Parks Associates projects the number of households using data networking solutions worldwide will grow from 80 million at the end of 2005 to nearly 145 million by the end of 2010. By Kurt Scherf

For consumers, shared multimedia content (music, photos and video) from both home computers and from other storage platforms will drive adoption of digital media adapters; some of which will be stand-alone and others integrated with platforms such as the set-top box. Carriers view the deployment of home networks as a service differentiator to promote customer loyalty. They will seek to monetise their customer premise equipment (CPE) deployment as part and parcel of their nextgeneration voice services and multi-room video applications; seeking residential gateways (RGs) that support multi-room distribution of this content as part of a shift from a primarily retail orientation toward one in which carriers themselves become greater participants in home networking deployment, monitoring, and troubleshooting.

An eye on the European market

Several European operators are already at the forefront of the residential gateway trend. France Telecom’s deployment of the Thomson-built Livebox residential gateway – at nearly three million as of June 2006 – has already matched service provider-deployed home networks in the U.S. It’s an interesting example of a service provider laying the groundwork for additional home networking-related services by deploying robust CPE. Not only does the RG facilitate broadband sharing; it serves as the hub for a host of services, including voice, video communications, TV, in-home multimedia streaming and remote home monitoring features. Similarly, British Telecom’s Total Broadband service comes with the Home Hub; a residential gateway that supports both data sharing and voice applications. The future for digital lifestyle products and services in Europe is certainly substantial. The aggregate consumer base is larger than in the U.S., infrastructure improvements are underway, competition between carriers and upstarts is healthy and regulatory changes are motivating continued investment. Still, each country’s situation remains unique, and we’re not at the point of declaring a “pan-European” digital lifestyle solution. Above all, the industry’s ability to innovate and develop creative and useful technology solutions must be balanced with the consumer’s perception of utility and value.

Multimedia and entertainment networks

To date, the addressable market for linking home computers to legacy CE devices has been small, and penetration of digital media adapters hasn’t fared as well as many manufacturers would have hoped; due to high pricing and less-than-perfect connectivity. Among countries with established broadband markets, Parks Associates research has found households that have home broadband access and more than 300 digital music files to be as low as 7 per cent (in France) to a high of just 21 per cent (in Taiwan), with the U.S., UK and other major broadband markets in between. But there’s reason to believe that a market for multimedia networks (PC-to-CE) will grow as consumer use of downloaded and streamed digital content increases and as they seek ways to extend entertainment beyond the home computer. The penetration of whole-home DVR solutions will grow steadily from 2006 to meet customer demand for flexible time-shifted television throughout the home, and as a consequence, set-top boxes and other CE media server platforms will grow in importance for backup and centralisation of media files and for connectivity to video content from a host of Internet services. Key opportunities within this digital home sub-category will also increase as companies develop solutions to address remote management and diagnostics of the home network. Standards efforts such as the DSL Forum’s TR-069, aimed at simplifying connectivity and resource sharing (printers, files) while enhancing security, and work by the Home Gateway Initiative (HGi), a forum to develop standards for broadband-enabled services, will also provide critical guidance in allowing service providers to leverage sophisticated CPE as they move to offer value-added in-home services. As IPTV providers enter the pay-television space, we believe that home networking will play a key role. As IPTV providers seek differentiation, they too may push set-topto-PC links that allow end users to display user content and play music stored on their computer or another home platform.