 Okay. Hello. It's a great pleasure to be here. I guess it's better to speak after lunch than before lunch. So it's really good to be back here. Many of you may not have any idea what a futureist is. I mean, does anybody know a futureist here? Alvin Toffler, Paul Saffo. So what I do basically is best described with this. I look at trends in the next five years, three to five years in the telecom media space. I try to help companies to understand where things are going. So we're not making predictions. We'll call it foresight. There's a Chinese saying that says, if you want to know the future, ask your children. It's very much like that. So we look for the obvious fits. There's also really interesting sentence that was said about Henry Ford. If Henry Ford had asked people what they want, they would have said faster horses. So we're trying to get our companies that we work with to see beyond the faster horses, which in your case would be a faster network, maybe or a cheaper network or a better running network. And we work with many clients, about 50 percent in the telecom media space all over the world, especially in Brazil, in Indonesia. I live in Switzerland myself. So that's sort of a short intro. If you're into Twitter, I'm G Leonhardt on Twitter. We can follow me there, and I will publish the PDF sometime this afternoon on Twitter, as well as on the event site tomorrow. So first of all, you're extremely lucky, right? The muscle, the need, the hierarchy have shifted. I have not the one for food, water, shelter, sex, now it's food, shelter, internet, right? I mean if you talk to people around the world, it's like this is the next thing after having enough to eat is the mobile phone, right? So this is a really interesting development that we're going to see five billion people connect on mobile devices. And I think because of this, we're looking at the convergence of the telecom and media space. Especially in developing countries, some of you may be from those areas, we're seeing a large trend in this direction of saying, okay, basically what Kleiner Perkins has said, they were the lead investor or our lead investor in Facebook. It's all about these three things, social, local, mobile. And I would add two more things, the cloud. We talked about that this morning, and video. And I call this to make it more complicated, solo more VG, right? Or CL rather. So social, local, mobile, video. And what does that have to do with the topic that I'm about to talk about? I think that we have to consider as Kevin Kelly says, who's the co-founder of Wired Magazine, is that we're now people of the screen. I mean yesterday I took a cab and the guy had six screens in the front. Now you can ride anywhere on an airplane, you can go on the internet on an airplane, right? Everybody using screens all the time. If you do any travel in Asia, you know that screen absolutely everywhere. So now we're people of the screen, which means that we're actually really quite different people. In Brazil you wouldn't catch a person under 35 reading a book, okay? It's all mobile devices. In Korea, Japan, of course, you know that in the subway you're not supposed to have a newspaper. It's actually forbidden to have a newspaper, it takes too much space, right? You can only use a mobile device. So people of the screen are different people, they consume differently, they will expect different things. In my view, if you look at this chart, all from planet Perkins, huge growth, of course, in terms of global mobile free geosubservable growth, China, Brazil, India, Turkey, cheaper and faster will not be good enough. And this is a trend that we're seeing on a global scale in Europe, of course, we're a little bit more safe in many ways there. But on a global scale, this is, we can safely say that basically these kind of people, and you know these services, Netflix, Spotify, Flipboard, Instapaper, people of the cloud, we're also now de facto people of the cloud. I mean, I used to be a musician and producer, okay, so what I use now is Spotify, my music doesn't sit anywhere, it's in the cloud. I download maybe a thousand tracks at any given time, but it's cloud-based. So I'd be to see iPlayer, sometimes 20% of the entire UK traffic is the iPlayer. So clearly this is happening, these people will expect a lot more than just a good and cheap connection. In other words, I mean, we can safely expect that it won't be enough to give them a good deal on the internet connectivity. Music is the first one to move in the cloud, we now have like 10 services already in the cloud, Mark, Spotify, Virgin Media, IRCOM in Ireland, TDC in Denmark, and many others. Music is already in the cloud and the record labels have, of course, fought this hard and long for the last 10 years. But it has happened anyway. So now music is being reorganized, the entire content business, you're looking at the mobile streaming forecast, right? So if you're an operator, this is really quite bad news, right? Because the traffic goes up, but do you make any money off these guys, right? I mean, if Facebook works with Spotify and if we can listen to music on Facebook, is that gonna create value for the operator? I doubt it. I think at this point, we have largely based our business models in Telcom on this model, which is a captive customer. I mean, I live in Switzerland, which is one of the worst places in the world as far as the rates are concerned, right? The most expensive phone calls in the world are in Switzerland because we have this. You don't really have a lot of alternatives, right? So now we have things like WhatsApp. You guys know, of course, what WhatsApp is, right? It allows you