European Service Providers Embracing the Connected Home

We're in London for the Connected Home World Summit, and I chaired yesterday's sessions. The operators in attendance are from a wide spread of European markets - everywhere from Greenland, Estonia, Italy, Germany, France, Russia, and countries in between. I was furiously writing notes during the keynotes and the panels, and came away with the following takeaways:

• There are very different takes on the economics of deploying the "God Box"/über-box, which would bring in the functionality of the residential gateway (modem, routing, remote manageability, etc.) along with multiple set-top boxes (tuners, transcoding, server capability, etc.). For reasons related to cost, lifecyle differences in CPE, and the risk of one point of failure, many operators are taking a very conservative approach in deploying a fully integrated customer premise equipment hardware. At the same time, Intel (which was represented at the event by Brendan Traw) has had early success with some service providers, including Telecom Italia and Liberty Global, to deliver a high-powered gateway that takes on much of the functionality of the über-box.
• The effort formerly known as Project Canvas (now known as YouView is making progress, and we can expect to see set-top boxes and then connected televisions with the implementation in 2011.
• There are some interesting thoughts about whether the concept of TV Everywhere is simply a nice-to-add feature or a true revenue generator. Our own research finds a good percentage of consumers willing to pay a $5 premium per month for access to their cable channels on different IP-connected devices, and Irdeto - which delivers content protection solutions - indicates that one of its European service provider customers is getting a good take rate on a TV Everywhere service at a €5-6 premium.
• Irdeto's representative also spoke of the evolution of digital rights management, indicating the the renewability DRM - that is, its ability to be updated as new threats emerge - will be a critical trend. It's one of the key reasons that Irdeto acquired Cloakware.
• A speaker from Vodafone shared the company's key connected home strategies, which includes the deployment of both residential gateways (with a port for a 3G modem) and femtocells in the U.K., French, and Spanish markets. In terms of value-added services, they have found good success with delivering an online backup service, which is one of the key value-added services that Parks Associates identified in our Customer Support in the Digital Home: Europe study in major Western European markets. Finally, they have embraced at least some basic home control applications with remote home monitoring through the mobile phone. This is an area that we're watching closely, as we expect that energy, home control, and health applications as value-added services will be important for operators to investigate in the next few years.
• Operators are mainly very pleased with the capabilities that DLNA provides to them, particularly in applications such as media servers and multi-device entertainment servers.
• Several service providers spoke of their concern about the high number of video formats that will need to be supported.
• A speaker from A1 Telekom Austria also spoke of the importance of its online backup service as a value-added service (as did a speaker from Telefónica). A1 Telekom Austria offers 1 GB of storage for free, but also will upsell tiers. The company developed their own UI and Media Manager software so different devices (TV, PC, mobile, etc.) could access and share content. The sharing of content is a critical element as well. You can push things like photos to your parents by simply entering in their telephone number into the interface on the TV or the PC, so sharing digital photos with non-tech savvy people becomes much easier.

I'm off to Budapest to speak at the CTAM EuroSummit'10 tomorrow. It will be interesting to hear the perspectives of the cable operators in Europe regarding the connected home, and what similarities and differences exist with technology, strategy, and business models.