Broadband providers are turning to home networking services in the name of higher ARPU and customer loyalty, but early adopters are finding the home networking game is expensive and a management nightmare of proprietary proportions
The notion of networking household appliances is a lot closer to reality than science fiction these days. Indeed, for many carriers it's the next logical step in the quest for adding value to the broadband access link. It's long been understood that access revenues will only go so far, which is why broadband operators have been going the value-added route, most notably with IPTV.
But just as broadband services are no longer just about access, IPTV is no longer just about television. Vendors across the value chain are talking up the migration from vanilla IPTV to a range of features, from multiple video streams to time-shifted video and interactive capabilities.
The key to this will be more powerful set-top boxes enabled by MPEG-4/VC-1 codecs, feature-rich middleware and cost-effective system-on-chip decoders, among other things. Interestingly, next-gen STBs will also serve as a launch pad for home networking services, from home surveillance and remote DVR programming to health services and home control services, such as switching on lights and air conditioning units via a remote Web interface.
Big-name service providers such as KT, Softbank BB and PCCW have already made moves into home networking simply by virtue of the fact that they are already presence in their customers' homes.
'Home networking is a natural for us, because we already have presence in the home via the set-top box, which is a kind of home gateway,' says Paul Berriman, head of strategic market development at PCCW. 'Some of them already have Wi-Fi capabilities, and there will be other devices coming that will connect to each other in the home.'
Little wonder analysts are bullish on home networking, at least in developed markets where broadband ARPUs are dropping.
'In less developed markets the ARPU is higher because the average connection speed is lower, and people are more in need of basic connectivity,' says Teyew Sin Siew, head of telecoms research for ICT Practice Asia-Pacific at Frost & Sullivan. 'In more developed markets, there's a greater need for value-added services to increase ARPU, which is what operators like KT and Softbank BB are doing.'
Also, like other VAS, there's also a stickiness factor, says Vincent Kennedy, director of innovations and solutions for Nextep Broadband, a service unit of NEC Australia. 'Service providers need value-added services to raise customer loyalty as well as ARPU,' he says.
However, as usual, it's not quite as straightforward as it sounds. Early adopters of home networking services are discovering that there's a lot more to home networking than connecting a bunch of consumer electronics to a gateway. The experience reported so far is that it's expensive, a potential management nightmare and an interoperability headache, all of which is aggravated by the ultimate wild card in the home networking equation: the customer.
Reliability and bouquets
One of the top challenges in offering a home networking service is that, like any other service, it has to work well, and it has to work all the time.
There are a few basic requirements to offering home networking service, says Nextep's Kennedy.