to sidestep SMS. It's wildly popular now with kids and also business people. And I think basically we're seeing this system failure of this idea of a captive consumer. Many of us don't like this idea, obviously, because it's better if somebody is captive, but I think that's basically inevitable. What we're going to see is the end of the captive consumer, the consumer who is forced to actually buy what we sell because there's no other options. I mean, if you go to Asia or Brazil, you'll see this in force in Indonesia or India, the cheapest phone calls in the world and data prices also rapidly declining with an ARPU of $3 or so a year. And 70% or so, churn. So that is waiting for us as well in Europe. That's that value. So it's a little bit like we're happily surfing down here still, but there's a tornado coming in the back. This is happening as a next step. We can safely say if we look at this, for example, AppStores versus Operator Control Revenues exploding and Mark Mulligan who used to work before as it says companies lose control of their customers and markets when new technologies and the resulting behaviors enable them to interact on their own terms. That's a great description of WhatsApp. We enact on our own terms $300 million a day on SMS. Will that be the future in five years? I doubt it. Because when we have data plans, we start to change our behavior. And basically I think we're facing a time of significant disruption, which is a huge opportunity, which I'm gonna tell you about. If we look at the disruption, just a while ago, a year ago, of course, Google accused YouTube of getting a free ride and we have the CEO of Telefonica saying, these guys are using the networks and they don't pay anybody. And we have him saying that they think that Google should pay to use the network. I'm sure you're familiar with that discussion. So we have disruption here and basically I think we're going to have serious food chain conflicts. I think basically in this system, should Google pay? Should the record labels allow Google not to link to an MP3 file? Should the ISPs be allowed to filter content, to filter out websites like we have now in the US, the whole discussion? These are serious food chain conflicts. And in the content industry, where I work mostly, film, music, television, this is the biggest shift since the printing press. Going from the copy economy to the access economy. In other words, if you have kids, many of you may have kids doing this already, they don't even download illegally anymore, not because of the law, because they don't have to. YouTube is the virtual jukebox. Why do you bother downloading? When you go to a party now, it's no longer the hard drive with 100,000 free tracks, it's YouTube. So that has changed, it's going from copying to access. Great news for you guys in the ICT business, because you're in the access business. But guess what? If you don't help the content guys, get to the access economy, it won't work. Help them in the sense of creating a business model, which I want to talk about. Significant disruption for the content guys as well. I mean, you can safely say the only one winning pretty much all the time is the consumer, right? So as consumers, we're quite happy with this idea. But Kevin Kelly also said that basically the internet is a giant copy machine. And we're talking about health records, education, movies, books. I was in Russia four months ago. I went to a factory where every single book is being scanned. Every single book you can possibly get, and you can download it for free if you're a member of this book club. I won't tell you what book club it is. But based on advertising without license. Everything that we have on the web is going to be copied. There's very little we can do about it unless you want to move to China. And even there it doesn't work, right? The internet is a giant copy machine. And so the future of the content industry is not about selling copies. This is something that's dawning on companies like Netflix, for example, right? They don't sell copies anymore. They have 22 million subscribers currently in a bit of a trouble paying 10 bucks a month for access to films. Now, Jeff Zucker, the president of CEO of NBC, I think he was, you know, it's been a few years ago here, right? He said something very interesting for a guy who owns content. He said, the best way to combat piracy is to make it available to the content. And that's what we're seeing pretty much across the globe. Now, people are saying, you know what? It's much better if we have legal systems like Spotify and others and Netflix rather than saying that you shouldn't be doing this in the first place because we have five billion consumers connected to the web in a very short time. Great quote by the CEO of Macmillan, a book publisher. He says, piracy happens when motivation means opportunity. That basically means that piracy is in itself an opportunity for business. Ask yourself a simple question. If a song would cost 10 pence or 10 cents in euro or dollars, right? Would anybody bother downloading it for free? And how much money could you make if it was 10 cents? I mean, through the math, right? One dollar a week per customer for music. Whether you pay it or whether it's done through advertising would make the music industry three times as big as it is now. And so we have this calculation happening all over the world. There's like a dozen different cases. I'll show you that a little bit later. But basically piracy is unmet demand. That's pretty much all there is to it. And what it takes for us in the telecom business is to say, okay, it's about disruption and lubrication. I