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Carolina Pinart, Daniel García Networked Vehicles Division TELEFÓNICA I+D November 5, 2008 © 2008 Telefónica Investigación y Desarrollo, S.A. Unipersonal Telefónica Research and Development The Connected Car initiative – A focus on services

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<ul><li>Part I – Innovation in Telefónica – The Connected Car (C. Pinart) </li></ul><ul><li>01 The Telefónica Group: a solid leader in the telco industry </li></ul><ul><li>02 Telefónica R&D: Telefónica’s research and development unit </li></ul><ul><li>03 What is the Connected Car? </li></ul><ul><li>- The concept </li></ul><ul><li>- Behind the Connected Car: the Networked Vehicles Division </li></ul><ul><li>- The three pillars of the Connected Car </li></ul><ul><li>Part II – Developing services for the Connected Car (D. García) </li></ul><ul><li>04 Services for the Connected Car </li></ul><ul><li>05 Starting up: what, who, when, where, how </li></ul><ul><li>06 Building a framework: setting up the enabling technologies through innovation </li></ul><ul><li>07 Getting to the market: product ideas, testbeds and trials </li></ul>Index

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The Telefónica Group: a solid leader in the telco industry

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Telefónica is a benchmark for the worldwide Telco sector nowadays … More than 240,000 professionals** <ul><li>219 Mill. accesses (as of Sep’07) </li></ul><ul><ul><li>86.1 Mill. in Europe </li></ul></ul><ul><ul><li>126.5 Mill. in Latin America </li></ul></ul><ul><ul><li>6 Mill. in other markets </li></ul></ul>Revenues (9M07): € 42.0 bn (+8.6% vs 9M06) Net Income* (9M07): € 7.8 bn (+ 51.0% vs 9M06) Integrated ICT solutions provider for all customer segments One of the 50 largest companies in the world by market cap * Includes capital gains from Airwave in 2Q07 of € 1.3 bn, and € 1.37 bn from Endemol in 3Q07. ** Average staff as of September 2007. Among the 100 largest companies in the world by revenues International integrated Telco company by customer base European integrated Telco operator by market capitalisation <ul><li>1 st </li></ul><ul><li>1 st </li></ul>

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Total accesses (as reported by companies)=Fixed lines + Mobile subscribers + Narrow and Broad Band + Pay TV. Geographic Diversification 9M07 Business Diversification 9M07 … as it enjoys a unique diversified portfolio among the largest operators at a worldwide level Total accesses worldwide Top 10 Million accesses as of September 2007 73.2% Accesses Accesses Revenues

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Telefónica is a leader in the Latin American Telco market … Data as of September 2007 Note: Central America includes Guatemala, Panama, El Salvador and Nicaragua * As of 2006, using IDATE’s 2006 accesses estimates (DigiWorld 2007) Argentina: 18.8 Mill. Brazil: 46.6 Mill. Central America: 5.0 Mill. Colombia: 10.1 Mill. Chile: 9.1 Mill. Ecuador: 2.6 Mill. México: 11.1 Mill. Peru: 11.2 Mill. Uruguay: 1.0 Mill. Venezuela: 9.8 Mill. 1 1 1 2 2 1 1 1 2 2 1 1 1 1 2 Wireline market ranking Mobile market ranking Total Accesses (as of Sep’07) 126.5 Mill. Market Share* (2006) 28%

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... and has obtained a relevant scale in the European market … Total Accesses (as of Sep’07) 86.1 Mill. Market Share* (2006) 10% Data as of September 2007 * As of 2006, using IDATE’s 2006 accesses estimates for EU-25 (DigiWorld 2007) Wireline market ranking Mobile market ranking Germany : 12.6 Mill. Spain : 45.6 Mill. Ireland : 1.6 Mill. UK : 18.0 Mill. Czech Republic : 7.8 Mill. Slovakia : 0.5 Mill. 4 1 1 1 1 2 1 3

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Moreover, Telefónica’s activity has a clear positive impact in the societies where it is present ... a driver for technological innovation and employment ... As an engine of economic development … ... a company committed to help overcome the digital divides ... ... and a perfect partner to foster social development IN SOCIETY

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Telefónica is helping to overcome the digital divides and is committed to social development Skills inclusion 25,000 child workers reintegrated into school in Latin America Used by more than 25 Million people in Spain and Latin America Telefónica invested in Social Action more than €50 Mill. during 2006, which benefited more than 33 million people worldwide Telefónica’s global investment in Social Action (€ Thousand) +12.4% Social inclusion Telefónica Accesible, launched in partnership with people with disabilities For Spanish employees in retirement

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Telefónica R&D: Telefónica’s research and development unit

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Telefónica I+D was created in 1988 with the mission of contributing to the improvement of the Telefónica Group competitiveness through technological innovation. Network and platforms Services for the final customer Operation Support Systems (OSS) Business Support Systems (BSS) Multimedia Applications, Multilingual Services and new Internet paradigms Telefónica I+D's activities focus 45M€ invested in Applied Research 207M€ of total activity 1189 staff 94% University graduates Collaborating with 36 companies on Project development Agreements with 29 universities 89 EU financed projects 260 IPR’s protected and registered 203 papers and conferences 350 Trainees Telefónica I+D’s figures of the year 2006

