Home automation: The new frontier for service providers
New services go beyond traditional home security while adding incremental revenue for service providers.
Home automation services have a long way to go before they reach the level of comfort portrayed in “The Jetsons,” but service providers are ramping up their efforts to provide their subscribers with home automation creature comforts that go beyond simple security cams.
Mitch Bowling, senior vice president and general manager of new businesses for Comcast Cable, said Comcast’s Xfinity Home service would be largely available across the cable operator’s entire footprint by year’s end.
“Xfinity Home is three things: It’s security, it’s home control and it’s energy management,” Bowling said. “It’s much more than a security system. The home of the future that people have talked about for years, we’re delivering that right now. It’s here, and consumers are adopting that notion rapidly, which is great.”
Xfinity Home, which was first launched in Houston two years ago, offers traditional home security components, such as police and fire alarm protection, as well as the ability to adjust digital thermostats, turn lights on and off, and watch secure live-streaming video from wireless cameras while subscribers are away from their homes.
The service uses an Xfinity Security app, which is available for free on Apple's iTunes App Store. In addition, Xfinity Home comes with a tablet-like touchscreen with a menu of widgets that allow access to the latest weather, news, traffic and sports scores. While a traditional security system’s brains reside in a metal box somewhere in the home, the wireless touchscreen, which uses Wi-Fi connectivity for the cameras and ZigBee for everything else, is the point of control for Xfinity Home users, Bowling said.
Each install of the Xfinity Home service is unique based on a customer’s requirements and the layout of their home, but the base price starts at $39.95 a month plus an installation fee. From there, a la carte options, such as an additional security camera for $5, can be selected.
“It’s really customized to the consumers based on their choices, which we think is absolutely the way to go and lets the customers really have what they want,” Bowling said.
Comcast looked at home automation three years prior to the Houston launch, but for various reasons held off.
“What we found was there were at least two reasons not to move forward then,” Bowling said. “One, the technology wasn’t ready for something that we could put together in a comprehensive package at the right price point. With a lot of technology, time and price point have to work together. The second thing was we weren’t quite sure that consumers were ready for smart home, and it turns out they weren’t. We’ve done a lot of research from 2010 to now, and their understanding of smart home has changed considerably just in that time frame. We had been looking at it for a while, but we were just waiting for the right time.
“You could cobble together these elements five years ago, but you may spend $10,000 doing it. What we’ve done, which is bringing this into one user interface where it’s all integrated at a reasonable price, that’s game-changing.”
From a technology standpoint, Bowling said Xfinity Home was easy to launch because it’s provisioned from a rack of Comcast servers in one secure location, which means it didn’t need to be rolled out from headend to headend. The part that has taken longer is gaining regulatory approval in the states and townships, as well as training Comcast’s employees.
Comcast has a dedicated customer service support group for Xfinity Home and has trained both its technicians and contractors on the installs.
Comcast, Cox Communications, Time Warner Cable, Bright House Networks, Verizon and AT&T have all tossed their respective hats into the home automation field. Like Time Warner Cable, Cox and Bright House Networks, Comcast is using iControl as its software vendor for Xfinity Home. And Cox, Bright House and Comcast are all using SMC Networks’ touchscreen for their services, but Comcast plans to add another touchscreen from Technicolor later this year.
Bright House first launched its home automation service, which is called Bright House Networks Home Security & Automation, in mid-March in Hillsborough County, and then in Pinellas County, both of which are in the Tampa Bay area.
Similar to home automation services that are offered by Comcast, Bright House Networks’ home automation system lets subscribers manage their home networks via a touchscreen. But Bright House also made an extra effort to make sure its home automation system works with some of the traditional wired home security systems that customers have already installed.
If the wired system isn’t compatible, Bright House techs can swap out the security panel for one that does work. With either option, the cable operator is able to take over some wired security systems if customers choose to keep a system they’ve already paid for.
Why home automation matters
While consumers are able to remotely track when a door is opened or control their lights and thermostats from afar, cable operators are hoping to gain incremental revenues and reduce churn by offering home automation services. Bowling wouldn’t say if Xfinity Home has reduced customer churn for Comcast’s data subscribers.
“We’re just getting started, and so far all indications are positive,” he said. “I will say that the customer response has been great. Customers that have this product really score it very, very high as far as satisfaction and value.”
Jeff Heynen, directing analyst for broadband access and video at Infonetics Research, said it is too early to tell if home automation services are actually keeping subscribers from wandering off to other service providers.
“Most of the operators that we spoke with are going to take baby steps in terms of home automation with things like nanny cams, webcams, with kind of not a monitored service, but a way to access those cameras on your iPhone or iPad while you are away,” Heynen said. “Something that doesn’t require full regulatory approval because that’s the process that takes the longest amount of time.
