplete. Each month GlowCaps mails a printed report to you and your doctor if requested Encourages better health and reduces costs through health maintenance and daily medication adherence 800 million people have chronic conditions (GSMA)

Pay as you Throw Charges households a higher bill for putting out more trash for collection Cost effective method of reducing landfill disposal and toxins Encourages and increases recycling efforts Recycling containers can send information about how full they are and trigger pickup Weight of recycled material can be credited to each household and used to reduce taxes or as a credit towards municipal services

Summary Consumers are more connected than ever before M2M 2.0 is about providing consumers with more timely information in which to make better decisions New business models are being created that leverage M2M technology and create “win-win” scenarios