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Time Is Right for Telcos & Smart Homes
While the smart home market may not have exploded quite as strongly as some analysts expected, it's fair to say the area is one of the most exciting and dynamic markets across the tech and telco spectrum. Some analysts still predict the segment will grow to $121.73 billion by 2022 from $46.97 billion in 2015 at a compound annual growth rate of 14.07% between 2016 and 2022. Not only have we seen thousands of devices and exciting new services come to market for consumers and business alike, but we also have begun to see the direction the market may take over the next few years. This is an exciting time for all smart home players, but for telcos this is particularly worthy of note. Telcos are arguably best positioned to take advantage of this burgeoning market, and most importantly in ways that develop and expand their influence. But let us step back a little. Traditionally the guardians of fixed-line copper, telcos' ownership of -- or ability to lease -- vast bandwidth of fiber positioned them well for the advent of mobile; now, a decade later, they face a new threat. The commoditization of these products, the growth of MVNOs and fixed-line counterparts mean that simple provision of data services is under increasing pressure, as white-hot competition squeezes margins. However, history has given telcos an almost complete toolkit to provide the very best smart home services.
BROADBAND WORLD FORUM: New perspectives. New connections. New location. See you in Berlin. Telcos are under increasing pressure in consumer homes, from technology brands as diverse as Google, Amazon and Apple. Telcos must actively exploit the opportunity around controlling the home, otherwise over-the-top (OTT) manufacturers and service providers could potentially disintermediate them, and they will fail to capture a fair share of the value. However, telcos retain a number of valuable advantages. Telcos own customer relationships and are trusted providers for connectivity in the homes and for services; their billing systems are perfectly capable of extremely granular billing, and across a range of services at that. Moreover, telcos are used to the retail environment, defining a product, refining a unit sales price (USP) and delivering that call to action to diverse groups of consumers, whether via billboards, TV, cable, print or pure digital. Vitally, telcos are well equipped with engineer networks, corresponding management tools, service call centers, and the staff to run them. In pure logistical terms alone, these assets represent a massive competitive advantage over the Kickstarter-era startups, some that only have exciting ideas and a nice set of renders.
Perhaps most crucially, telcos have considerable experience of data management. Data -- and competent leveraging of it -- will be the mark of the most successful connected home players. You cannot overstate the importance of being able to aggregate third-party data and segment it in new and powerful ways, although there are significant pitfalls along the way. Consumer trust is not so easily earned, and if lost even the best technical implementations and biggest brands can fail -- robust and transparent data policies are essential for the entire industry, both now and in the future, so new models can flourish. A variety of exciting partnerships are signposting the way to future prosperity. Interesting examples of bundling come from European telecom operators that have introduced services that give users control over security, energy and comfort. These offerings neatly leverage the telcos' consumer position of strength in their country, and the white label platform and ecosystem from Deutsche Telekom. One telco bundled security services from a third-party supplier.
Plugged In to IoT
Deutsche Telekom educates consumers and partners on the many ways in which connected homes enhance security, quality of life, health and more. (Source: Deutsche Telekom Connected Home)
While telcos are well positioned to succeed in the smart home market and moreover, to develop an even more diverse provision of products and services, the time for action is now. Telcos must act soon to avoid becoming commoditized and disintermediated in this new market. Competition is fierce. The prize, however, is considerable. Related posts:
— Thomas Rockmann is responsible for all aspects of the Connected Home business at Deutsche Telekom and has been instrumental in growing the business and delivering the white label solution with partners across Europe.
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Community IoT connects homeowners in building blocks or gated communities with property managers and external services, increasing satisfaction and creating new service opportunities, writes Deutsche Telekom's Thomas Rockmann.
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