The ABI Research report, UnTelco in Smart Home: Telcos opportunities and Market Activities, forecasts that connected or smart homes will bring additional revenue, of about $11.2 billion by 2022, to operators that build smart home offerings alongside their investments and deployments of broadband and video services.
ABI Research noted that the window of opportunity may be narrowing on the back of aggressive competition and suggests that operators must accelerate their UnTelco strategies – activities they should pursue beyond their traditional offerings to foster revenue growth – in smart home to take back the ownership of the home or risk being relegated as marginal players.
“CSPs are being threatened in a market increasingly driven by the likes of Google and Amazon with a range of products and services from AI-powered smart home voice control smart speakers to security solutions,” ABI Research senior analyst Pablo Tomasi said.
Tomasi conceded that CSPs are accelerating their strategies for the smart home and cited operators like Telefonica with Aura, Orange with Djingo, and SK Telecom with Nugu as leading the way of operators developing AI assistant to support their smart home play.
To win the smart home, operators must take a platform approach, as done by Deutsche Telekom or Comcast, two of the leading operators in this space. A platform strategy must be supported by the creation of a wide partner ecosystem and must be underpinned by an innovative monetization approach favoring freemium services over traditional bundles.
Operators have assets all around the connected home from providing connectivity, creating content and delivering video, to specific applications such as monitored security and as such, they have a wider reach than any other competitor. Operators should use this mix of essential (e.g., broadband connectivity) and value-added services (e.g., monitored security) to tailor a strategy fine-tuned to customers’ needs and regional dynamics.
Tomasi cautioned that operators should not impose their legacy fixed-line business model to the smart home.
“The smart home is core to the CSPs’ future and it is a real test to assess how far CSPs have developed their business beyond their telco heritage and how they can adapt their bundling business to market condition, experiment with innovation, and compete head-to-head with webscale players,” he concluded.