According to research from Parks Associates, the majority of American consumers (60%) buys or leases their residential gateway from their internet service provider (ISP). However, existing gateways are not perceived by consumers as an important part of the connected home experience. So long as the gateway provides good Wi-Fi coverage and speed, most consumers are satisfied.
Rarely do consumers place gateways in a prominent location in the home as they do with other smart home devices, like smart speakers. As a result, ISPs have become an “invisible brand” inside the home, while companies like Amazon, Google and Apple gain additional mindshare.
Two current market trends have the potential to change the game for ISPs. One is the growing popularity of smart home devices that use low-power wireless technology and the other, ironically, is the growing popularity of smart speakers, like the Amazon Echo.
Rethink the home gateway
Currently, when consumers purchase smart home devices that use one of the standard low-power WAN (LPWAN) protocols (Bluetooth Low Energy, Zigbee or Z-Wave), these devices cannot be connected to their existing residential gateway, resulting in limited functionality. For example, door locks cannot be operated remotely using an app. Connecting LPWAN-powered devices to traditional gateways requires additional hubs or bridges — often at an average cost of $90 each. These supplementary devices serve to “convert” the LPWAN signal emitting from the smart home device to Wi-Fi, enabling the device to be connected to the gateway.
What if ISPs could offer a universal IoT-capable residential gateway that gives their subscribers the freedom to buy any smart home device without worrying about whether it will work in their home? This would reduce the complexity associated with the smart home and eliminate the need for multiple hubs and bridges to support devices that use different protocols. By enabling consumers to enjoy a simple and economical experience, ISPs would differentiate their offers, deliver on the promise of smart home automation and capture a more central role in the smart home.
Simplify device setup and configuration
Another huge differentiator for ISPs is their understanding of technology, which is at the core of the smart home. However, for ISPs, the smart home opportunity is also about providing an excellent customer experience.
Setting up smart home devices can be a complex task for consumers. Research by Parks Associates indicates that half of U.S. smart home households (registration required) have had problems setting up their devices. The top three trouble spots are configuring settings, connecting devices to routers or the internet, and physically installing devices. ISPs are often on the receiving end of customer complaints when things go wrong, despite having limited involvement in the process. This drives support costs higher.
Take voice assistant functionality to the next level
The popularity of smart speakers indicates that consumers are willing to pay for an excellent smart home experience. Ranging in cost from $35 to $150, these devices typically occupy a prominent position in the home, such as the kitchen or living room. Today, 54.4 million Americans — 21.6% of the adult population — own smart speakers.
How beneficial would it be for ISPs to offer a cutting-edge residential gateway that is as good or better than any gateway that their subscribers could buy from a consumer electronics store — with an integrated smart speaker?
Gateways with this functionality would be transformed into premium smart home systems. By providing a premium smart home system that consumers interact with daily, ISPs gain additional mindshare by becoming a more visible brand inside the home.
The fact is having a premium smart home system with an integrated smart speaker would:
- Entice more subscribers to buy or lease equipment from their ISP, rather than shopping at consumer electronics stores;
- Place the ISP at the center of the smart home experience, as the gateway used to provide consumers with Wi-Fi connectivity also serves as a smart speaker;
- Result in significant cost savings for subscribers by eliminating the need for additional hubs and bridges for LPWAN connectivity;
- Increase customer satisfaction and loyalty by giving consumers more freedom to buy the connected devices they want (without having to worry if their gateways will support the specific technology), reducing the total number of devices and simplifying the overall smart home experience; and
- Create new revenue opportunities for the ISP by linking services to smart speaker functionality (e.g., “Alexa, the Wi-Fi network is a bit slow. How do I upgrade to a higher speed?”).
From under the desk to the top of the counter
ISPs are well-positioned to take advantage of the rapidly growing market for smart home devices and technologies. By offering premium smart home systems that combine universal support for the most popular IoT protocols, combined with an integrated smart speaker, ISPs can increase revenue, reduce support costs and earn a place at the center of the smart home experience.
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