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Analysis & Opinion

Operators taking different roads to the Smart Home but not all will arrive

Andrew Ladbrook, Senior Analyst at Informa Telecoms & Media

Andrew Ladbrook, Senior Analyst at Informa Telecoms & Media

It became clear at this week’s Digital Home World Summit that the future of the Smart Home remains very much a great unknown. A variety of different business models and service providers emerged all offering broadly the same set of services. That said some plans were grander in their thinking than others.

Operators adopting different business models

The great motivation of all that operators do – churn reduction – is unsurprisingly a factor for some operators offering smart home services. Orange stated that the slight revenue increase and the significant cost savings brought about by reducing churn would more than justify the roll out of smart home services.

Swisscom was more upbeat for new revenues to be generated from the smart home. It plans to launch a suite of smart home services including home monitoring, energy monitoring, and home automation before the end of the year.

For Swisscom, the operator’s advantage over its smart home competitors is that it can offer a bundle of these services rather than each service individually. By combining these individual services into a single bundle the operator can target a wide audience and offer users more features than they would have received from a single competitors service.

But Swisscom already offers a Smart Home service. Through its joint venture MyStrom it offers powerline plugs that can monitor electricity usage, turn devices on and off, and be used as terminals for powerline data networks. The service offers an attractive UI and for more advanced features users must pay a monthly premium. Perhaps most importantly it is already out there, generating genuine revenues, and helping Swisscom judge actual customer demand.

Utilities partners and foes

Deutsche Telekom and Telefonica have decided to be enablers of Smart Home services rather then provide them. For these two companies revenues will be generated from partners not directly from the consumer. And both companies are offering a gateway that will enable partner services and both have designs on making their gateways international, and in this regard Telefonica is ahead of DT.

Telefonica’s gateway provides all the connectivity technology required for partners’ – typically utility companies –  smart home services including a mobile broadband connection, as well as selected home network technologies.  Telefonica stated that it will not be restricted to their own mobile footprint and it is already on its way to launching a service in Italy. The major drawback of Telefonica’s approach is that it seems to only be capable of enabling a single partner’s service with each gateway.

DT has opted to build a gateway for its Qivicom platform. This gateway will enable a whole host of services, and will be pushed to users not by DT but its partners which include two of Germany’s largest utility companies. But users will not be restricted to only services from the partner which they purchased the gateway from. Instead they will be able to access all the services that have launched on the Qivicom platform. DT aims at charging a licensing fee to those partners that launch on its platform.

Utility operators are not content merely pursuing one business model with a single partner. Eon which has partnered with DT on Qivicom has also partnered with two other platform providers. One in Germany to offer an entirely different service more focused on home control services. And a simple low cost power monitoring service in the UK.

Gateways, gateways, gateways

For every planned service there seems to be yet another gateway required for its delivery. And each of these gateways would sit behind the already installed broadband access gateway. Potentially, subscribers could up end up with as many gateways as smart home services, even more if they switch services. This is obviously far from ideal for both the user whose house becomes cluttered, and service providers who will have to subsidise these devices.

Optimistically skeptical

Smart Home services are not going to be mainstream tomorrow and many delegates were happy to point out they had seen this demoed all before some ten years previous. But the home is going to get smarter with plenty of the services spoken about this week actually implemented – even if it is slowly – in the next five years. But overcoming the technological challenges is only one half of the conundrum, the other side of what business model should be used, remains the great unknown.

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