Perhaps this is so obvious I'm wasting my time; I'm either afflicted with an unhealthy idealism or there are great movements afoot of which I'm unaware. But in looking over the littered landscape of two related technology fronts, I can't help but see a connection some seem to be missing.
Broadband penetration, both cable modem and DSL, has stalled at just over 12 percent of eligible households (in Korea it's more than 30 percent), with some surveys showing the vast majority of 56K users perfectly content with their dial-up access. Service providers are having a hard time keeping their fees from rising and still haven't made a compelling value proposition to those unwilling to fork over 50 bucks per month.
Meanwhile, home networking, another tech wunderkind at the bubble burst of two years ago, is also looking for that elusive "traction." But competing standards and competing technologies, wireless (Wi-Fi and HomeRF), phoneline (Home Phoneline Networking Alliance, or HomePNA) and powerline (HomePlug Powerline Alliance), have made this an alphabet soup for consumers and electronics manufacturers alike. All this despite rosy forecasts: Yankee Group says networks will be in 9.5 million homes by next year, Cahners In-Stat predicts 15.8 million by 2004, and Paul Kagan Associates anticipates $2.2 billion in revenues by 2005.
Though neither can be classified as debacles (try telling that to angry ex-Excite@Home users, however), each slump has generated its vitriolic finger pointing. Blame the standards, blame the economy, blame the government -it's all been tried. Intel's Andy Grove and Cisco's John Chambers, as well as other tech luminaries, have taken their case to Capitol Hill, calling for government involvement in pushing broadband penetration, while the Bells have been clamoring for regulatory relief to put them on a level playing field with cable operators.
FCC boss Michael Powell, of course, wants to leave things to the market.
As painful as it may seem to some of the players, home networking is badly in need of three things the private sector can provide: reasonably priced components that work together, services that people want, and someone to help integrate and manage the networks.
Broadband, meanwhile, with its over-reliance on the convergence triad of high-speed data, video (particularly VOD) and VoIP telephony, badly needs home networking, the logical piece to tie broadband services together and deliver them effectively throughout the home.
Neither of these sides seems to be looking closely enough at the basic definition of a home network from the customer's perspective. What exactly is a home network to them? In its simplest form it's a connection among various home devices, beginning with PCs, handhelds and maybe a TV. Even a non-sophisticated user can certainly grasp the value of a home security network or a content-on-demand distribution system.
Among the broadband players, DSL providers (SBC comes to mind immediately) have been out front in working with home networking. Cable operators, meanwhile, have been talking a lot about creating a "pull in demand," launching trials of various home networking services and products and pushing forward their CableLabs set of CableHome specs. The MSO's however, have yet to make inroads that customers can actually see.
What are they waiting for? Granted, the financial climate is still grim, with a python-like grip on the capital expenditure necessary for home networking.
But the irony is that while the Bells move forward with home networking plans, flush with cash and having entered into numerous home networking tech alliances, it's the cable operators whose modems are in 70 percent of broadband homes. Their agonizing slowness can be blamed in part on their debt loads and their hesitancy as they await some resolution in the home networking standards and technology fracas.
In the meantime they're missing out on several opportunities. On the revenue side, home networking would dramatically speed up adoption and use of DVR technology and VOD, offsetting deployment costs. And, as several analysts and enlightened cable guys have pointed out, home networks can save on truck rolls and customer service costs.
THE LAST FOOT
Bottom line, home networks, residential gateways, smart homes, PANs, whatever you want to call them, are a logical extension of cable's (and DSL's, for that part) broadband strategy. They're the last square footage of the last mile. And no matter what they might be used for, from the obvious (data connections) to the futuristic (home security, energy management, smart appliances, automation), they're going to need a healthy dose of broadband investment and input to realize their potential and generate the revenues broadband so badly needs. The fact is, broadband users are the major adopters of home networks; Forrester Research says 7 million broadband households will have their own home network by next year.
So maybe, when considering how to gain "traction" with non-broadband users, we need to ask the question this way: Would customers rather pay $50 per month for a broadband connection that boasts nothing more than high-speed Internet access, or pay a figure somewhat greater than $50 for broadband Internet plus... a home security and energy management system? A video and audio distribution link among PCs, stereos and TVs networked with a powerful DVR? Internet radio, VOD and webcam linkups?
As a broadband and home network customer, I want something similar to what AT&T's C. Michael Armstrong once promised me (but never delivered): one bill for multiple services. A choice of providers is a good thing, but once I choose I want one connection to deliver services to all my home-networked devices - and one bill. Not multiple companies, multiple technologies and multiple headaches.
Tech players and broadband service providers hell-bent on carving up their Golden Goose instead of getting it to lay more eggs had best take heed.
You can reach Will at email@example.com
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