One of the more ambitious and promising initiatives announced at CES was AT&T’s Digital Life, an application and services platform that will offer a broad range of services to consumer households including media management, home security services, home energy monitoring and a broad variety of sensor-based services such as water leak detection and water main control.
When launched in March 2013 in eight metropolitan markets in the US, the platform will be the first of its kind sold by mobile operators in the US in partnership with several firms including Cisco Systems, which will provide a control panel for the service.
The service platform has been in development for well over a year, with a mansion full of demonstration prototypes given at CTIA in New Orleans in 2Q2012, and represents a significant strategic direction for AT&T which is aggressively pushing the traditional business model boundaries of a mobile operator.
While pricing and service details won’t be available until later in the quarter, the new platform is designed to leverage AT&T’s ever expanding portfolio of connected devices and shared data plans launched in 2012.
While home media management and device connectivity are not new to AT&T, the platform’s home security service is a strong indication of AT&T’s ambitious plans to expand its business model and revenue base.
According to AT&T, the home security market is a highly fragmented industry that is ripe for disruption and under penetrated.
With less than of 20% of US households currently subscribing home security services and served by thousands of service providers, AT&T is convinced that its wireless IP-based services will offer both the scale and efficiency to carve out a leadership position in the space, challenging current market leader ADT.
AT&T’s new security business will offer two 24/7 call centres to respond to real-time security issues as well as provide integration with customers’ tablets, smartphones and other devices for access to security camera images and other sensor data.
The bold push into home security will require a risky shift of brand and customer affinity with AT&T. Extending a telecommunications brand into home security will test not only customer trust of AT&T to monitor and safeguard their home, family and possessions, it will also be an important first test of AT&T’s capability of breaking through into other adjacent markets, such as connected cars, another area of interest mentioned by CEO Ralph de la Vega.
In recent years, AT&T has invested billions to upgrade its mobile network and combat the bad press the operator received due to dropped calls and poor coverage following the launch of the Apple iPhone.
While AT&T has largely overcome this challenge, it will be crucial for the operator to build consumer confidence in the reliability and fail-safe redundancy of the new security service.
The primary network for the security services will be the operator’s 4G network, but with parallel fixed broadband connectivity as a backup.
AT&T’s Glenn Lurie, President of Emerging Devices, stated that AT&T will work flexibly with customers who “bring their own broadband” as well as provide fixed broadband services in areas where AT&T is licensed to offer fixed broadband U-Verse coverage.
Given the extended difficulties caused by the recent natural disaster experience following Hurricane Sandy, AT&T also will need to work on offering failsafe connectivity in the face of such occurrences, since existing security companies often use fixed PSTN connectivity.
While AT&T’s wireless IP network should provide the operator with a huge advantage in terms of new applications, speed of deployment, and costs, it will be crucial for the operator to carefully walk the public through the details to make sure consumers feel confident and comfortable with the new service.