INTERNET OF THINGS & 5G REVOLUTIONThe highway for the future of EU services & industry:

energy efficiency, eHealth and Industry 4.0Brussels, 19 October 2016

European Parliament

Internet of Things and 5G: what is at stake

IoT’s definition and deployment’s forecasts

3

The Internet of Things (IoT) has been defined in different ways but, generally speaking, it refers to aglobal, distributed network (or networks) of physical objects that are capable of sensing or acting ontheir environment, and able to communicate with each other, other machines or computers

Considering the IoT’s revolution, the EU Commission concluded that there was a need for policy action inEurope to contribute to R&D investments, stimulate the growth of the stakeholder community and thedevelopment of a strong IoT supply industry, open the way for the user industry to adopt this disruptiveinnovation, and create the main framework conditions needed for the development of the market,including the provision of skills, the building of trust and the removal of regulatory barriers

IoT market’s expansion in Europe with yearly growth rates over 20% in value between 2013 and 2020, anincrease of the number of IoT connections within the EU28 from approximately 1.8 billion in 2013 (the baseyear) to almost 6 billion in 2020 and an increase of IoT revenues in the EU28 to more than €1,181 billion in2020, including hardware, software and services.

Worldwide the IoT will connect 26 billion devices and IoT product and service suppliers will generateincremental revenues of more than $300 billion and IDC’s more optimistic previsions that the worldwideIoT market will grow from $1.9 trillion in 2013 to $7.1 trillion by 2020

Actions to promote

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“Advancing the Internet of Things in Europe” (April 2016)

Commission document

spectrumavailability

standardisation

flow and transfer of data

network coverage

mechanisms for the identification of physical

and virtual/logical objects

interoperability

ecosystem in which IoTtechnologies and their

application are trusted, accepted, wanted,

accessible and usable

5G opportunities

5

The extraordinary diffusion of Internet and mobile devices and the prospects of developmentof the IoT call for a reflection on the need to promote technological progress and, in particular,5G implementation

5G opportunities

• data rates up to 100 times faster (more than 10 Gbps)• network latency lowered by a factor of five• mobile data volumes 1,000 times greater than today’s• battery life of remote cellular devices stretched to 10

years or more• increase of the number of devices connected to the

network (1 mln per 1 sq km)• possibility of use of several bands from 400 MHz to 100

GHz

With regards to the timeline, many operators have predicted 5G commercial availabilitystarting from 2020

Energy efficiency

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Energy efficiency EU target by 2020

20% of Energy efficiency target by 2020 27% of energy savings by 2030,compared to 1990 probably going to rise to 30%

Industry: -15.0 %Transport: -6.4 % Domestic: -13.8 %Services: +4.3 %

-11% of consumption in 2014 from 2006

peak Source: JRC, 2016

Final energy consumption (2006-2014)

00

50

100

150

200

Mtoe2014 Final energy consumption

Final energy consumption target for 2020

Source: EEA, Eurostat 2015

Energy cloud & demand side management

8Source: SEDC (2015)

Explicit demand response in Europe - 2015

Energy efficiency, distributed energy sources, demand

response, energy storage, advance software/hardware

and emerging energy cloud are key components of the

ongoing transformation.

World market annual new capacity: centralized vs distributed

0

50000

100000

150000

200000

0

50

100

150

200

2016 2017 2018 2019 2020 2021 2022 2023

GW

Annual new centralized power plant capacity additions Annual new distributed generation capacity additions

Annual distributed generation revenue (right axis)

$Million

Source: Navigant Research(2015)

Digital Healthcare

Level of eHealth in European countries

10Source: I-Com elaboration on EU Commission data

2222

252627

31313232333334343637

40424242

4549

6574

7983

8687

100

0 20 40 60 80 100

PolandBulgariaSlovakia

LatviaSlovenia

Czech RepublicIrelandGreece

MaltaLithuania

ItalyLuxembourg

HungaryAustriaCyprus

GermanyBelgiumPortugal

FranceRomania

United KingdomCroatia

SpainSwedenEstonia

NetherlandsFinland

Denmark

According to the synthetic index,which is based on the four eHealthkey indicators of EuropeanCommission and describes thelevel of eHealth in Europeancountries, the most advancedcountry is Denmark, followed byFinland, Netherlands, Estonia andSweden.These countries have in common ahigh level of digitalization indoctor’s offices and a high numberof patients who use mobile andinternet technologies forsearching health information andmaking appointments online withdoctors.

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1,7

2,3

3.0

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

2013 2014 2015

Total downloads of mHealth apps (billions)

Demand of mHealth apps

The demand for mHealth apps is increasing every year. In 2015, the total number ofmHealth app downloads worldwide reached 3 billion from 165,000 app solutions on themarket .

Source: Research2guidance, mHealth App Developer Economics 2015, November 2015

Supply of mHealth apps

12Source: Research2guidance, mHealth App Developer Economics 2015, November 2015

69000 68000

1400010000

4000

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

Google Play Apple App Store Windows PhoneStore

Amazon AppStore

Blackberry World

Number of mHealth apps displayed in app stores

The market for mobile apps has developed very rapidly in recent years to become a key driver ofmHealth deployment facilitated by smartphone penetration. According to recent estimations,the number of mHealth apps available to consumers now exceeds 165,000. Most of the apps arepublished in Google Play or Apple App Store.

