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Digital Home - The Opportunity for Telcos

As you’ll have seen for ‘Digital Town’ here, we create detailed hypotheses as a brief for participants at the Telco 2.0 brainstorm . Next up is the Digital Home work stream on Day Two, which looks at the impacts of high speed broadband and wireless access, and the parallel evolution of other technologies, on the home environment. We’re delighted to have senior execs from BBC, Belgacom, BSkyB, FT-Orange, Slingbox, Telecom Italia, Telefonica, Telenor and others preparing special stimulus presentations for this. (Thanks again for input to Alan Patrick from Broadsight who is working with us on this).

So, below is what we think is the ‘Situation’, ‘Complication’, ‘Key Questions’, and ‘Way Forward’ for ‘Telcos in the Digital Home’.

The Situation today is interesting to say the least:

- Broadband takeup in recent years has been phenomenal in many countries, driving a shift in the way all media is consumed in the home
- The Digital home has a high penetration of separate devices - PCs, PDAs, TVs, Mobile, MP3s, CCTV, Games Machines and other intelligent home devices
- There have been a number of mixed media Mobile/VoIP home services launched
- The overall economics of the business world are increasing the amount of home working, and home workers, as HomeComms gets better
- Trends identified in the 1990’s such as “Cocooning” ourselves in our homes show little sign of abating.
- With e-commerce, e-learning, e-health and e-government it’s easier now to live without leaving the house at all, you even socialise with your e-Friends on your favourite Social Networking site (case in point - my home shopping arrived this morning while I did my tax return online and researched and wrote this
article)
- Researchers at MIT and other places have shown how immersive and ambient Home Networks may work, ushering in the new dawn of the Smart Home

However, there are some complications to this e-dream. Clearly a Telco wants to be a major player in the Digital Home, but there are major barriers.

- Can Broadband really deliver big bandwidth if everybody is using it - bandwidth limits, contention and xDSL speeds will all be pushed to the maximum
- The commercial models for a supplier of home web traffic are unclear - a Web TV service will use up an entire monthly allocation of ISP bandwidth in an hour in the UK, for example.
- Mobile / IP mixed media services have not yet been resounding success stories - in fact, mobile 3G overall has not really lived up to its promises, leaving the field open for a variety of other wireless approaches - WiFi, WiMax and - thus muddying the aether considerably.
- The home is a “Digital Mess” today - everyone wants to be the Home Hub, but no one wants to be the Tragedy of the Commons so there is little commercial interest to make different devices interwork easily.
(Some people are amazed that we can connect a PC to a TV) - this will possibly creates a barrier to mass adoption.
- Telcos still, by and large, don’t “get” customer centric multi-service provisioning - their structures are built around discrete stovepipe product provisioning, so many of them fail to delight customers in a multi service world.
- Consumers are limited by choice and budget - in the “Attention Economy”, does a Digital Home actually help people free up time or money?
- With respect to Home Working, Cocooning and the ease of e-Hermiting overall, it is becoming clearer that we are social animals and for our (and our societies’) health we should get out more…..will counter-trends and possibly regulation militate against the Digital Home?

Key Questions

For a Telco the partners in its ecosystem, there are four fundamental questions: Will “Digital Homes” ever be a mass market, if so then what will they look like, what will be the Telco’s role in the Digital Home (and why so?) - and finally, what does the Telco have to do to serve its customers in this new environment? The Telco 2.0 Digital Home session will address some fundamental questions:

- What types of Digital Homes will emerge - what are the drivers and trends for, and against, them emerging en masse?
- What will they look like - what will people do in them, how, and by when?
- What role does a Telco play - pipe provider, service provider, e-Commerce enabler - an where is the benefit likely to be
- Similarly, what roles will its partners play in this environment - and are there new partners needed, old ones to be dropped?
- What do Telcos and their partners have to start doing today to serve its customers - what options to take, services to start, structural changes to make?

Towards a Solution

Our Hypothesis, which we will be debating is that:

- The Digital Home will arise, but it will be a patchwork quilt depending on location, demographics, lifestyles and conflicting needs - flexibility will be key
- Technology adoption will be a patchwork quilt but in the main will be driven by people’s desires for Communication, Entertainment and an easy life - they will live with unsolvable problems rather than solutions that are too hard to use.
- The role of the Telco is to use all its assets across the value chain to make it as convenient as possible for its customers, and their suppliers, to use its capabilities
- To make this a success, Telcos and their partners need to become more customer-centric across the whole customer lifecycle. They will all have to expose more of their end to end capabilities to customers and potentially each other - and other service providers - now.

We are seeing the space polarise into “experience providers”, and “experience enablers”. Our hypothesis is that very few telcos will be experience providers. It’s up to them how much of the enablement they want to participate in
— there’s plenty of opportunity, and correspondingly little action today. Come and debate the issues at the Telco 2.0 event in March.

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