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Our centres MADRID (1,263 people) BARCELONA (187 people) VALLADOLID (Boecillo) (242 people) HUESCA (Walqa) (26 people) MEXICO (2 people) BRAZIL (182 people) GRANADA (31 people) 1,933 people are working in our centres around the world Last update on December 31st, 2007

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In 2007 Technological Innovation (1) in Telefónica exceeded € 4,300 millions (1) According to OECD's definitions. Products/Services/ Processes Development Technological Innovation (1) R&D M€ 594 Who does it? What are we developing? M€ 4,384 How do we innovate? Who do innovate? Applied Research R&D M€ 61 Who promotes it?

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The complete innovation cycle Where? TID Research Development Invention Pre-commercial Innovation Commercial Innovation Commercial Exploitation Research Development of innovation Exploitation BU’s Who? Financing? Local Global Regional Applied research Evolution Deployment Basic research Pilot test Prototype Demos Initial Deployment Solution proposal Telefónica I+D focus Subsidies and Corporate Business Units

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We are a key element in the Open Innovation process of Telefónica

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Initiatives Telefónica Corporate Innovation Programme Incubation Programme Venture Capital Corporate Innovation Group

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Telefónica R&D’s Direction for Services to the End Customer

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Telefonica I+D Areas of activity Internet and Multimedia Services for the Final Customer Networks and Platforms OSS BSS

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Services for the Final Customer Areas of activity Services for the Enterprise Services for the Final Customer Personal Mobile Services Connected Car Connected Digital Home eHealth Services

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What makes us different Beyond products and services <ul><li>Analyzing and evaluating user experience interaction beyond mobile services, products and devices </li></ul><ul><li>Test, register and analyze in real environments </li></ul><ul><ul><ul><li>Home, Car, Office, eHealth, etc. </li></ul></ul></ul>

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What makes us different eXtreme User Experience: User centered development <ul><li>Concept  Prototype  Test  Analysis  In depth design, usability and technical feedback </li></ul><ul><li>Close to development team: short cycles  cost efficient </li></ul><ul><ul><ul><li>Start with prototypes in early development stages (before we don’t have time to turn things around) </li></ul></ul></ul><ul><ul><ul><li>Mockups and real working prototypes </li></ul></ul></ul><ul><ul><ul><li>Agile Scrum - Incorporating Usability Practices and UCD Processes in Agile Projects </li></ul></ul></ul>User Experience Senior Designer Concept Design Team Usability Team Technical prototyping Team

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The Connected Car, a key area within Telefónica R&D Autonomic Computing Augmented reality Device management Widgets Gadgets mashups Ambient intelligence Multimedia search QoS QoE User Generated Services Internet of Things Identity Personalization Recommendation systems Hybrid worlds Ubiquitous video Future service platforms Ubiquitous & Seamless Access Social media & communications Devices Enablers 2008-11 Strategy Services Infrastructures Long Term Mid Term Short Term eEntertainment Broadband access eHealth Connected car Rating & charging Digital Home NGN Core network evolution Telepresence Open capabilities Advertising Security & trust Financial services New generation of business environments Urban computing Services for the enterprise Base Of Pyramid Mobile Internet & personal mobile services User characterization Next generation SOA/WEB Agile networks Audio/video/image processing UX - User eXperience Key areas Long tail areas

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The Connected Car Smart services for safer, more efficient and more comfortable trips <ul><li>Why? Every day, millions of people in the world use their vehicles to go to work or in their leisure time and spend time in the car . This means traffic jams, parking problems , navigation, need for communication with the “outside world”, … </li></ul><ul><li>What? We are working towards guaranteeing always-on communications for users in four- and two-wheeled vehicles, providing them with smart, useful services to solve the above problems, and delivering all this in heterogeneous devices , from in-car systems to mobile phones, and plug’n’play </li></ul><ul><li>How? Through basic and applied research , development of pre-commercial prototypes , field trials and early customer insight tests. Some R&D projects and fora we are involved in: </li></ul>Contact details: Carolina Pinart Divisional Head E-mail: [email_address] Phone: +34913374952 Telefónica I+D – Telefónica Group Networked Vehicles Division c/ Emilio Vargas 6, 28043 Madrid (Spain) Web: www.tid.es / netvehicles

