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Security Services Boost Cable & Telcos

Mari Silbey

After years of hovering around 20%, the adoption rate for home security services in the US bumped up to 23% in 2014. One big reason for the increase? Cable and telecom companies are gaining significant traction with their new smart home offerings.

According to Parks Associates, 40% of new home security subscribers are signing up with non-traditional providers, and cablecos and telcos are reaping the benefit.

"The telecom and cable operators are taking a substantial portion of the strong growth in the market, thanks in part to their ability to include security in triple- and quad-play service bundles," says Tom Kerber, director of research for home controls and energy at Parks Associates. "Interactive service providers are experiencing dramatic growth, as the portion of new professionally monitored security subscribers that include interactive services and home controls continues to climb."

Security is still the bedrock of the smart home, but getting customers in the door with security also gives service providers the opportunity to upsell into other home automation areas. While traditional providers like ADT Corp. still own 75% of the security market, broadband companies are gaining ground and helping to educate consumers about the potential advantages of expanding from home security into energy monitoring and appliance automation applications.

The trend is good for cable and telco operators for two reasons. First and foremost, it helps them further monetize the broadband pipe to the home. Second, it gives them entry into a broader Internet of Things market, which is still being defined. Connecting sensors and appliances in the home is one thing, but consumers will ultimately be networked not only through their home devices, PCs and smartphones, but also through connected cars, shopping interactions, new entertainment applications and more. Managing service across all of these touch points will be big business, and that's not even taking into account the long-term analytics play and the value of the behavioral data collected. (See Icontrol Adds Analytics for Smarter Homes.)

Want to know more about the Internet of Things and smart home technologies? Check out our dedicated IoT content channel here on Light Reading.

Not all is rosy in the smart home market, however. Even as adoption of home security services rises, there have been reports of a slump in demand for individual connected home devices like smart thermostats and door locks. This may be in part because of reliability problems with early hardware, but it's also a function of the fact that the smart home market remains in its early stages. The industry is still in the process of solidifying standards and protocols to help connected devices work together, and consumers are still struggling to understand the value that smart home devices can bring. (See Analysts Predict Smart Home Slow Down.)

In the meantime, service providers like AT&T Inc. (NYSE: T), Comcast Corp. (Nasdaq: CMCSA, CMCSK) and yes, ADT, are working hard to drive the market to its next stage of maturity. Apple Inc. (Nasdaq: AAPL) and Google (Nasdaq: GOOG) will also have an important say as the mobile and smart home industries continue to converge.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

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User Rank: Light Sabre
8/19/2015 | 11:23:19 AM
Re: ISPs as Security experts...
That's very true. I do wonder what the earnings in relation to the costs for operating and installing these services are. I know in Comcast's case there's a $1000 or greater ETF to ensure they at least get their money back should a customer leave. Hopefully one of the big ISPs will share SOME subscriber data on these services sometime soon.
User Rank: Light Sabre
8/18/2015 | 10:19:22 PM
Re: ISPs as Security experts...
And "a slump in demand for individual connected home devices like smart thermostats and door locks" seems to indicate there's not a lot of folks who want to spend money to do something that a flick of the finger can do free.  But, the Telcos can probably get their foot in the door, so to speak at a relatively low cost and expand their brand with this move.
User Rank: Light Sabre
8/13/2015 | 6:21:16 PM
Re: ISPs as Security experts...
With regard to security, people do have reason to be wary.  They may be waiting for the recommendations of this group to be adopted by the industry before opening their homes to tech with security risks. From https://otalliance.org/system/files/files/resource/documents/iot_trust_frameworkv1.pdf

As consumers and businesses increasingly rely on IoT devices, the security and privacy risk is amplified. Addressing the mounting concerns and collective impact of connected devices, in January 2015 the Online Trust Alliance, a 501c3 non-profit organization and think tank, established the IoT Trustworthy Working Group (ITWG), a multi-stakeholder initiative. The goal of the ITWG is to develop a framework, focusing on voluntary best practices in security, privacy and sustainability. The initial focus is on two primary categories; 1) Home automation and connected home products, and 2) wearable technologies, limited to health & fitness categories.
User Rank: Blogger
8/13/2015 | 12:53:12 PM
Re: ISPs as Security experts...
I have heard some numbers second hand that make the uptake, at least on the security side, decent. But I'd like to hear that evidence directly. 
User Rank: Light Sabre
8/12/2015 | 3:42:21 PM
ISPs as Security experts...
Worth noting though that ISPs have refused to reveal their subscriber totals for security and home automation services. With the pricing and ETFs of many of these services, I'm not entirely sure they're seeing significant uptake by anyone other than those with the most disposable income. 

On the home automation front especially, I think ad hoc home brew solutions tend to be much more cost effective for gadget nerds, while most Luddites still don't see the purpose of paying AT&T another $100 a month to be able to adjust their heat from their smartphone.
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