mean, this is of course the Google game, right? They first disrupt people and then they lubricate something new, right? Which we should take a page from, right? Three billion dollars a month in revenues and YouTube very soon the same and Android very soon the same, right? Disruption and lubrication. That's the name of the game. And guess what? Many telecom companies can actually play this game because it takes scale. It takes payment, right? It takes technology. It takes infrastructure. Spotify isn't going to play this game. They're just way not big enough for this. But this lubrication is not another easy job, right? I mean, you're seeing several business models. These people here are carrying the Arshkash, the Arshkash tablet, $35 for this thing. It's not an iPad but it works. Very soon we'll have devices for $10 connected to the cloud. Maybe not here because we have more money but in developing countries this will be a default, right? And guess what people want that are connected, that are people of the screen? What would they love to have from the operator? Is to make it liquid. To create a fluid environment to where they can do what they want to do. One of my first books, we talked about music like water which essentially is what we have now and I think you'll have different kinds of water as well. This idea of saying, okay, something bundled and something else, sometimes called freemium which I'm sure you heard about. So in this world, we're going from a world of the dumb television. I mean, this television did not know who we were to the connected television. I mean, the connected TV is a salvation for the TV industry. I'm sure you heard about this, right? Social television, connected TV. And this television knows who we are which is also a scary thought considering data, right? But every single television will connect to the internet and will allow us to do all kinds of things on this TV and I think what this will mean for paying for content is really quite clear, right? It's also total disruption as we see for example in mobile banking. All of a sudden the banks are saying, wait a minute, Google, this is our business. People's money, right? But all of a sudden we're seeing money as content, health as content, education as content, the users are content, right? If we look at Facebook, we're the users, we are Facebook's content. We are essentially the content producers of Facebook. That's us. So on a very large scale we can say, okay, content is really becoming a term for all kinds of things for data but you know monetization will fragment as we can see in this picture and it will have a hundred different ways of getting money from users. Here's one of them, again kind of Perkins saying, okay, the amount of ad revenue per user has increased from $90.95 from $9 to 49 now. That's what every internet user is worth in advertising. Now if you don't think that advertising is going to fuel content, I don't know if you guys know the numbers, right? But the advertising marketing business is a trillion dollars US a year, a trillion. So clearly content and advertising are very closely related and of course that's partly also your business. We're going to see stuff like open research as shared already three years ago. Bonding and musical service could reduce a churn between four and 15%. In fact, in Denmark where TDC has done this, it has reduced the churn rate 50%. Now imagine if you do this in China with a 70% churn rate and 600 million users, right? How much music could you deliver? I mean the worlds for nothing basically, right? And we're seeing of course this whole curve here, right? And people are still paying for premium content as well. So it's advertising, it's bundles, it's premium, it's upselling, all these models will come to pass and of course gaming, very big, virtual goods. I mean make an estimate of virtual goods. You know what a virtual good is when you send somebody or friend flowers through the internet or you buy a pair of carrots for Farmville. I know you guys do this every day, but it's six and a half billion dollars a year, virtual goods. Most of us don't even know what that is, thankfully. But it's all happening right now. So my point is, you know, if you look at Mary Meeker one more time here, from Morgan Stanley used to be, now kind of her kids, we can't afford to stand by and watch. Look at the traffic explosion, mobile internet with Google. Look what's happening with mobile apps and mobile advertising. You're not getting any of this money if you don't get engaged, right? I mean this is basically somebody else's money. Look at the mobile e-commerce. Look what's happening in social network and becoming more important than search or equally important. More people spending time on Facebook as of yesterday, 15.8 billion minutes spent on Facebook. That's where the attention is going. So here clearly the ICT ecosystem is changing dramatically. Many of us are still looking forward to growing by having a better network or inventing something else and we have to do that. Of course we have to invest, right? But basically it's about this. I mean, if you view, for example, here in the UK, a new service that's going to be offered, that's going to change the landscape forever as far as TV is concerned. Look at this chart here saying how much people watched a video on the web. So that's going to mean more throughput, more users, you know, costs going up like this. So how are you going to participate in this new economy? I think most of the money action will be over the top. So we don't really have a choice of saying, you know, we're not interested in these guys because we're just running the