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Behind the Connected Car: the Networked Vehicles Group <ul><li>Created in 2007 from in-house experience in vehicular networking </li></ul><ul><li>100% focused on vehicular services and communications </li></ul><ul><ul><li>Advanced services for drivers and passengers on mobile and in-car environments </li></ul></ul><ul><ul><li>Vehicle to vehicle (V2V), to infrastructure (V2I) and to road (V2R) communications </li></ul></ul><ul><ul><li>Proof of concept, demonstrations and field operational tests (FOT) </li></ul></ul><ul><li>Participation in 10+ R&D projects , highlighting: </li></ul><ul><ul><li>Ongoing: FP7- TeleFOT , FP6- GOODROUTE , </li></ul></ul><ul><ul><ul><li>FP6- SAFESPOT , EUREKA- CaringCars , Spanish </li></ul></ul></ul><ul><ul><ul><li>CENIT- MARTA , Spanish PSE- m:Vía (leader) </li></ul></ul></ul><ul><ul><li>Due: FP6- MYCAREVENT , FP6- COM2REACT , Telefónica eCar </li></ul></ul><ul><li>Participation in a number of related fora and technology platforms : </li></ul>(Leadership of vehicular group)

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The three pillars of the Connected Car (2007-2010) <ul><li>What? Services targeted for drivers, who use their cell phones </li></ul><ul><li>When? Short-term </li></ul><ul><li>Our approach: Movistar Car services on basic and advanced cell phones with 2.5/3G connectivity (*), 2G for eCall </li></ul>What? Roadside network infrastructure for V2R and Real-time Traffic Info When? Mid- to long-term Our approach: Telefónica Road Network , hot spots on the road with WAVE-based for V2R connectivity and fiber optics/radio links backbone connectivity What? Brought-in or in-car framework to enhance the driving experience When? Mid- to long-term Our approach: Telefónica In-Car Box , a software framework for managing Always Best Connected V2x communications (**) and OSGi-based services for safety, routing/assistance, communications and infotainment (*) WiFi optional, depending on the features of the cell phone. (**) Based on the Hybrid Node concept. (***) Real-time Traffic Information (RTI). Connecting the Driver Making the cell phone a useful tool also in the car Connecting the Car Enhancing the driving experience Connecting the Roads Placing hot spots along the roads to provide RTI (***) and enhanced Internet access to drivers & passengers

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Our R&D approach 1 Know the key agents in the ITS field, and also our competitors, whoever and wherever they are 3 Focus on product ideas aligned with the strategy Movistar Car, Telefónica Road Network, Telefónica In-Car Box Work with and learn from the big ones - Partnerships to turn product ideas into products - Basic and applied research “providers” to solve challenges of current product ideas and to spot future product ideas 4 2 Have a clear strategy for short- and mid-to-long-term, and hints on longer-term Towards Ambient Intelligence & Advanced Networking Hybrid Node OSGi Service Framework

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The Telefónica In-Car Box <ul><li>Piece of software running on an in-car or brought-in device or set of devices that contains communications and services for drivers and passengers </li></ul><ul><li>Key features </li></ul><ul><ul><li>Always-on, QoS-enabled communications </li></ul></ul><ul><ul><ul><li>Our solution: in-vehicle communications manager . Based on three axes </li></ul></ul></ul><ul><ul><ul><ul><li>Always Best Connected, where “Best” deals with QoS and “Connected” encompasses wireless and mobile technologies </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Compliance with the CALM standard under development at the ISO </li></ul></ul></ul></ul><ul><ul><ul><ul><li>(Part of) the network is enabled with IMS </li></ul></ul></ul></ul><ul><ul><li>Open, powerful, felxible service framework </li></ul></ul><ul><ul><ul><li>Our solution: OSGi-based common service layer </li></ul></ul></ul><ul><ul><ul><ul><li>Further information in the talk “ Use of OSGi in Telefónica's Connected Car initiative ” by M. García. </li></ul></ul></ul></ul><ul><ul><li>Advanced services around an enhanced navigation experience covering </li></ul></ul><ul><ul><ul><li>Safety and assistance </li></ul></ul></ul><ul><ul><ul><li>Routing and traffic-related information </li></ul></ul></ul><ul><ul><ul><li>Entertainment </li></ul></ul></ul>

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Interested in joining us? <ul><li>Yes… Maybe… But what do you offer? </li></ul><ul><li>Besides an excellent team , a challenging R&D field covering many aspects, from application platforms to communications, interfacing to user experience, service design to development and trials, and international exposure … </li></ul><ul><li>… we offer three kinds of contractual relationships, from loose to tight: </li></ul><ul><li>- Internships (Becas Telefónica I+D) for undergraduate students in Telecom, Computer Science and related fields. For further information: https://www.tid.es/trabaja_investigacion_desarrollo/jsp/estudiantes.jsp </li></ul><ul><li>- PhD Fellowships for young graduates willing to pursue the PhD. We have an ever growing joint Program universities in Madrid and Barcelona, and hopefully soon the UVA (contact person: Ana González, [email_address] ) </li></ul><ul><li>- Permanent positions (Engineering staff) for young graduates . </li></ul><ul><li>Want to know more? </li></ul><ul><li>Contact us: Carolina ( [email_address] ) and/or Daniel ( [email_address] ) </li></ul>

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© 2008 Telefónica Investigación y Desarrollo, S.A. Unipersonal