“They’re going to take these baby steps and then start bundling these services. We’re still very early on in this process. If they make a full commitment to do full home security, then they have to go to the cities and counties and get franchise approval and get patched into the emergency response systems, etcetera.”
Now that broadband penetration has flattened out, Parks Associates’ Tom Kerber, director of research for home controls and energy, said telecom providers are looking for ways to bring in additional revenues through services such as home automation, online tech support and digital lockers.
“It is to some extent about maintaining share, and potentially gaining share, but also about that incremental revenue and RPU,” he said. “It’s a little too early to tell [about churn], but I will say we had asked the question, ‘Would you switch for someone that had this service?’ And the answer was roughly 15 percent had very high interest in switching for someone who had a home automation/home control system. I think when you’re in a mature market, it’s about fighting for those customers.”
Kerber said that while telecommunications providers have the advantage of offering home automation services over their data pipes to their subscribers, an HVAC vendor, such as Trane, can upsell a customer on its home security service at the point of sale for an air conditioner. Heynen said that cable operators also face stiff competition from entrenched home security companies such as ADT.
While Comcast’s Bowling said he sees home automation as a greenfield opportunity, the lure of potential revenues has also attracted the attention of retailers and utilities in addition to service providers and traditional security firms. According to Parks Associates, annual subscription revenues from the various system offerings will be more than $180 million by 2015. Parks estimates that 60 percent of homes across the nation will have some type of networked energy management system by 2022 (see Figure 2).
How home automation will evolve
Earlier this year, Comcast announced it had struck a partnership with cloud-based energy management vendor EcoFactor. Using Comcast’s data and Xfinity Home services, EcoFactor provides a “smart home” platform that learns the heating and cooling patterns of a home and makes automatic and incremental adjustments to the broadband-connected thermostat based on real-time weather data, the thermal characteristics of the house and the temperature preferences of the occupants. The homeowner maintains full control over the thermostat. Over time, the system adapts to user inputs to help reduce energy while keeping the home comfortable.
Bowling said Xfinity Home customers can reduce the costs associated with cooling and heating their homes by 10 percent to 30 percent. As of March, Comcast was still in the design phase with EcoFactor, but Bowling said there would be more news in the coming months, which could also include new packages of Xfinity Home services.
While the current home automation systems are in the first phase of rollouts, the coordination of devices or programming of events will be the next phase, according to Kerber.
“EcoFactor does energy modeling, and that functionality is very interesting because it does save consumers money on average,” Kerber said. “It really depends on your household, but I think on average they save roughly 17 percent of heating and cooling your home with their system. The EcoFactor system is an energy modeling system that looks at when you operate your HVAC system. The amount it costs you is a function of the equipment performance, and it’s also a function of how well your house is insulated, how tight your system is, and then also how you operate it.
“EcoFactor can automate the control of that device by building an energy model. It looks at how your system responds, how your building is performing, and then automates control of that device. They’re able to take some of the errors out that a person would do and make subtle tweaks throughout the day based on anticipated outdoor temperatures and indoor conditions.”
Kerber said the partnership with EcoFactor could also allow Comcast to participate in the command/response market for electric utilities. By using EcoFactor, Comcast subscribers could opt to shift their energy demands to off-peak time periods in return for savings.
Another potential application is disaggregation, which allows homeowners to see how their systems are performing by item or by system.
“Basically, when you get your electric bill, you get the total consumption for your home,” Kerber explained. “Disaggregation breaks that bill apart and shows how much your HVAC used, how much your dishwasher or refrigerator consumed, and how much your TV consumed. By disaggregating the load, you get a lot more insight into the actual consumption. It doesn’t require you to invest a bunch of individual modules to track those loads or have load control modules, which are individual plugs that report that information. Instead they use the electronic signature of each of those devices, what its load profile looks like, what its startup current is, what its voltage harmonics are, things like that.”
Kerber and Heynen both said that home automation also dovetails nicely with “the Internet of things,” where each device in a home is connected to the Web. Using a model similar to Netflix’s movie recommendation engine, someday your refrigerator could be able to take stock of its contents and make recommendations on recipes, including main courses and side dishes, according to Kerber.
The Internet of things also fits hand and glove with cable’s migration to all-IP networks and services.
“I think in this whole run-up in adding running downstream channels on the CMTS and upgrading to CCAP, being able to throw more DOCSIS channels down to the customer per service group, one of the reasons to do that is because of this Internet of things,” Heynen said. “Obviously, home automation and every single thermostat- or ZigBee-controlled device could potentially have their own IP address, let alone their own MAC address, so it stands to reason that one of the side stories of putting out all of this DOCSIS bandwidth is to provide those types of services down the road.”