HOME NETWORKING STUCK IN IDLE

Getting 'average' consumers to see the benefits of connecting various home devices is difficult--especially given that such devices won't reach the mass market for at least five years under the most optimistic scenarios. But carriers continue trying, albeit at a significantly slowed pace.

Like most technology sectors following the dotcom bust, the home networking market is getting back to basics.

After promoting the concept of smart homes to a customer base that wasn't large enough, couldn't afford it or simply wasn't interested, vendors and service providers have for the most part abandoned the Jetson's imagery of smart homes and decided to take baby steps into the market.

BellSouth, for instance, has largely shied away from the sector — even when the market moved at full-hype speed. Instead of engendering visions of homes with automated systems that would allow users to turn on lights, control environmental systems and even inventory their refrigerators from an IP connection anywhere in the world, the carrier will ease its way into the market when it announces its first home networking service sometime this month.

BellSouth FastAccess Internet Service is designed to give its DSL users the same capability that leading-edge adopters have had for years: the ability to share their high-speed connections among multiple PCs. Using 2Wire's home gateways, BellSouth is the latest in a growing list of carriers trying to bring home networking out of the early adopter phase.

“We've really positioned ourselves to folks that don't know how to do home networking,” said Randy Kincaid, senior director of consumer broadband sales and marketing for BellSouth. “This won't appeal to people who know how to string [Category] 5 wiring.”

But appealing to the mass market is easier said than done. Though numerous carriers have attempted to make inroads, in general, home networking remains the domain of technically savvy users.

SBC Communications, which launched a home networking initiative with 2Wire last summer, was averaging 2000 sales per month in the third quarter, the last quarter for which numbers were available. The company launched the service in Southwestern Bell, Pacific Bell and Nevada Bell territories in June 2000, quickly followed by SNET and Ameritech serving areas.

Like BellSouth, SBC has targeted its home network offering first to DSL users with what was intended to be the beginnings of a bundled package of services, including security monitoring, telemetry and device control.

However, with the company slowing down its Project Pronto efforts because of regulatory issues, it also is slowing the growth of its potential customer base. “Strategically for SBC, home networking is still very important,” said a company spokesman.

In the meantime, numerous technology developers have been sacrificed waiting for the market to develop. Broadband Gateways, one of the first to push the home network model through service providers, filed Chapter 11 and closed up shop last summer. Uniden America eventually picked up the company's assets, including its intellectual property rights and patents.

From a practical standpoint, SBC is waiting for device manufacturers to catch up with the market. At this year's Consumer Electronics Show, several vendors were touting the ability to connect everything from goods like ovens and refrigerators to home audio systems into an IP-based home network. It will be a number of years, though, until most of those devices hit the market and at least five to six years — in the most aggressive scenarios — before they reach the mainstream consumer.

In part, the delay is caused by the home networking market itself. Like many other new technologies, home networking vendors have been mired in a standards battle, hashing out issues that are of immense interest to their own community but of little concern to the vast majority of end users. And also like other technology segments, the solution to the standards question appears to be “all of the above.”

In most cases, the array of standards is narrowed significantly by the particulars of the home, said Bob Burich, president of Verizon Connected Solutions, which works with 250 builders around the country to pre-wire new construction homes for everything from security systems to shared high-speed Internet access.

Currently the Verizon subsidiary is only working with wired solutions using the Home Phone Line Networking Alliance (HPNA) standard, which allows users to connect PCs using existing copper wiring and is emerging as the dominant wired solution. But it's also exploring wireless options, including 802.11a, 802.11b and Bluetooth, which are more adaptable to older homes where wired installation would be prohibitively expensive.

BellSouth and SBC also are using HPNA, though BellSouth is aggressively studying wireless options with an initial preference for 802.11b, which can send up to 11 Mb/s of data at distances from several dozen to several hundred feet over the 2.4 GHz unlicensed band. The more recently developed 802.11a standard supports data rates up to 54 Mb/s in the 5 GHz band, though it is less proven in the field, said BellSouth's Kincaid.

“[802.11b] is faster and wider than Bluetooth,” he said. “‘a’ clearly has a higher potential for faster speeds, but ‘b’ is more proven for the bursty speeds that you get on the Internet. Right now HPNA is pretty much a standard. We need to do a little more due diligence on the wireless standards before we launch that.”

For the industry to move into the mass consumer market, it also must answer basic questions. “Right now, there's a million definitions of home networking,” said Verizon's Burich.

In part to help define the market better, the Consumer Electronics Association in January created the TechHome Rating System, which gives homeowners and builders a point system for ranking the capabilities of individual homes based on five factors: home entertainment, communications, PC networking/Internet sharing, security and home comfort/convenience. The system also gives the market a yardstick by which to measure consumers' interest in the various elements of home networking.

Lately, the meter has swung significantly toward entertainment, Burich said. That doesn't necessarily mean telcos will get cut out of the equation, though. While not traditionally strong in offering entertainment, some are taking advantage of the strides made by the consumer electronics industry to promote home networking as a way to provide Internet-based entertainment on multiple platforms. Moreover, most carriers are taking a more hands-off approach than, say, the high-end audio/video market, preferring to use the lessons learned in the DSL market by offering self-install kits.

In their early rollouts, SBC and BellSouth are sending gateways to users with self-install instructions. According to Kincaid, about 96% of BellSouth's DSL customers install their own modem and activate service. The carrier is hoping the progress made by vendors will translate into the home networking market.

“The appeal of this is the ease of use and the support,” he said. “This can be a complicated area with protocols and resolving software conflicts. To appeal to the masses, they don't really want to figure out how to do that.”

Verizon also is marketing 2Wire's gateways to its DSL user base but is among the most aggressive in the new home market, working with homeowners before they move in to design structured wiring systems that include the electronic piping needed for virtually all services.