Industry 4.0

Data market value

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The data market value in the manufacturing industry expected to grow by 54% to over 18billion euro in 2020

Source: European Data Market Monitoring Tool

0%

20%

40%

60%

80%

100%

0

4.000

8.000

12.000

16.000

20.000

Data market value, by industry (2015 vs. 2020)

Construction Baseline Scenario 2020 Growth rate (2015-2020)

Investments in IoT

15Source: Tata Consultancy (2015)

10%

11%

13%

13%

13%

15%

15%

16%

16%

16%

17%

18%

29%

0% 5% 10% 15% 20% 25% 30%

Automotive

Utilities

Energy

Healthcare

Consumer

Retail

High tech

Insurance

TLC

Travel, Transport and Hospitality

Media & Entertainment

Banking and financial services

Industrial manufacturing

IoT investments’ impact on revenues (2014 vs. 2013)

In the industrial manufacturing industry, revenues grew on average by 29% between 2013 and2014, thanks to IoT investments

Industry 4.0 and the job market

16Source: European Data Market Monitoring Tool

0,8%1,6%

2,0%2,0%

2,5%2,7%2,7%

2,9%5,5%

9,2%10,4%

0% 2% 4% 6% 8% 10% 12%

ConstructionTransport

Mining, ManufacturingHealth

Public AdministrationWholesale and Retail

EducationUtilities

Professional servicesFinance

Information & Communication

Share of data workers on total employment, by industry (2015)

6.6487.378

6.2536.892

5,9%6,6%

0%1%2%3%4%5%6%7%8%

4.000

5.000

6.000

7.000

8.000

2015 2020

Data workers skill gap in EU28 (in thousands)

Demand Supply Data workers skill gap

Manufacturing is evolving towards digitaltransformation but the presence of dataworkers is still too low (2%) in terms ofthe share on total employment.According to current data and estimatesfor the future, there is (and there will be)a substantial skill gap, Equal, in 2015, to396,000 unfilled data worker positions inEU (corresponding to 5.9% of totaldemand) and is expected to grow to486,000 (6.6% of total demand)

Industry 4.0 plans in the world

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UNITED STATES

Networks of institutes and excellence labs, forthe diffusion of technologies and skills,composed of large private ICT companies anduniversities, promoted by the Government andfinanced through public-private partnership.

Public funding: ~0.5 bln $, aimed at supportingresearch projects

FRANCE

Re-industrialization plan for the investment intechnologies 4.0, mainly guided by theGovernment.

Public funding: > 10 bln €, in the form of:- Fiscal incentives for private investments- Subsidized loans- Tax credit for research- Funding of projects 4.0

GERMANY

Federal action plan involving large industrialand technological players.

Public funding: ~ 1 bln €, in the form of:- Fiscal incentives for investments in

technological start-ups- Funding of business projects and applied

research projects

ITALY

Action plan, involving research centers,universities, large companies and labor unions.

Public funding: ~ 13 bln € (cumulative on the2017-2020 period), in the form of:- Tax credit for research- Fiscal incentives for investments in

innovative start-ups and SMEs- Support to investments in machinery

Key questions

Panel 1 – Energy Efficiency – KEY QUESTIONS

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1. Will the level of the 2020 targets set by all countries be ambitious enough toensure to decouple energy consumption from economic growth, taking intoaccount the forecast GDP development to 2020? Should 2030 energy efficiencytargets be mandatory and, more in general, how should the general EU frameworkbe set?

2. How may policies help improve investment conditions in some Member Statesin order to accelerate transition to higher energy efficiency levels in differentsectors? How to ensure financial suitability, especially for SMEs and families?

3. What are the main opportunities arising from the digitalization of the energysector?

4. What are the main concerns in terms of privacy and cyber security? How maycritical aspects be solved in the short term?

5. With regard to the Energy cloud, what is the real interest of companies andconsumers?

Panel 2 – eHealth – KEY QUESTIONS

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1. In your opinion, can eHealth really offer opportunities to take on several of thechallenges of health systems (chronic disease and multi-morbidity, sustainabilityand efficiency of health systems, cross-border healthcare)?

2. How to promote international cooperation in order to achieve widerinteroperability between eHealth solutions?

3. How to safeguard the privacy and the security of health data? On the otherside, how to take advantage of the opportunities provided by the big data in orderto develop personalized medicine?

4. Is there a need to make the current EU legal framework applicable to mHealthmore clear?

5. How to inform citizens on the safe use of mHealth apps and how to mitigatethe risks connected to the use of mHealth solutions?

Panel 3 – Industry 4.0 – KEY QUESTIONS

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1. Which role should be played respectively by governments and business sectorsand how to coordinate efforts in a coherent and effective governance framework atEU and national level?

2. How may best practices from some countries be replicated in Member Stateslagging behind?

3. New business designs are needed to successfully put the concept of “Industry4.0” into practice. In your opinion, what should they be?

4. Which policies for interoperability and standards are underway? How toremove possible barriers between countries and sectors? What role should EUinstitutions and business/technical associations play in this sense?

5. Which labor market policies to be aimed at filling the existing skill gap?

Thank you!Silvia CompagnucciStefano da Empoli

Chiara Del FrateMaria Rosaria Della Porta

Gloria MarcotullioGiusy Massaro

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