& cplSiteName &

Betting on Smart Homes

Mari Silbey
8/27/2013
50%
50%

Cable is betting big on the smart home market. With Comcast Corp. leading the charge, operators across the US are expanding into home security and automation services. They have promising visions filled with new customers and revenue growth.

Enthusiasm has spread from the largest companies, including Time Warner Cable Inc. and Cox Communications Inc., down to the tier-two and tier-three markets. Mid-tier cable company Comporium Communications not only offers its own smart home product, but also wholesales the iControl Networks Inc. technology platform as a turnkey service for providers who want expert support. Mediacom Communications Corp. also announced plans to deploy smart home services with Comporium's help in July. More wholesale customer announcements are on the way.

However, for all the excitement in the cable industry, the smart home market is shaping up to be a major battleground.

Cable operators have to compete, not only against the well-known ADT Corp. brand in the managed security space, but also against every company that pops up at retail selling smart thermostats and lighting control solutions. With the Internet as a foundation, any hardware company can build its own home automation solution out of a series of IP-connected devices.

Mike Harris, CEO of the home automation company Zonoff, Inc., compares smart home services to the television business. In his views, choosing a managed smart home solution is similar to purchasing a cable TV subscription. Buying a window sensor or lighting controller at retail, on the other hand, is more like getting video over the Web from YouTube Inc. or ordering TV episodes online from Amazon.

There is one major difference, however. In the smart home sector, retailers don't have to worry about content.

"There's some really sticky content pieces like ESPN and others that really… give those cable incumbents huge advantages over the cord cutters and the people that want to get their video content over the top," says Harris. "There really aren't those same sort of huge barriers to entry for folks to go over the top versus through a traditional security model here. There isn't the equivalent of an ESPN that's locked up, or an NFL Sunday ticket."

In the long term, it's not only the smart home that's at stake. Sensor-driven platforms could ultimately extend into virtually every aspect of life -- from smart cars, to shopping, to healthcare. Cable companies want a piece of the market now in order to create a foundation for future expansion. The smart home is only the beginning.

Who wants a smart home?
Consumers are still wrapping their heads around home automation, but evidence suggests the technology can be a powerful draw. At The Cable Show two months ago, Comcast announced that 41 percent of customers buying Xfinity home service are new Comcast subscribers. Better still for the giant MSO, almost two thirds of those new subscribers are subsequently buying Comcast's complete package of video, voice, and data services.

Comporium General Manager Dan Lehman says cameras and light controllers are the most popular accessories for cable customers. "Now I don't have to come home to a dark house,” he recites from his customers’ responses. "I have full control of that experience."

Jim Johnson, executive vice president and general manager of iControl, likens the technology's emergence to the introduction of the digital video recorder. "It's one of those products that really folks need to see to appreciate the power of it," he says. "It's kind of like DVRs back in the day. Everybody said hey, I've got a video recorder. I've got my VHS system. Why do I need DVR?" Once consumers try it out, however, they're often hooked in an instant.

At the same time, though, the security side of the smart home has lost a bit of its luster. Although cable companies regularly point out that only 20 percent of U.S. consumers currently have a home security system, they're also discovering that security is still a tough sell to the other 80 percent. Lehman notes that home automation is driving a lot more new business for cable than security. As a result, Comporium is readying a stand-alone home automation product to launch later this year, and Comcast has already separated home control services from security monitoring in the Xfinity Home offering. (See iControl Rubs Its Touchstone.)

For smaller cable companies, there's also an issue of liability with security services. Even if they outsource emergency-response management, cable companies still take on legal responsibility if anything goes wrong. Some operators will move forward with security anyway because of the revenue potential. But others will bypass that option and head straight down the home automation path.

Mid-tier MSOs get in the game
It's still early days for cable-driven smart home services. But as large operators have begun to gain traction, the mid-tier market is paying close attention. Initially, small and mid-size operators balked at launching home security and automation services because of the required resources. However, several factors have changed their thinking.

First, Comcast, Time Warner Cable, Cox, and others have all field-tested the iControl smart home platform and established its viability in a cable environment. Smaller operators no longer have to go through the process of vetting the technology if they want an easy route to service deployment. (See Services Battle Shifts to the Home.)

Second, Comporium has introduced a turnkey solution based on iControl that takes away much of the work associated with launching a smart home service. From wholesale management of the technology platform to sales, marketing, and customer support, Comporium can handle virtually every aspect of a smart home offering.

