Home networks are mixed bag for telcos

Ovum Ovum recently attended and presented at the Connected Home Global Summit. In many ways the connected home is advancing at a tremendous rate, but with regards to the home network itself we are still left scratching our heads, and it is now one of the bottlenecks to the “home of tomorrow.”
It’s not that technology in this area is not advancing - it is -, but we are still left with the problem that every home is different and located in an environment largely outside the service provider’s control, and there is no single solution that works in all cases.
Service providers are well positioned to take control of the home network and help consumers optimize it to provide the best-quality experience for all the services they wish to access. That would provide significant value and therefore differentiation. However, it would also come at a significant cost, and the question is whether that cost is one service providers wish to bear?
One of the most interesting presentations at the conference came from Roberto Saracco, a futurologist and director of Telecom Italia’s Future Centre. He talked a great deal about the point at which the human brain is unable to detect the difference between a video screen and the real world, and the technology developments that will allow virtually any glass surface to become a video screen. Entertainment value aside, the implications of Saracco’s presentation are real and significant.
Video is creeping into everything we do. In something that is starting to resemble a scene from a Harry Potter film, images in (digital) newspapers and books are already starting to become moving video rather than static pictures. In Saracco’s world this will also apply to the family photos stuck to the fridge door and the pictures hanging on your walls.
Nothing too alarming here perhaps, but add to this the fact that some of these screens will be able to deliver a true “real-world experience” - to deliver that kind of video quality using today’s technology will require in the region of 150Mbps per channel - and it starts to become clear that the bandwidth explosion is far from over.
To advocates of fiber-to-the-home, the vision is not new and, indeed, is the kind of development they have been pointing towards for some time in order to justify the need for ultra-fast broadband. However, even with such technology starting to become a reality in many countries, there is a big hole in this vision that nobody seems to have really resolved – the home network.
There is less of an issue in countries such as the US where there are a lot of households with coaxial cabling to virtually every room, and in areas of large-scale new development where apartment blocks are being installed with new cabling such as plastic optical fiber (POF).
But this is a small proportion of today’s households worldwide. Outside these areas, most households either have no home network to speak of or are using basic Wi-Fi. With the number of connected devices entering the home and the levels of streamed video increasing, these networks are coming under serious strain.
Even for those lucky service providers that operate in areas with households that are equipped with good-quality home wiring, the issues are far from over.
The home network is in an environment where no third-party player has any real control. Its configuration is completely different from one house to another and is run by a CIO (i.e. the home owner) who, in the majority of cases, has little or no concept of networking technology. In essence, consumers need help.
Service providers could certainly take the upper hand here and become the trusted home networking partner. Enhancing the customer experience here will provide true differentiation, but it will be hard to do this without significant investment and a greater number of on-site visits (more expense), so if service providers want to take up the challenge, they will need to be prepared to pay for it.
The increase in connected devices has led to a new appetite for smart home services. However, smart home services require homes to be “smart” and the vast majority are actually dumb. To add intelligence into the home will either require all appliances and fixtures to become smart (i.e. connected to the network), which will take many, many years, or external sensors need to be introduced into the home that can be used to connect the appliance/fixture to the network.
Individually these sensors are not especially expensive, but even for a simple feature such as a security service that checks all windows are closed and doors are locked, you could be looking at tens of sensors. Multiply that for services that connect to electrical appliances, lights, cameras, etc, and it is easy to see how the number of sensors per household could soon build up.
The addition of such sensors adds complexity and cost to the home network and, if not done properly, could put many customers off the whole idea. Service providers will need to think long and hard about how to market, sell, and support this new home network if costs are not to outweigh the return on investment.
Michael Philpott is consumer practice leader at Ovum. For more information go to www.ovum.com/