Cable operators are building lines of business around home security and other “smart home” offerings, thus far with mixed results. These new services should help them to expand and diversify their sources of revenue and grow their relationships with existing customers, but there is some skepticism as to whether home security is a long-term winner. One issue is that in their current and traditional form, home security services may only be relevant to a limited market segment. With some fresh ideas and innovation, however, cable operators may be able to expand this market substantially to bring home security – or more relevantly, remote home monitoring – to a larger customer segment with a greater variety of offerings that take advantage of the substantial bandwidth – i.e. excess capacity - cable networks can deliver to customer premises.
Current Market Factors
Reuters reports  that the U.S.’s home security market currently generates $13 billion in revenue per year. The U.S.’s largest cable operator alone generates more than $64 billion in annual revenue, so the current home security market is relatively small and involves many incumbent players with similar – albeit aged – business models that only penetrate a certain layer of US households.
According to the U.S. Census Bureau , there are roughly 115 million households in the U.S., which means today’s home security providers only generate a little more than $9 per month per household. Consider that statistic in context of two others. First, home security services are typically priced between $30 and $50 per month. So the $21 to $41 delta between the typical price and the average revenue per household signals a substantial, untapped market opportunity. That assumption is confirmed within Reuters’ report that two-thirds of customers who have bought home security services from cable operators, thus far, have never had such a service before.
In the $30 to $50 per month range, home security subscriptions may be priced out of certain market segments that cable operators can access, particularly down market. Furthermore, most home security services are designed for houses and have few, if any, proactive, mobile, or user-controlled features or multi-dwelling unit options. They therefore have limited relevance to, for example, apartment dwellers who live in buildings with some form of front door security against break-ins. These potential customers, however, may desire forms of home monitoring that are not limited to securing entry ways into their homes.
The question naturally arises as to how cable operators can leverage their broadband assets and multi-device applications to make home security and remote home monitoring services more relevant across the broader range of customer segments in which they are already entrenched. Here are five ideas cable operators can consider for bringing innovation to the home security market, followed by the BSS/OSS assets they have, or can utilize, to bring them to life:
Don’t Just Alarm the Door – Monitor and Notify Customers Proactively
Traditional home security systems focus on alarming points of access, such as doors and windows. Over time they added automatic notification to police and fire departments in case of alarm. But they have not provided much in the way of surveillance or proactive notification via mobile to customers themselves. If a couple is out to dinner and has left their children at home with a babysitter, they might want to know when the door has opened, even if an alarm hasn’t gone off. This and other types of monitoring and proactive notification can expand home security applications and make them more controllable, practical, and valuable for users. This expands and may deepen the cable operator’s relationship with the customer while monetizing new services that build off of the cable operators’ strong broadband offerings.
Enable Time-Limited Add-Ons
Home security services today do not offer much beyond monthly subscriptions. Their payment processes, even online, can be cumbersome. Cable operators have the monetization infrastructure – i.e. BSS and billing – to offer more services that complement the primary subscription. For example, a customer might want to add proactive notification for home security, HVAC, and other features on a time-limited basis such as during a weekend getaway or international business trip. Cable operators can offer more complementary applications and create more sales opportunities beyond the initial subscription by using their mobile and broadband resources; real-time, direct-to-bill charging and payment; and catalog driven product management and sales capabilities.
Furthermore, cable operators could offer services like these as complements to customers’ existing home security services without displacing the incumbent provider. A camera-enabled set-top box, or drop-shipped, Wi-Fi enabled surveillance camera, could provide the basis for basic remote monitoring services that do not require or conflict with the home alarm system and can be offered on a recurring subscription or time-limited basis. These services can leverage cable’s broadband networks and in-home WiFi to bring new, value-added services to customers that monetize excess broadband capacity they’ve already deployed and activated.