network, right? I mean, this is a view with my point is from 10 years ago. 10 years from now, I mean, this is going to be a standard over the top, you know, and people always say, content is king, but I say, you know, it's a combination, it's the cloud, as king you see here, the various devices being used. In the US, over the top homes will exceed those of cable, US number, UK number, right? Television is still very important. But guess what? People are actually on the internet at the same time. ITV has a really cool project where you can tweet and communicate through the tablet while you're watching, right? This is all already happening. This kind of situation where we're all becoming broadcasters of TV channels. I mean, if you want to watch interesting speeches, you don't have to go to Discovery Channel, you can go to Ted.com, right? That's 300 million views already. So doing nothing in my view is not an option. Look at this graph of Google. I think if we go this a little bit further, it's 8.2% is how Google is driving mobile traffic, and that's going to dramatically increase. Network load going up, that's nothing new to you. Mobile traffic growth by region, Asia, 564% traffic growth. Court cutters, people who are going on the web to watch and not subscribing to cable TV, that's all a trend in the same direction. We've seen this one already. And then we have to realize there's one very important thing here. It's a European commission has flagged this already years ago. Basically what's happening is because we're all becoming giant generators of data. We're saying where we are and what we like and who we are connected to, and we're giving a rating and all the things on a regular basis. Basically, personal data is the oil of the internet. You've heard this before, right? Data is the new oil. In other words, because you're operating and rating a network, you have the data. You're not using much of it now, right? But you could, and the king of data, of course, is Google. But you have the data. So what we're going to see in the future is rather than these guys doing all the data mining, there will be many, many initiatives to figure out what to do with the data of the user. How to sell ads, how to upsell. And you can't leave this turf to Facebook and Google and Twitter. That's not going to work. Here's Steve, best in peace with his iPad. I mean, people are going to do what you see in this clip as a standard default with mobile devices for $10. I mean, for 10 pounds, everywhere. How are we going to participate in this? I think as a network explodes, you must engage with content, advertising, and media. So that brings me to my core theory. I call this telemedia. I had complete convergence of the telecom and media space. And you see in this all over the place, in different places, but in Europe, of course, we're much more regulated, and we're having, it's taken a little bit longer here, but we have sort of a new pie. We've got the content guys, we've got the advertisers, the device makers, the telcos, the social networks, and the search engines. And out of that, we're going to create a new ecosystem that's based on the collaborative model. And this is the only way forward, because basically, if we don't do this, we're going to end up with endless legislation about who's responsible for what. In the meantime, all the money is made somewhere else. So what we're going to see here is really quite simple, rather than a system like this, an empire. I mean, most operators and telcos were or are empires. That will be almost impossible to sustain. We're going to an ecosystem, a network. And that means the creation of a business model. It doesn't mean your network is worth less, it still is worth a lot. But it can't just make money on its own, right? It will be an interconnected system that we're going to see. I mean, this number from Frost should show you where it's going, right? This is where I do most of my work, Indonesia. Brazil is not on here, right? When we look at the Arpo in Indonesia, it basically doesn't exist. And that's our future if we just stick with infrastructure and providing infrastructure services. So I would propose a different word than Arpo. I call this Saipu, continuous engagement, involvement and trust, adding value to the user, sort of flip the pyramid. I mean, many of you would agree that the word Arpo is basically, now it's a metric that we don't really use anymore. I mean, it's sort of a business metric, right? But think about this a little bit further down the road, right? I mean, we're going to a system where we are interdependent on the content owners, on the advertisers, on the device makers. We're not independent anymore, we're interdependent. And that can be quite painful, as this guy shows. Because now we have to think about a new way of doing this. There's a great movie coming out called Connected, the movie, that's where the screenshot is taken from. You should watch it, we're talking about the same issues. I think it's just available on the web now. So, new roles in the new ecosystem is what's going to happen. One example here, my favorite German company, Audi. Audi is getting into the apps business. What does a car maker do with apps? But it gets worse. Next thing they do, is they build this car, which is a self-driving car. And this car, you'll see it in a minute, is 10% of Audi's R&D is going into a car. That's a self-driving car. I mean, what kind of person would buy a self-driving car? Is that still the car business? And then it has apps in it, right? So, new roles, new ecosystem, that's what's waiting for us, just like these guys have to get into. Amazon Kindle, any