A Bundle of Opportunity with Broadband
It appears homeowners like to buy things in bundles, especially when it comes to broadband. What started out as a “triple play” of services—the bundling together of digital cable, cable Internet access, and telephone services—quickly evolved into the “quad play,” which added on wireless provisions such as cellphone service. In essence, it all becomes associated with M2M (machine-to-machine) entering the home.
Now, providers are attempting to include a fifth—and maybe even sixth—service to that bundle by adding on security and home automation services. Companies like AT&T, www.att.com, with its AT&T Digital Life, Time Warner, www.timewarner.com, and Comcast, www.comcast.com, are using their broadband infrastructure to enter the security market and have plans to branch out into home automation in the future.
Comcast, for example, launched Xfinity Home Security in June 2010, which focuses on home security. However, within a year, it renamed its service Xfinity Home to show customers the broader value of home services, including home automation. TimeWarner’s entry-level Intelligent Home package also focuses on security, but customers can customize their packages to include energy management and other home control capabilities, depending on their needs.
AT&T has yet to officially launch its Digital Life home management service and is currently undergoing trials. However, the company has confirmed that the offering will be built around home security with home automation options.
The question, of course, is whether or not consumers will allow providers to add one more service to their bundle or if, in fact, they will draw the line on how much they are willing to spend with one provider.
Research coming out of Parks Associates, www.parksassociates.com, seems to suggest consumers are more than willing to bulk up their bundles, especially when it comes to security. The research firm is reporting 14% of all U.S. broadband households are “highly interested” in receiving security services from their ISPs (Internet service providers).
The research also found consumers who have professional monitoring security services—which total about 16% of all U.S. households—are also interested in the new bundling and service options that come with Internet-enabled home systems. In fact, about 40% said they would switch from their current monitoring provider if that company does not offer new features such as email alerts, energy management, and lighting automation functions.
The findings suggest bundled services and new IP features are important to both customer retention and subscriber growth. Tricia Parks, CEO of Parks Associates, believes these services could also spur growth in the security market, which has been stagnant throughout this recession. “IP-enabled security features are opening the market for new offerings from communication providers, which could result in new security system adopters,” Parks says.
There’s no question broadband provides a good anchor for service providers to branch out into these new offerings. However, if they really want to penetrate the market, they will need to spend the time and the money to educate homeowners about issues such as privacy and data security—especially if they plan to use smartphones and other mobile devices to control the systems.