Monitor the Remote Location
Consider customers who have vacation homes, boats, ATVs, or just storage outside of the home. Why not make remote monitoring of these locations and valuables part of the package? Anything from a country house with pipes that freeze, to the offsite garage where Dad works on his vintage Chevy, has applicability for remote monitoring applications. If rolled out simply, inexpensively, but practically with tie-ins to online and mobile access, this can expand the market for remote monitoring – i.e make sure the thermostat and pipe heating systems are running - and personal security – i.e. make sure the teenage son isn’t joyriding in the Chevy.
Integrate Emergency Communications
Communications services that enable the elderly or disabled to reach contact centers immediately for help have been around for decades. But this kind of functionality could be extended to a broader audience to make it far easier for parents, caregivers, and even children to access emergency services in situations where a security or fire alarm never sounds. How does a small child contact EMS if Grandma falls while babysitting? Who do you call when a pipe bursts, a window breaks during a storm, or you’ve received a proactive notification that someone opened your front door but the alarm didn’t sound? Integrated emergency and maintenance communications can expand the concept of home or personal security and are natural extensions of cable’s mobile application offerings.
Provide Superior User Controls
Today’s home alarm systems are somewhat rudimentary as far as security goes – a simple four digit code is all it takes to disarm not only a single alarm, but the entire system. So what if a customer doesn’t want the housekeeper or the teenager to be able to disarm the surveillance application when they shut off the door alarm? Furthermore, any single-factor security system just isn’t all that secure. Cable operators have an opportunity to introduce more user controls, permission-based settings, remote controls, and multi-factor security to the home security market and raise customers’ expectations against the competition.
Key BSS/OSS Capabilities for Innovating in the Home Security Market
Though there may be many more details to consider, there are some high level BSS/OSS capabilities that cable operators can leverage to drive the home security market forward. These capabilities, in most cases, are inherent to or natural extensions of their current BSS/OSS roadmaps.
- Simple Installation and Activation: Any new devices, such as Wi-Fi-enabled cameras or door alarms, must be simple for technicians or, ideally, customers to install and activate. Not only does this mean enabling devices to auto-activate out of the box, but it also means automating service fulfillment on the back end for network connections, device management, and all associated application functionality – i.e. user accounts, proactive notification settings, and user permissions.
- Strong Self-Care: Enabling effective user controls necessitates strong self-care capabilities, particularly via mobile and web interfaces. These are the primary control points for the user to monitor, configure settings, and purchase new services. They need to be simple to understand, easy to use, and highly responsive – i.e. well integrated into service management, billing, and ordering.
- One-Touch Purchase via Mobile: Since there is an opportunity to introduce on-demand, and time-limited applications to the home security mix, one-touch purchasing via mobile app can be a real differentiator. Imagine the customer is two hours from home in her RV and remembers that she wanted to keep an eye on the house sitter for the week. If she wants to add proactive notification for the week, one-touch mobile purchasing can let her find the feature, purchase it, and charge it directly to her cable bill immediately.
- Policy-Based Settings, Controls, and Permissions: To enable different settings, codes, and access permissions for different users, cable operators will need to leverage or deploy low latency (or real time) policy control capabilities and make them accessible to customers through self-care interfaces. This is a differentiator that is very difficult for incumbent security providers to replicate, but is similar to the kind of parental and spend-limit controls communications and cable providers are rolling out in relation to mobile, digital content, and other services.
Ultimately, cable operators are in a strong position to revolutionize and expand the home security and remote home monitoring market. Doing so would build off of their strengths in broadband networking while expanding what they can offer to each customer. As they rapidly adapt, expand, and even transform their BSS/OSS capabilities, cable operators may consider these next-generation capabilities as means to enable and deliver a variety of new service innovations that take home security and remote monitoring into its next generation.
With some fresh ideas and innovation, cable operators may be able to expand this market substantially to bring home security – or more relevantly, remote home monitoring – to a larger customer segment with a greater variety of offerings that take advantage of the substantial bandwidth – i.e. excess capacity - cable networks can deliver to customer premises.