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Two of Europe’s major telecoms operators, BT and Telefonica, hope ‘smart home’ applications like energy management, home security and home automation can boost revenues. The UK incumbent BT is actively looking for partners to deliver new broadband applications that can help differentiate its broadband offering, promising the benefits of scale in return.
Both companies were speaking last week at the CSI Multimedia Home Gateways conference in London, where Rubens Cesar Bastos, Fixed Devices and Home Networking Manager at Telefonica, suggested the maturity of connected home technologies and growing consumer awareness about the benefits of connectivity had prepared the way for smart home services. Erik Raphael, General Manager Devices at BT, said smartphones and tablets provided the ‘infrastructure’ needed to make applications attractive to consumers, by giving them the ability to read meters or display energy consumption, for example.
During a panel discussion, there was an acknowledgement that remote healthcare is an opportunity, though it might be hard to get consumers to pay for this, suggesting this particular service may depend on the involvement of government agencies. BT is especially interested in energy management and home security when looking beyond multimedia connected home services. Telefonica is prioritising energy management among the various ‘smart home’ applications available, with Cesar Bastos suggesting this has huge potential. But Telefonica is also considering health assistance services, which are viewed as important.
There was no impression from this panel that there is a ‘killer app’ when it comes to new non-video connected home services. The smart home market could be characterised by a number of different add-ons that together create sufficient value to increase loyalty and possibly generate revenues. Both Cesar Bastos and Raphael made it clear that their companies hope to increase ARPU through these types of broadband offers.
Chris Shelley, Chief Operating Officer at Navetas Energy Management, representing the third-party service/applications provider delivering smart home services over broadband, admitted that measuring energy consumption and measuring electricity meters is not going to excite consumers on its own. But this is a precursor to other apps. “If my freezer stops working, I should get a light on a ‘dashboard’ like I do with my car if there is not enough oil,” he suggested. “When you put an appliance into your home it becomes part of the infrastructure of the home and people should be able to understand what is in there.”
He believes it will take 5-10 years for smart devices to penetrate homes, like a washing machine or freezer that is connected to the home broadband [backed by an intelligent monitoring platform]. If consumers already have a ‘dashboard’ in the home, they will appreciate the added value that a smart device with connectivity provides, when compared to ‘standard’ goods, Shelley believes. Convenience is the name of the game.
Cesar Bastos highlighted one of the value-adds that the service provider can offer. “You must ensure that everything is well connected and works,” he told the London audience. Brett Sappington, Senior Analyst at Parks Associates, who chaired the panel, highlighted the possibility that we could end up with different devices for every kind of service add-on, like energy management, security and automation. This could be one of the reasons why partnerships between broadband providers and the specialist service/apps companies are a good idea.
On this panel there was an acknowledgement that partnership is the way forward. Telefonica’s Cesar Bastos and BT’s Raphael agreed that the market is big enough to accommodate this model. Raphael added: “If you look at the number of devices consumers have already, it could become complex for customers if you try to get broadband operator boxes and security service and automation service devices in the home together.
“Another aspect to consider is the end-to-end management and if you have backend systems and cloud storage then good cooperation is possible between energy management companies and service providers. I think collaboration will be a better strategy than fighting.”
Shelley at Navetas warned that the biggest barrier to business could be consumer fears about what happens to data that is collected about their various activities, so they will need to be reassured about privacy policies, etc. Rubens Cesar Bastos agreed this could be a hurdle for this developing market.
Smart home services and applications need a home gateway and some kind of management platform, a reliable broadband connection and client devices or software in the home. But technology is not considered a barrier.
Raphael summed up BT’s position on the smart home: “The industry needs to be clever and bring services to market that make sense for customers and which they do not have to pay very much for. If they are expensive, take up will be very limited but we should look at the use of smartphones and tablets and consider what they can interact with, and what kind of services can be built on the connected home.”
Videonet report, August 2011: Taking control of the connected home. The defensive business models around multi-screen TV suggest increased competition is having an impact on the Pay TV market and it could be time to think about where future revenue growth is coming from after HDTV. The answer could be the ‘connected home’, with service providers taking more responsibility for managing the entertainment and multimedia experience and also providing new home management services ranging from energy monitoring to security.