IBC 2018: The smart home is a myth – don’t believe the hype

The vision of the smart home is powerful for the digital economy but don’t believe the hype, right now it’s a fragmented minefield of complication and frustration.

Advertisements on consumer channels and marketing collateral at industry conferences point towards the smart home as the realization of the future. Data is the fuel of this money making machine, with the promise of a space-age, free-flowing digitally enabled environment made popular by the entertainment industry. This world of convenience excites some consumers almost as much as the companies trying to make money out of it, but there is little evidence this vision is a reality.

Yes, there is consumer acceptance. There are also clever products on the market. Companies like Amazon and Google are creating incredibly complex virtual assistants and normalizing the voice user interface also. But in reality, all we have are several products, which individually connect to our smartphones, have little interaction and offer nothing but a gimmick to make our lives a little bit simpler.

The power of the smart home is to make our environments intuitive and personalised. The central heating comes on at the right time automatically, depending on where we are in the world and the temperature outside, or the TV displays personalised content depending on who is in the room. Alarms are adapted to our schedule and smart locks authorise entry to friends and stranger alike. It is the flow of information which makes these ideas possible.

According to telco and tech analyst Paolo Pescatore, there is an opportunity for the telcos to influence this space. The router should be the centre of the smart home, and should the telcos be able to create a common platform, with open-APIs to create interoperability with all devices, the dream can be a reality. Data will start to flow around the ecosystem, personalised services will begin to emerge, taking us away from a fragmented collection of gadgets, and what we have imagined as the smart home will start to become reality.

But here is the big question; are the telcos positioning themselves to capitalise on these rewards? Or might we see history replay itself? Sluggish behaviour and a lack of transformation meant the telcos were disrupted by the shift to OTT messaging platforms, missing out a massive slice of the data economy. The telcos might not lose revenue by not taking a leadership role in the smart home, though they won’t necessarily make more. Inactivity will see them remain as the connectivity utility, only collecting the crumbs which pass down the value chain. This is the road to commoditization and classification as a common utility.

Right now the likes of Amazon and Google are staking strong claims. Through normalising the smart speaker market, the focal point of the smart home can be shifted away from the router. Both of these companies are taking steps in aligning the various different ecosystems and concentrating the relationship with the consumer. The virtual assistant is being used in the same way the telcos billing relationship with the consumer could have been.

If there is to be an economy developed around the smart home, there needs to be a focal point. Too much fragmentation and too many billing relationships will over-complicate matters and frustrate the user. Telcos are moving users towards a single billing relationship for connectivity (convergence of mobile and broadband), and this relationship could have been extended to other services. Orange is trying to do this in France, though a consolidated effort across the industry is needed to wrestle control of the flow of cash away from the internet giants.

With Alexa and the Google Assistant, the two smart speakers enthusiasts are concentrating the consumers attention on one asset in the living room. This might only be simple instructions for the moment, though with shopping experiences being developed and content platforms also being thrown into the mix, they are winning the battle. The telcos are starting to look like passengers on the road to the smart home.

Perhaps more independent influences are needed to develop this common platform and establish the telco foothold. ETSI would certainly be a good place to start, and this would seem to be a project tailor made for the influential working groups. The TM Forum is searching for more validity in a digitally transformed world, maybe this is a way in which the organization can become more relevant than it is today.

Of course, a common platform is one factor when encouraging the flow of information, but another critical one is trust and credibility. Very public scandals, such as the Cambridge Analytica saga, and the almost-daily occurrence of data breaches are not providing the consumer any confidence the data economy is secure in the first place. Perhaps the telcos have an advantage here as well.

Aside from a couple of examples, the telcos have been largely innocent when it comes to data breaches. Most victims are enterprise organizations, while the internet players are having their credibility strained as more details emerge on how personal information is being used in advertising. Creating a common platform for data interoperability should, in theory, be more secure than the fragmented ecosystem which exists today, while the telcos have a strong-brand in terms of securing customer data. They have had a billing relationship with the customer for a considerably longer-period than the internet players, and still maintain that trust today. Both of these factors could be exploited in pushing the telco case for controlling the smart home ecosystem.

Ultimately the creation of a smart home will come through insight and personalisation, and these promises can only be delivered through collaboration. Maria Ferreras of Netflix highlighted it was sharing data on consumer viewing habits with partners, which is only a small aspect of the smart home, but it does inform and help create a personalised environment. Common platforms and collaboration across the industry will create more insight and accelerate the development of the smart home.

Some might argue the justification for the smart home is not there, that the fortunes are by no means guaranteed. There might well be an element of uncertainty right now, but Amazon and Google have proven to be incredibly accurate fortune tellers over the last decade. These two heavyweights fighting for control of the living room should be evidence enough there is money to be made.

The question is whether the telcos are ready to commit the R&D funds to capitalise on this opportunity. A common platform, which will allow all smart devices to communicate with each other and the consumer, is critical for the emergence of the smart home.

Many of the telcos argue they want to avoid the dreaded utility tag, but they aren’t being very ambitious trying to avoid it.