Kindle users here, right? I love the Kindle, I have a new Kindle book out, by the way, called The Future of Content. The Amazon Kindle has been vastly successful, now Amazon sells more Kindles and Kindle books than their self-printed books. In a very short time, did anybody ask for this? No. Did anybody ask for Steve Jobs to make a tablet with a touch screen? No. Amazon is a market maker. Look at the curve here, Kindle book, so. You don't get to sit back and jump on the right when you see it. That is the past. And you have to be a market maker. And my view is, if you're not a market maker, then you're a taker, somebody will take you over. I mean, you're looking at this curve, and you're saying, okay, how can you invent something? I mean, this is disruption, pure, right? I mean, now they're becoming a publisher as well. And then we're coming to UK laws, three strikes, digital economy bill, what's happening in America with the Protect IP Act, and so on is this very basic idea, right? How is this going to make money for anyone? I mean, if you have an answer, I'd like to hear it. But basically, the alternative is something like this. This is a car company, Seat, bundling Spotify music into the new car. When you buy the car, it has Spotify in the car when you buy it. And it's free. That's the commercial, right? So the idea is to say, okay, it's bundled, right? It creates extra value. And basically, it's all about this now. It's about bundled, premium, added values, turn reduction, reason to buy. Why would I buy a smartphone if I can't do anything legal with it? Or if I have to pay a dollar for each song that I download? I mean, that's only 2% of the population, mind you, that actually does this, right? Legally download, right? Everything else is YouTube. PDC Play in Denmark, best example. And this is now happening in Ireland, in China, in Canada. So the bundling of the content, free music, every subscriber, every DSL subscriber, every mobile subscriber gets free music, legal free music, unlimited, 50% turn reduction. They pay for the music, but I mean, do the math, right? How much can it cost to pay for the music? I mean, it would cost a lot here in the UK because of various political reasons, right? So smaller territories and developing countries are easier, of course, in this model, right? But, I mean, clearly, that exists, and we're looking at a future of bundling and upselling. For example, in Denmark, they're saying, okay, if you bundle this, but if you want premium content, you know, high-definition concept recordings, backstage footage, you pay extra. And there's a significant business coming out of the idea of freemium. And I think if you have kids, you know the story as well, it's extremely important to start free, or what I call, feels like free, which means somewhere there's money being generated, but it's not by saying it's 10 pounds a month or not. There's other ways of doing this, as we're seeing now around the world. This is the world of Google, can you recognize it? 1,300 alpha projects, currently being run at Google, over 300 beta projects, right? This is the world of permanent beta. You don't have time to sit back and say, let's make a plan with a tournament investment in 18 months and then launch something, it won't work, right? It's just too slow. That brings me to this important point, the invention of the wheel. For the last time, I do not know what the ROI is. If you're gonna invent something, you'll probably take a lot more than calculating how much money you can make in the future, right? It takes a leap. And this is a tough mission, but you see lots of telcos doing this. Not so much here, but in developing countries. Brings me to the key question, I'm sure you're dying to know, how can you make money with this? I'll give you a bit of a summary and then we can maybe take a question of two or two. So first summary, that's the future. Social, local, mobile, video, cloud. That's where all the consumers are going. And to do this, you need to do a lot more than just make a cool network or a cheap network. You have to actually be part of this ecosystem. People of the cloud expect a lot more than just throughput. You have to lubricate what they want. You have to solve their problems. And this is one thing you can say about Apple, right? They're solved a bunch of problems, right? I mean, they made music legal and parenthesis, but in the process of which they became 80% of the music market became Apple. By lubricating this and just paying labels and just getting it done. Copy economy to access economy. This is huge, of course, if you're in the mobile business, the content owners have no choice than to go with you and be part of the access economy because this part is dying. If you haven't noticed, yeah, DVDs, CDs, books, print. We'll be around for a while, but it's definitely not growing. Most of the action will be over the top. So you gotta get in on this. Data is the new oil. I mean, if you're looking what people call a data economy, there's actually more dollars going to be moved in a couple of years than the selling of oil. I mean, this is a real development. This is not just a phrase. So we're moving into this world. I had a world where we collaboratively had to build business models at work for everyone in this food chain. So I would encourage you to embrace what I call telemedia and investigate how you can actually make a leap because now speed is of the essence. And I have an iPad, an iPhone app, if you want to also Android, of course. These are my books. Most of those are free on the web. You just Google for my name, you find the PDFs. That's it. Thanks very much for listening.