"A few years ago some [operators] were saying it's too difficult to launch this product, and that was the reason we partnered with Comporium," says iControl's Johnson. Now, however, that barrier has diminished, if not disappeared altogether.

"We don't really see the folks saying this is too difficult to deploy at this point."

The one thing that has held smaller operators back is project timing, and specifically the ability to fit a new service launch into the product pipeline. A year ago, Comporium predicted it would have eight to ten new wholesale customers within 12 months. However, the sales cycle has been slower than expected, and Lehman now says he believes Comporium will be able to announce a few more customers outside of Mediacom this year, with three to five additional operator launches following in early 2014.

The slower sales cycle, though, doesn't seem to worry Lehman, who says interest has grown "dramatically" since 2012. In fact, the way he sees it, the stage is now set for major expansion in smart home services. The business model is proven, the ecosystem is ready, and consumers have a better understanding of what exactly having a smart home means. From his perspective, Lehman believes now is the perfect time for more cable operators to get into the smart home game.

"The sooner you get in, the better you'll be."

But what about the retail market?
There are many positive signs for cable operators entering the smart home market, but that doesn't negate the fact that competition is also ramping up in the retail space. Whether it's the next smart thermostat, or the latest crowd-funded company's sensor with smartphone control apps, the retail market will present high-profile alternatives to cable's smart home services.

Zonoff's Harris sees advantages to the cable channel for new smart home offerings, but disadvantages as well. "I think that's a great channel, but I think it's just one of several great channels," he says. "There's also some backlash around my cable bill getting even more expensive… I think there are some reasons why other channels make sense as well."

There's also the fact that at retail, consumers can touch and try a smart home product before committing to a new service and a new monthly bill.

At least on that front, cable providers and iControl are working on a solution. iControl's Johnson says cable operators are "very active" in trying to figure out how to work with retailers to sell kits and devices that connect with a managed cable service. "I think we will absolutely see devices that connect with the cable, with your local cable provider's platform, on retail shelves in the next 12 months or so."

The battle has just begun
The cable industry has a lot of incentive to get smart home services right. Being successful means significant new revenue and the potential for increased uptake across the entire portfolio of cable services.

According to ABI Research, the home automation market alone is predicted to grow 45 percent annually through 2017. To the victor go the smart home spoils.

— Mari Silbey, special to Light Reading Cable

(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
albreznick
50%
50%
albreznick,
User Rank: Blogger
9/26/2013 | 6:04:59 PM
How big an opportunity?
Great story, Mari. I love to see these kinds of features. Any stats on just how big the market for smart homes could be?
From The Founder
Download our complete guide to de-risking NFV deployment in 2016, including:
  • An eight-step strategy to deploying NFV safely, based on input from the companies that have already started virtualizing their production networks.
  • Interviews with leading executives at Colt, AT&T, Deutsche Telekom, Cisco, Nokia, ZTE, Ericsson and Heavy Reading.
  • Flash Poll
    Live Streaming Video
    Prepping for the Future: Upskill U Explained
    During this short kick-off video, Doug Webster, Vice President of Service Provider Marketing, Cisco, and Light Reading’s CEO & Founder Steve Saunders give an overview of Upskill U.
    LRTV Documentaries
    LRTV Report: Mobile Core Innovation

    4|28|16   |   25:32   |   (0) comments


    Hear from multiple industry experts from Deutsche Telekom, SK Telecom, Heavy Reading, Huawei, Cisco, Ericsson, Nokia, NEC and many more about developments in the mobile core as operators virtualize their IMS and evolved packet core systems and prepare for a 5G world.
    LRTV Huawei Video Resource Center
    NFV World Congress Highlight

    4|26|16   |     |   (0) comments


    The highlight of the NFV World Congress contains exciting telecom news. Join us for an inside look at Huawei's ICT 2020 plan and its latest collaboration with industry leaders.
    LRTV Interviews
    Unified Comms Finds Its Voice

    4|25|16   |   03:44   |   (0) comments


    Peter Quinlan, VP of UCC Product Management at Tata Communications, talks about the evolution of the unified communications and collaboration services sector and how voice is now a big part of current developments.
    LRTV Documentaries
    So... What Do We Do Now?

