Home networking: the next revenue stream? Operators, phone companies, ISPs and manufacturers are all angling to help consumers link their PCs, TVs and other appliances

Cable World, Nov 26, 2001 by Richard Cole

Pioneer is taking a similar approach with its Passport software for its Voyager boxes. The company is developing a Passport download for thin-client set-top boxes that can control lighting, wireless cameras, a DVD player or a digital jukebox through a single remote control, says Mark Gurvey, VP of cable and communications. The network is maintained using infrared, X10 protocol and even USB communication ports, he says.

Pioneer is also looking at a more elaborate home-networking device that it will demonstrate at the Western Show.

"This home gateway device puts the burden of cost for high-end networking in a stand-alone device rather than in the set-top box," Gurvey says. In other words, subscribers, rather than MSOs, will have to pay for the more sophisticated home-networking device.

That points to another facet of home networking: If the gateway is not a set-top box, then cable operators are far from the only game in town. Pioneer itself is looking at retailing its own devices, Gurvey says. Ucentric, meanwhile, though working with cable operators, has also signed a home-networking deal with Sears and has run a trial with a DSL provider in Seattle.

Competition or not, cable operators are unlikely to rush into home networking without knowing they will have a revenue stream and a credible financial return.

Scientific-Atlanta's Russ, however, says MSOs need to look at revenue as only one leg of a three-legged stool that also includes increasing broadband penetration and decreasing subscriber churn.

But assuming they're sold on home networking, operators need to know what customers want and how cable operators can market to them. On that issue, everyone has different answers.

Ucentric's Giancola says that entertainment will push adoption of home networking.

"The beginning of home networking is all about entertainment--leveraging what operators already have in their home," she says. "This is about streaming video and audio throughout the home."

Rogers is banking on the increasing popularity of PVRs, which may be the key to acceptance of home networking. Motorola, which is working with Intel--which has consistently touted the PC as the central home-networking device--is taking a look at video-on-demand as a possible driving force for its equipment.

Some in the arena believe another lower-profile application could drive networking--home security. A number of MSOs are already experimenting with running home security, lighting and alarm systems through a home gateway, says Pioneer's Gurvey, a service for which consumers are willing to pay monthly fees.

2Wire's Fagenson, however, says that video, audio and security are nice, but adds that his company monitors customer assistance calls, noting that whatever the future of home networking, currently consumers are concerned mainly with networking computers.

"What we're hearing is that between 50 and 100% of the calls are, `I have two or more PCs--how do I link them?'" Fagenson says.

In the end, the customer will decide. Rogers, the one company that may have had a peek at what its subscribers want, says the trials haven't lasted long enough to find answers to questions about marketing techniques or price points. Two insights have emerged, however, says Lee.