& 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?
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
NEXT COURSE
Wednesday, August 3, 1:00PM EDT
The Central Office Re-Architected as a Data Center
Guru Parulkar, Executive Director, Open Networking Research Center, Open Networking Lab
UPCOMING COURSE SCHEDULE
Wednesday, August 10, 1:00PM EDT
Telcos & Open Source 101
Phil Robb, Senior Technical Director, OpenDaylight
Friday, August 12, 1:00PM EDT
The Role of Open Source in NFV
Jim Fagan, Director, Cloud Practice, Telstra
Wednesday, August 17, 1:00PM EDT
Using Open Source for Data Centers and Cloud Services
Roz Roseboro, Senior Analyst, Heavy Reading
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
Reinventing Operations for a Virtual, Software-Defined World

7|28|16   |   5:23   |   (0) comments


Heavy Reading Senior Analyst Jim Hodges speaks with Accenture's Larry Socher and Matt Anderson about what service providers must do to transform their business to get the benefits of SDN and NFV including: leveraging DevOps, introducing real-time OSS and implementing analytics.
Women in Comms Introduction Videos
Fujitsu Sales Leader Shares Lessons Learned

7|27|16   |   5:12   |   (1) comment


As Fujitsu's only female sales leader, Annie Bogue knows the importance of asking for what you want, being flexible (she's been relocated five times), keeping a meticulous calendar, 'leaning in,' working harder than everyone else around you, being aware and more.
Telecom Innovators Video Showcase
VeEX Test & Measurement Solutions

7|25|16   |   08:57   |   (0) comments


Cyrille Morelle, president and CEO of VeEX Inc., talks test and measurement with Light Reading's Steve Saunders at BCE 2016. This includes innovative products such as VeSion Cloud-Based platform for network monitoring; MTTplus Modular Test platform for Access, Business, Carrier Ethernet, Transport and Core services; and OPX-BOX+ for Fiber Optics.
LRTV Custom TV
VeEX: Live From BCE 2016

7|25|16   |   03:20   |   (0) comments


VeEX's Senior Director of Business Development, Perry Romano, explains how VeEX provides tools to help install, maintain, monitor and manage network infrastructure efficiently and effectively. The portfolio of products on display include the RXT-6000, MTTplus and TX300s.
LRTV Custom TV
Real-Time Telemetry & Analytics for Intelligent SDN Orchestration

7|25|16   |   03:09   |   (0) comments


Packet Design CEO Scott Sherwood discusses how real-time network telemetry and analytics are enabling a new breed of SDN orchestration applications.
From the Founder
The Russo Report: Driving Disruption

7|25|16   |   07:44   |   (0) comments


In the first episode of a four-part series, Light Reading Founder and CEO Steve Saunders and Calix President and CEO Carl Russo drive around town discussing the disruptive mega-changes in the communications industry and where hope lies for service providers to meet the escalating demands of the cloud.
LRTV Custom TV
NetScout: Maximizing Enterprise Cloud for Digital Transformation

7|20|16   |   04:53   |   (0) comments


Light Reading Editor Mitch Wagner talks to NetScout CMO Jim McNiel about maximizing the benefits of enterprise cloud and digital transformation while minimizing potential pitfalls with a proper monitoring and instrumentation strategy.
Women in Comms Introduction Videos
Ciena's VP Offers a Career Crash Course

7|20|16   |   4:14   |   (2) comments


How did Ciena's Vice President of Sales, Angela Finn, carve out her career path? Simple, she tells WiC. She stayed true to her company, customers and principles. She shares her advice for women on how to be authentic and credible, as well as for companies that want to make a real change to their culture and practices.
LRTV Custom TV
NFV in 2016: Part 2 – Climbing the Virtualization Maturity Curve

7|19|16   |   06:56   |   (0) comments


Many of the initial use case implementations are single-vendor and self-contained. The industry is still climbing the virtualization maturity curve, needing further clarity and stability in the NFV infrastructure (NFVi) and greater availability and choice of virtualized network functions (VNFs). Interoperability between NFVis and VNFs from different vendors ...
Telecom Innovators Video Showcase
Versa Networks' Kumar Mehta on SD-WAN Managed Services

7|19|16   |     |   (0) comments


In Silicon Valley, Steve Saunders sits down with Versa's Kumar Mehta for an interview focused on why service providers are building SD-WAN managed services, and how Versa's telco customers are innovating.
LRTV Custom TV
Juniper Networks & The Evolution of NFV

7|19|16   |   06:01   |   (0) comments


Senior Juniper Networks executives talk to Light Reading Founder & CEO Steve Saunders about NFV developments and the recent independent evaluation by test lab EANTC of Juniper's Cloud CPE solution.
LRTV Interviews
CenturyLink Goes Beyond Managed WiFi

7|19|16   |     |   (0) comments


CenturyLink's managed WiFi allows enterprises, such as retailers and resorts, to track guest WiFi usage in order to help them better communicate with customers.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 6-8, 2016,
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Five of the Top 10 most targeted countries in Check Point Software Technologies' global Malware & Threat Index for Q1 2016 are in Africa.
Hot Topics
Verizon Sports Big Plans for Yahoo
Alan Breznick, Cable/Video Practice Leader, Light Reading, 7/26/2016
Light Reading Beyond
Steve Saunders, CEO and founder, Light Reading, 7/28/2016
Are IP/Optical Integration Initiatives Moving to Silos?
Faisal Khan, Network Operator Technology Planning Dept., 7/28/2016
Yahoo Signing Off in $4.83B Sale to Verizon
Mari Silbey, Senior Editor, Cable/Video, 7/25/2016
Ericsson Board Has Been Asleep at the Wheel – Consultant
Ray Le Maistre, Editor-in-chief, 7/25/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
There's no question that, come 2020, 5G technology will turn the world's conception of what mobile networking is on its head. Within the world of 5G development, Dr. ...
I've enjoyed interviewing many interesting people since I rejoined Light Reading, but William A. "Bill" Owens certainly takes the biscuit, as we say where I come from.
Animals with Phones
Live Digital Audio

Our world has evolved through innovation from the Industrial Revolution of the 1740s to the information age, and it is now entering the Fourth Industrial Revolution, driven by technology. Technology is driving a paradigm shift in the way digital solutions deliver a connected world, changing the way we live, communicate and provide solutions. It can have a powerful impact on how we tackle some of the world’s most pressing problems. In this radio show, Caroline Dowling, President of Communications Infrastructure & Enterprise Computing at Flex, will join Women in Comms Director Sarah Thomas to discuss the impact technology has on society and how it can be a game-changer across the globe; improving lives and creating a smarter world. Dowling, a Cork, Ireland, native and graduate of Harvard Business School's Advanced Management Program, will also discuss her experience managing an international team focused on innovation in an age of high-speed change.