Connected home brings new revenue opportunity for telcos: Ovum

Here comes the 'quint play': Home and mobile phone, broadband Internet, TV services and smart home services

The rise of the Internet of Things could allow telcos to provide a “quint-play” of services, according to an Ovum report.

The quadruple play, which is still not common in Australia, includes home phone, broadband Internet, mobile phone and TV services bundled on a single bill. In a report released today, Ovum has slotted the smart home into a fifth spot.

“For the service provider, the smart home concept is an opportunity to implement the next level (quint-play) of service bundling, creating additional value for its customers and generating new revenue opportunities for its business,” Ovum stated in the report, which was commissioned by NBN Co.

“Connected home automation services are achieving successes in markets similar to Australia’s. There are opportunities for telecommunications service providers in Australia to also find success in this fast developing service category.”

The report includes case studies from Comcast in the US and Orange in Poland. Ovum also cited a Telsyte estimate from April that home automation device sales will reach $917 million by 2016.

The main barrier to growth in the connected home market is its currently small ecosystem of devices and applications, Ovum said.

“To grow this market the ICT industry must create innovative products that widen the appeal of connected home technology to the mass market,” the report states.

However, Ovum said it’s optimistic that home automation services will catch fire.

“Sensor costs are falling, and sense/control devices will in due course be integrated into household fittings such as windows, doors, thermostats and air conditioning units. This will place these services within the reach of a larger and larger number of households and provide opportunities for telecommunications service providers.”

Telcos are ideally positioned to sell connected home products, according to Ovum.

“The key advantage that telecommunications providers have is their preexisting relationship with a large number of households as an IP connectivity and IP gateway provider, along with a strong billing infrastructure,” it said.

“These advantages make telecommunications providers an attractive partner for IT companies looking to deploy connected home services to a mass market.”

Ovum cited specific revenue opportunities for Australia in home security and home automation such as energy management.

Read more: The Internet of Things at home: Why we should pay attention

In Australia, only 1 million household out of eight million have remote security monitoring systems, it said. Adding these services could provide $10 per month in additional average revenue per user (ARPU), it said.

Ovum said it sees growing demand for energy management services as energy costs become a larger share of household budgets and efficiency becomes a greater priority.

“There is no single killer app in the future but rather big ticket categories such as security and energy control,” said Ovum analyst David Kennedy.

“Growing revenue in a mature market like Australia is about incrementally improving the service offer and allowing for new innovation and consumer experiences.

“RSPs need to develop a suite of services that deepen the relationship between their brand the household. This will generate customer loyalty between RSPs and their Australian households as they become more familiar with the apps of the future.”

Adam Bender covers telco and enterprise tech issues for Computerworld and is the author of dystopian sci-fi novels We, The Watched and Divided We Fall. Follow him on Twitter: @WatchAdam

Follow Computerworld Australia on Twitter: @ComputerworldAU, or take part in the Computerworld conversation on LinkedIn: Computerworld Australia

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