    4|25|16   |   03:24   |   (0) comments


    After a long hiatus, Max Dingman, the CEO of a GeeGhiz, returns for a motivational board room pep talk.
    LRTV Documentaries
    NAB 2016 Highlights

    4|21|16   |     |   (0) comments


    Light Reading's Cable/Video Practice Leader Alan Breznick climbs down from the slots to tell us about the latest news in broadcast technology at NAB 2016 in Las Vegas.
    Between the CEOs
    CEO Chat: Deepfield's Craig Labovitz

    4|21|16   |     |   (0) comments


    In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
    Shades of Ray
    Leading Lights 2016: Shortlists Announced

    4|20|16   |   0:53   |   (0) comments


    The judging is over and the Leading Lights 2016 shortlists have been published -- you can see who made the cut by clicking on this link.
    LRTV Custom TV
    Introducing MulteFire – Qualcomm at MWC 2016

    4|18|16   |   3.29   |   (0) comments


    MulteFire is the latest option for using LTE in unlicensed spectrum. As oppose to its close 'siblings', LAA and LTE-U, MulteFire operates solely in unlicensed spectrum, which enables it to offer the best of two worlds – LTE-like performance with WiFi-like deployment simplicity. In this interview, Sanjeev Athalye, Sr. Director, Product Management at Qualcomm ...
    Between the CEOs
    CEO Chat: Grant Van Rooyen of Cologix

    4|18|16   |     |   (0) comments


    Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
    LRTV Huawei Video Resource Center
    ONS 2016 – Demonstration of Huawei's NetMatrix Multi-Vendor SDN Orchestrator

    4|15|16   |     |   (0) comments


    This demonstration shows how Huawei's NetMatrix SDN Orchestrator (SDN-O) addresses an operator's core service agility needs for services spanning multi-domain, multivendor networks: it includes a demonstration of:
    - Rapid New Service Design: using YANG to model a complex example of multi-domain, multivendor L3VPN network connectivity service that ...
    LRTV Custom TV
    AT&T Wants to Own North Carolina

    4|15|16   |     |   (1) comment


    Venessa Harrison, president of North Carolina for AT&T, tells how the company will expand its GigaPower service beyond the seven N.C. cities it already serves.

  • This blog, sponsored by AT&T, is the second part of a ten-part series examining next-generation broadband technologies titled "Behind the Speeds."
  • LRTV Interviews
    Will NC Be First Gigabit State?

    4|15|16   |     |   (1) comment


    Alan Fitzpatrick, co-founder of Charlotte Hearts Gigabit, spells out the state's progress in at least starting to wire nearly every major market for gigabit service.
    Upcoming Live Events
    May 23, 2016, Austin, TX
    May 23, 2016, Austin Convention Center
    May 24-25, 2016, Austin Convention Center, Austin, TX
    September 13-14, 2016, The Curtis Hotel, Denver, CO
    December 6-8, 2016,
    June 16-18, 2017, Austin Convention Center, Austin, TX
    All Upcoming Live Events
    Infographics
    A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
    Hot Topics
    Ultra-Broadband Summit, Hong Kong
    Iain Morris, News Editor, 4/27/2016
    GoT Fans Curse HBO (Not Right) Now
    Mari Silbey, Senior Editor, Cable/Video, 4/25/2016
    Analysts More Than Bullish on Comcast MVNO
    Mari Silbey, Senior Editor, Cable/Video, 4/22/2016
    Mitel Asks: What Time of Day Do You Shower?
    Mitch Wagner, West Coast Bureau Chief, Light Reading, 4/25/2016
    Charter Jumps Gun on TWC Restructuring
    Mari Silbey, Senior Editor, Cable/Video, 4/26/2016
    Like Us on Facebook
    Twitter Feed
    BETWEEN THE CEOs - Executive Interviews
    In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
    Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
    Animals with Phones
    Live Digital Audio

    Of all the tech companies in the Valley, Intel has made the most aggressive commitment to building a diverse and inclusive workplace culture. It's doing so by taking concrete, measurable steps, making a large financial investment and through a commitment to complete transparency about its progress. In this radio show, WiC Director Sarah Thomas will be joined by Shlomit Weiss, Intel's Vice President, Data Center Group, and General Manager of Networking Engineering, who will share with us why Intel is tackling this huge challenge, how and to what effect. She will also discuss her unique experiences leading development of Client SOC development in the past and today leading development of all of the chipmaker's silicon hardware for networking IPs and discrete devices and managing a team of 600 engineers across Israel, Europe and the US.