The Connected Consumer and Smart M2M Services

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

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

4. Consumers are creating and consuming digital data and media

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

6. Real-time M2M 1.0 M2M 2.0 Moving to M2M 2.0 Usage based pricing Broad

7. M2M 2.0 Market Drivers

8. M2M‘s Impact on the Connected Consumer m2m Enables Economic Incentives and Influences Positive Consumer Behavior • 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….

9. What is Behavioral Economics? 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 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.

10. 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

11. 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

12. 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

13. 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 • 35-45 million car sales a year, 20 million are sub-prime

14. 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)

15. 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

16. 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