European telcos should target opportunities in the connected home environment to drive new revenues and boost customer loyalty, German mobile operator Deutsche Telekom argues in a new report.
In the report entitled: ‘How To Create Growth From The Connected Home’, Deutsche Telekom sets out how the telco industry can realise the next stage in its growth trajectory – moving beyond triple and quad play - by exploiting the potential of the connected home.
The report outlines a number of prospective growth spaces, many of which align closely with telcos’ existing offerings, or can be realised through brand partnerships. The Western European connected home market is set to be worth up to €12bn annually by 2019, with a total of almost 50 million homes having installed such technology (Strategy Analytics, Dec 2014).
Deutsche Telekom, which has invested significantly in building its open connected home platform, states that telcos need to actively exploit the opportunity, otherwise ‘over-the-top’ manufacturers and service providers could potentially disintermediate them, and they will fail to capture a fair share of the value, but rather just the cost, in terms of incremental network investment and increased operating costs.
Deutsche Telekom outlines that telcos should consider establishing ecosystems of third party manufacturers and service providers to create greater differentiation and so engender enhanced customer loyalty. The report also details how, by entering new and adjacent markets, related to the connected home, such as home security.
Holger Knoepke, Vice President Connected Home, Deutsche Telekom (pictured above), explained: “The connected home is a natural extension of the core quad play offer, which we as an industry are all focused on. We believe that the connected home represents one of the next big growth opportunities, and for operators who provide customers with their broadband router or TV set-top box, it is an obvious next step.
“In the near future, we won’t just be providing Wi-Fi connectivity, so customers can connect their PCs, tablets, smart TVs and smart phones, but increasingly we will support our customers in connecting the majority of their domestic devices and appliances.
“We will be responsible for providing connectivity across multiple different types of devices, different manufacturers and brands, and then enabling a range of incremental services that enhance this.”
The report outlines a number of other specific points for operators, including the top ten key success factors to drive growth in the market (see page 4), one of which is how to leverage Cloud-Based Data analytics so that – with the customers’ approval – telcos can create more personalised service offerings and so enhance customer loyalty.
It also states that device and data security, which is a key strength of Deutsche Telekom’s platform, can be one of the areas where telcos can differentiate from other players in the market.
Knoepke added: “Not only does the connected home mean new revenues, as a result of new services being bundled with home broadband and increased mobile data traffic, but it means greater differentiation, and with that more loyal customers.”
One of the greatest challenges facing operators seeking to enter the connected home market is the lack of common standards and common architectures. Today, many proprietary and incompatible wireless protocols exist, which continue to limit the mass market adoption of connected home services.
To help the industry realise the opportunity, Deutsche Telekom has built an open platform, leveraging OSGi (Open Services Gateway initiative), and Eclipse SmartHome, an open source software environment. It will also deploy an open API and SDK to provide seamless integration so that customers and partners can rapidly integrate new connected devices and create new innovative services.
Knoepke concluded: “Having a truly open and interoperable connected home platform that can be licensed by any telco will – we believe – bring multiple benefits to the industry, from improved time-to-market, to access to a common open source developer community, which will ensure that we, as telcos, maintain more of the value.”