Parks Associates Blog

Thursday, July 19, 2007

Cable Reticence in Home Networking

For telcos on a worldwide basis, I don’t think there’s any question that they see the value of things like home networks and residential gateways, especially in places like Europe. I think there’s a reason why France Telecom and British Telecom are being as aggressive as they are with deployments of Livebox and the BT Hub, respectively, as local loop unbundling is going to force them as service providers to truly differentiate with their services. There are some really interesting applications using the home network, such as fixed-to-mobile communications handoffs (even some femtocell work), and IPTV has really raised the stakes for carriers on a worldwide basis to examine “no-new-wires” bridges, adapters, and embedded solutions as ways in which to significantly reduce the install time.

Given this push by the telcos to roll out their differentiated services, you'd think that this might spur some heightened activity among cable operators to more actively develop and deploy home networking-related solutions. However, I'm not really sensing much activity in this direction. Although we had a couple of cable executives on a recent CONNECTIONS discussion panel regarding home networking, the typical comment we have heard from the MSOs is that they'll deploy home networking solutions in greater numbers once they see “the business case.” We have also heard from some chipset manufacturers (modem, set-top box space) that the operators are really struggling to figure out how to best implement solutions like whole-house DVR without taxing the processor capabilities of their current set-tops. I think that home networking is really going to be a critical element in providing customers with a truly valuable and differentiated service (look at Verizon’s Home Media DVR – the last public comment Verizon made was that it was deploying at about a 12% take rate among FiOS TV customers).

Among the cable operators, home networking may indeed be an insignificant concern, at least relative to what other issues they're facing. Certainly, questions about how best to optimize their networks (digital simulcast, channel bonding, switched digital video, etc.) and dealing with the FCC's "separated security" order for set-topx (CableCARD, et. al.) are definitely chief concerns. However, we're disappointed that what we're hearing from cable right now about home networking is a big yawn.

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