Entering the smart home market is a smart move for telecom operators and service providers. It’s a young and nascent market, but one with a huge growth potential. It is forecasted to grow with a CAGR of 24% to $39B between 2015 and 2020.1
Operators are uniquely positioned to become major smart home players for four key reasons:
- Connectivity: smart home services require high-speed wireless connectivity inside the home and ultra-broadband connectivity to the home for the exchange of data. Owning the connectivity enables operators to partner with third party service providers as well as offer their own services.
- Existing presence inside the home: customers would rather not add another device from a third party when they already have a hub or CPE from their operator.
- Credibility and trust: smart home services capture a lot of personal data. Customers already trust their operators with personal information and billing.
- Organized operations: customer service teams and technicians are already in place for fast implementation of equipment and services, troubleshooting and customer peace of mind.
In addition, operators have a strong history of bringing more value to customers, from simple telephony to internet services, triple-play to quad-play. Who better to provide quint-play digital home services: a bundle of voice, internet, video, mobile and smart home services?
Choosing the right use case
When looking to enter the smart home market, there are four main use cases for operators to consider:
- Home security services using devices such as door and window sensors, cameras, motion and smoke detectors, which can automatically trigger alarms or relay data and streaming video to a monitoring service for action.
- Home automation is about providing remote and automatic control of a home for things such as lighting, heating, ventilation, and air conditioning (HVAC).
- Smart metering begins with remote meter reading through to the analysis of the data to give advice to customers about potentially malfunctioning appliances or how to save energy.
- Digital health services enable ill or elderly people to be cared for in their homes with home assistive technologies like health monitoring and remote consultations.
Monetizing the use case
But each use case has a distinct business model and different potential for monetization.
- Home security has high potential: people are willing to pay to protect their homes, possessions and families. Operators can potentially partner with security companies to provide 24/7 monitoring.
- Home automation has low revenue potential as it is an entry-level service that customers will expect compared to the self-install kits they can buy from electronics shops and DIY stores. It may make sense for an operator to bundle home automation services with another service such as home security.
- Smart metering and energy services are most likely to be driven either by utility companies or by national regulators. The opportunity here is to partner with utility providers.
- Digital health will be driven by private healthcare providers and insurance companies. There is a huge interest in keeping elderly people in their homes longer and to get hospital patients home sooner, both for patient well-being and for cost reasons. Operators can marry their smart home infrastructure with services from healthcare providers, potentially complementing in-home services with mobile monitoring.
Selecting the right devices
Having looked at use cases, operators need to consider the devices and appliances needed to support the relevant services.
The choice of smart home hub needs particular consideration. Ideally, it should be integrated with the residential gateway to provide a one-box solution for customers. But the hub also needs to be able to “drive” all the chosen smart home devices. In such a fast moving market, interoperability and open standards are very important. For an operator, it is important to select an ecosystem of vendors whose devices are guaranteed to work together.
Nokia smart home hubs can help here. Nokia devices, such as the 7368 ISAM ONT G-240WZ-A home hub, can work on up to four different ecosystems to maximize interoperability with most major device manufacturers.
Given the overwhelming number of smart home interfaces, ranging from standardized to proprietary, it is important to choose the right combination. Wi-Fi + Z-Wave + ZigBee seems to be the optimum choice; it’s estimated that these three interface types will represent 72% of all protocol chips shipped in 2016.1 So it’s essential to choose a home hub that supports multiple types of interface.
Another important component is the mobile app to manage the smart home. Every device vendor has their own, creating a significant headache for customers. A better solution is to have a single app to manage all the different devices. Nokia can help operators develop their own app to control all devices from the home hub or provide a white-label app for operators to rebrand.
This app would typically work together with a cloud-based server to store all the data generated by the smart home devices, the device library, rules and personalization parameters, and so on.
Quickly to market
Having a clearly defined smart home offer and the relevant devices to make it happen is a good starting point. But there are additional challenges to bring these services to market. Nokia has a number of services to help.
- ONT Easy Start enables customers to self-install their ONT residential gateway. Self-install is commonplace in xDSL environments but quite exceptional in a fiber-to-the-home scenario.
- Wi-Fi Expert System helps customers troubleshoot their Wi-Fi coverage, which is especially important for people living in multi-dwelling units.
- Home Device Manager enables operators to remotely control and manage customer premises equipment (CPE) from the network.
These capabilities help network operators lower their total cost of ownership and bring smart home services to market more quickly.
1 ABI Research, Home Automation Systems, December 2015