Smart Homes: searching for the right business model

Friday 14 October 2011 | 15:35 CET | Background

The technology to implement smart homes is existent, many tests have been done but how to convert it to a mass market product? That turned out to be one of the key issues coming from the presentations at the Smart Homes and Metering/Billing events in Amsterdam in early October.

For a number of years various players in the smart home value chain have been looking at the possibilities of smart metering and, going further, into creating smart homes: homes where energy management is easy for the consumer. Device manufacturers have been perfecting their products, operators have been setting up M2M departments, often with special teams dedicated to smart metering/smart homes, in various countries utilities have been deploying smart meters and have been trying to persuade their customers to reduce their energy usage.

Recent trials by Deutsche Telekom, Bosch&Siemens, Panasonic and others show that convenience and comfort comes out top in most customer experience surveys. Although cost savings generally appear high on the list too, control over the Home Energy Management (HEM) system and knowing that the system is secure are equally as important to consumers.  Deutsche Telekom announced their Smart Connectivity product, German utility RWE has a similar product on the market, and Bosch&Siemens also offer similar services.

All these trials and new/recent products are offered by different players in the field and that begs the question: who owns the customer? Therefore interoperability is key. A consumer doesn’t want to buy a Bosch&Siemens smart dish washer to find that it doesn’t work with its DT or RWE HEM system. Various telecom operators have set up open platforms, such as DT and Telecom Italia, but fragmentation only seems to be increasing with new players entering the market with their own products/platforms. Although many systems are designed as open systems, no-one wants to abandon their own system to join the other and thereby create one truly open system.  Universal standards could avoid the market fragmenting too much, but that does not seem to materialize any time soon either.

Currently there are so many standards appliance manufacturers can choose from as the vast majority of systems are based upon mobile or a mixture of mobile and fixed connections. Should they choose Zigbee, Z-wave or WiFi, to name but a few? This seems to be one of the reasons appliance manufacturers have so far been reluctant to push smart appliances.  However some participants in the panel discussions felt that is better to simply bring products onto the market, as no-one knows how the market will react to these products on a large scale. Manufacturers are coming under pressure to deploy more smart appliances as they have to meet the 2020 requirements set by the EU. Although this mostly applies to smart meters, other smart appliances can help to reach that goal.

Where do the telecom operators fit in? As mentioned several have started to build platforms or even offer a HEM as they want to offer more than pure connectivity. One of the main questions for a telco will be if it should go directly to the customer or if it cooperates with a utility and/or appliance manufacturer. Belgacom believes that an operator needs to look at each country’s specific situation: how is the pace of renewable energy in that country, what is the regulatory framework and what is the position of the utilities?

A telco has the advantage of a nationwide network, of engineers experienced in rolling out new products/services and most telecom companies will also have experience of converging services and/or technologies. Initially a consumer may feel that a telco can’t be trusted to offer smart home services. However, several trials have also shown that it is logical for both the utility and the consumer to use existing devices such as the TV, tablet and smartphone as control mechanisms within the HEM. This gives a telco an advantage as that means simply extending the customer relationship to another service, offered via the same connection as the customer’s internet or TV connection.

A main issue still remains though: with all the new smart appliances and the HEM in place, will the customer actually reduce his energy usage? The consumer will need to be educated to regularly check his control unit to be aware of his energy usage.  They key answer from trials seems to be that if utilities offer different rates consumers are indeed willing to change their habits. Smart appliances can tell consumers when is the most cost efficient time to run their dishwasher or washing machine. As these machines can be programmed to start automatically, it only requires the consumer to push a button, coming back to the top demand of convenience and comfort, although of course, the machines do need to be loaded first…!

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