ABI Research: Managed home automation could be telcos' new service opportunity

While the notion of home automation has always conjured up images of consumers pressing a button to remotely turn on lights and automatic nets to catch burglars, the reality is home automation has been a relatively niche market segment.

Home automationA growing number of service providers ... are deploying prepackaged solutions from a number of emerging home automation providers such as 4Home/ Motorola Mobility, Xanboo, and iControl.

What's inhibited the growth of home automation services are the two dominant approaches: do it yourself and the custom approach. While the do it yourself approach can save a homeowner some money it still requires technical expertise, while the custom approach is far too expensive.  

However, one segment that could help drive further adoption of home automation is the local telecom or cable service provider.

A growing number of service providers, including Verizon (NYSE: VZ), AT&T (NYSE: T), and Comcast (Nasdaq: CMCSA), are deploying prepackaged solutions from a number of emerging home automation providers such as 4Home/Motorola Mobility (NYSE: MOT), Xanboo, and iControl. What bodes well for the service provider is that they can leverage their well-established customer relationships to develop low-cost automation services that could be offered as an add-on service to a new or existing bundled service plan.

"Telco/broadband players are increasingly looking at providing home monitoring/control/energy management services as part of a larger service bundle," said Sam Lucero, Practice Director, M2M Connectivity, ABI Research, in an interview with FierceTelecom. "There have been extensive trials for years, and now some of that activity (e.g. Verizon) is now bubbling to the surface.  Service providers see home monitoring as one of the few potential services that can be added to the bundle that start to approach the ARPU levels of their core video/voice/data offerings." 

Two key cases in point are Verizon and Comcast. Verizon previously announced during this year's Consumer Electronics Show (CES) that it would begin a home automation service trial in limited markets, while Comcast is currently trialing one in the Houston, Texas area.

Lucero added that service providers targeting home automation "is not solely a US phenomenon." A growing number of international service providers, including Telus (Toronto: T.TO), Chungwa Telecom, TIM, and France Telecom (NYSE: FTE) are also in the process of trialing or rolling out their respective home automation services.  

Already leveraging the broadband operator for their traditional telecom services, a typical homeowner would be able through a PC, laptop, tablet or smart phone to remotely monitor their homes in addition to having basic control features such as lighting or air conditioning.

ABI Research believes that these home automation services, which will both compete with and complement the traditional home security alarm market, will include security alarm system as part of an overall managed home automation service.  

And even though 2011 could be what Lucero says is the "inflection point" when the service providers establish a more prominent presence in the home automation market, there's still a number of challenges it will need to overcome before being accepted by the mainstream every day consumer.  

"Consumer acceptance and cost are the two chief barriers I see, for service providers, now that they're fairly far down the path of trialing platform technology from partners such as those listed above," Lucero said. "Essentially, home automation is still an application looking for a need, in the context of mainstream consumer attitudes; many consumers simply don't think they need to control their lights or air conditioning remotely. Add to this the problem that most traditional standalone home automation systems have been relatively expensive, and you can see why the market has been limited towards relatively wealthy folks on the one end, or gadget lovers (who have the patience and interest to cobble together more inexpensive systems themselves) on the other end." 

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