AT&T Mobility (NYSE:T) today officially launched its long-awaited Digital Life home security and automation service, an effort aimed at growing its business beyond smartphones. The carrier's base home security service will start at $30 per month.
The company launched the service in Atlanta; Austin, Texas; Boulder, Colo.; Chicago; Dallas; Denver; Houston; Los Angeles; Miami; Philadelphia; Riverside, Calif.; San Francisco; Seattle; St. Louis and select areas of the New York City and New Jersey metropolitan area. The carrier plans to expand to 50 markets by the end of the year.
In January, AT&T said the service would launch in March. Kevin Petersen, senior vice president of AT&T Digital Life, said the carrier delayed the launch so it could expand the number of initial launch markets from eight to 15. "That's a just a business decision we made," he told FierceWireless.
AT&T will own and operate the service's U.S.-based monitoring centers, where its staff will respond to emergencies and alert police and fire authorities of potential problems.
Digital Life customers will be able to manage the service through a Web browser or smartphone app; supported platforms include Google's (NASDAQ:GOOG) Android, Apple's (NASDAQ:AAPL) iOS and Microsoft's (NASDAQ:MSFT) Windows Phones.
Customers can choose from two base Digital Life plans:
- Simple Security: The basic package includes 24/7 home monitoring, 24-hour battery backup, a wireless keypad, keychain remote, recessed sensors and an indoor siren for $30 per month plus $150 for equipment and installation.
- Smart Security: This more advanced package includes the features of Simple Security plus a choice of three of the following features: motion sensor, carbon monoxide sensor, glass break sensor, smoke sensor or takeover kit. Smart Security begins at $40 per month plus $250 for equipment and installation.
AT&T also will offer a range of add-on features (opportunities for the carrier to make more money):
- Camera Package, which lets customers view live video from inside and outside of their home, for an additional $10 per month plus equipment and installation.
- Energy Package, which lets customers control appliances, lighting and thermostats for convenience and energy efficiency, for an additional $5 per month plus equipment and installation.
- Door Package, which lets customers grant access to workers or visitors into their home remotely with automated door locks or lets them check to see if a garage door is open, for an additional $5 a month plus equipment and installation.
- Water Detection Package, which allows customers to detect water leaks before damage occurs, for an additional $5 per month plus equipment and installation.
- Water Control Package, which lets customers detect leaks and shut off water at the main water source, for an additional $10 per month plus equipment and installation.
Peterson said that the equipment for the add-on packages generally runs for between $100 and $200.
AT&T is just breaking into the home security and automation market but the company clearly has high hopes for how much the business can contribute to its bottom line over time. Peterson said the carrier is hoping for average revenue per user from the service of $50. "I do think it happens over time," he said. "I'm very confident, very bullish we can get there very quickly," he said, without providing specifics.
Peterson said ARPU will be a key metric as AT&T analyzes how well the service is doing. "That to me is going to be a very telltale sign in terms of people thinking about the segment differently by virtue of what they are buying," he said.
Peterson also said AT&T is hoping to sell the service into new demographics that don't typically purchase home monitoring services.
AT&T said Digital Life will be sold and demonstrated in 450 company-owned retail stores in the 15 launch markets. Peterson said initially AT&T does not plan on launching a TV advertising campaign for the service and will instead focus on digital marketing and local traditional marketing, including on radio. "It's something we will be putting some marketing muscle behind," he said.
The service will not make use of AT&T's shared data plans.
Of course, AT&T is not the only company in the home security and automation market. Incumbents like ADT offer similar home monitoring solutions. ADT's comparable solution, called ADT Pulse, runs around $50 per month, but it comes with a total installation cost of $750.
Cable operators have also gotten into the home security market. For example, Comcast offers its Xfinity Home solution for $40 per month; Time Warner Cable offers its Home Intelligence product starting at $34 per month; and Cox Communications offers to install a home security system for $99 and a three-year contract.
Analysts said AT&T's clear and simple pricing should win the company convers despite its neophyte status in the home security market. "I think their pricing is very attractive and probably equally as important it's well understood," said Current Analysis analyst Larry Hettick.
Forrester Research analyst Charles Golvin said AT&T will be able to compete with the major MSOs in the home automation market. However, Golvin said the $50 ARPU target is a little bit aggressive "especially given the current economic climate. People are still looking to economize. It's going to be hard to convince people to up their spending unless they have a compelling story for how that can lead to other savings."
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