? Roughly 71% of respondents would choose a communication service provider to manage their connected home.
? 5G and other wireless technologies will challenge cable for the connection to and within the home.
? The applications and services that cable operators lay on top of their Wi-Fi will be essential differentiators.
Incumbent communication service providers, including cable and wireless operators, are undergoing a massive shift driven by increased competition, changing customer behaviors and the erosion of traditional growth. Raghu Puri, managing director at Accenture, believes a key avenue to success for these companies lies in developing integrated services for the connected home. Although Alphabet Inc. and Amazon.com Inc. are already chasing the smart home customer with their intelligent personal assistant services, Accenture surveyed 26,000 people in 26 countries and found 71% would choose a communication service provider to manage their connected home. During an interview ahead of the Cable-Tec Expo 2017, Puri discussed the opportunities and challenges that lie ahead. What follows is an edited transcript.
S&P Global Market Intelligence: What changes are you seeing for cable operators in particular?
|Raghu Puri, managing |
director at Accenture
Raghu Puri: The communication service providers who are focusing on consumers are recognizing they have two key strengths. One is the ownership of the consumer because they already have a relationship. And the second is the connection within the household. But both of those are now under threat because the over-the-top players like Netflix Inc. and Hulu are all eating into their entertainment service revenues. But they are also at risk at losing the connectivity into the home, because if you look at what AT&T Inc. or T-Mobile US Inc. or Verizon Communications Inc. are doing, they are offering unlimited cellular capacity, especially when you are taking their entertainment service. But if you are a cable provider and you don't have that connectivity, you risk losing that connection into the household.
Their subscribers are recognizing they would love to be able to get a more comprehensive service as opposed to the two or three different services that I'm buying today. That's an opportunity for the service provider, but the challenge they are trying to address is what should we do and how should we do it? How can we present consumers with a more integrated service offering and what should it look like from the back-end? Weaving all of that together — from their entertainment system to their broadband system to their connected home services — that is the challenge they are facing.
Cable's Wi-Fi service has always allowed you to attach as many devices as you want. Mobile operators, meanwhile, have frequently charged by device or line. How do you see those two models evolving?
Even in the broadband space, you have seen some operators experiment with usage-based billing. But they quickly realized it's better not to do that because internet connectivity is to some extent a commodity as well as a differentiator. Having said that, with the applications you are able to put on top of that, there is an opportunity for you as a service provider to do a couple of things. If you think about it, if I am a home healthcare provider or a home insurance or security provider where I manage or monitor all your devices so that if something goes wrong they are going to proactively identify that — all of these providers have similar needs. They need these devices installed in the house and those devices need to be managed to make sure they are working well. And as needed, a technician may need to be dispatched if there is a necessary repair. All of those services start looking very much like what a telco or cable operator could offer today leveraging their infrastructure and their workforce. And that becomes an opportunity. So going back to your question about differentiated billing for connectivity and services, there is definitely an opportunity to parse out part of the network or part of the capacity for a specific service offering.
Do you see some of the low-power wide-area solutions coming from the mobile space — like LTE-M or NarrowBand IoT — as a challenge to cable's Wi-Fi when it comes to the connected home?
Xfinity xFi gateway
Source: Comcast Corp.
Absolutely, the access network to the home is under threat, whether it's 5G or LTE-M. And that is something you are seeing the cable consultants come together to address. And I think that's why you've seen Comcast Corp. leverage their Wi-Fi network to offer wireless service. So that's one dimension. Maintaining the connectivity to the house is so important.
But the second dimension is managing the connectivity within the household. The device or gateway that sits in the household and acts as an aggregated point and actually as a control point for services is pretty important because that device is a critical piece in managing all the different services in the house. You can use the device to solve home Wi-Fi problems, which can be a pretty big deal in terms of dead spots and proactively identifying where the best connectivity is. And then you can give your customers the control of managing the services they have within their home, like what Comcast is doing with xFi. All of these services — the diagnostic, the provisioning, the applications within the house and the control capabilities — are key differentiators that a service provider can offer and also creates more stickiness to keep subscribers from churning.