Amdocs Helps Service Providers to Win the Connected Home Battle

A Home Run - Berlin, Birmingham and Beijing are no different to Boston or Bangkok: citizens everywhere are spending more and more time connected and are excited about 4G networks, machine-to-machine technology and embedded mobile devices. Amdocs’ market research survey of some 4700 consumers in 14 countries shows that consumers want, and will pay extra for, a “connected home” - a home environment conveniently controlled from residents’ smartphones, tablets, PCs or even connected-TV interfaces.

Subscribers are willing to pay for an improved customer experience in the connected world and consume more digital services. Over half the consumers polled by Amdocs felt connectivity and synchronization between all the devices they use on a daily basis would be the most important industry development of the next decade, and nearly 50 percent of those surveyed felt that this would encourage them to use their mobile device more. It was clear from the interviews that consumers are looking forward to the connected home.

The Emerging Connected World

In the Amdocs-sponsored survey, half of all respondents viewed connectivity as the most important industry development of the next decade. Intense consumer demand will lead to ubiquitous connectivity and pervasive digital content – it will help give birth to the connected world. The reason connectivity did not rank higher with respondents is most likely because they feel it is already underway as a natural progression, since they are beginning to feel its effects.

Another Amdocs global study found that 70 percent of respondents expect to be able do more on their mobile device. As a result, more than two-thirds of consumers expect and want their mobile device to connect to a wide range of other devices, such as televisions (43 percent) and cars (38 percent), and to have the ability to access their content from any device (54 percent).

In the next decade, trillions of devices and applications will share the network. But what they’ll be providing will go far beyond traditional “communication services,” since other industries, like health services, energy management and home security, will connect people not just with friends, family and business associates, but also with patients, gadgets, useful information and much more. By working with these forward-thinking industries in this new connected world, service providers will discover untapped sources of customers and revenue that are well beyond the scope of today’s communications, media and entertainment industry.

The connected world is a vision of making people’s lives easier: smart devices will support our busy, “always on” lifestyles and even anticipate our problems and help mitigate them in advance.

Primed to Profit

The connected world is promising for service providers, who can enable a vast value chain spanning multiple industries, geographies and services, all enriched and made more valuable to consumers by their connection to the network.

And in this world, all industry verticals and every person will rely on service providers, who are in a prime position to profit because they own the networks.
Service providers have an opportunity to broaden revenue generation beyond pure network services and the traditional consumers. In the connected world, success and profitability will be about selling value to both end-consumers and partners.

For instance, service providers and analysts have noticed a resurgence of interest in machine-to-machine technology, specifically around connected consumer electronic devices. In order to bring value to consumers, most leading service providers formed dedicated business units to define and implement a machine-to-machine business strategy that transcends the work/home balance.

Service providers are working hard to understand their consumers’ specific desires, in order to drive loyalty and revenue through increased service adoption, so they can deliver a connected service that people will welcome into their homes.

The Status of the Connected World – Creation and Challenges

Changing consumer attitudes; the creation of powerful devices, more intelligent networks and back office systems; and innovation by new market entrants, such as social networking sites, have driven this change worldwide.

Meanwhile, service providers worldwide are faced with a challenging search for new sources of revenues since the decline of voice and SMS. Today’s challenges, such as fast-growing capacity demand and insufficient average revenue per user (ARPU), are taking the bulk of service providers’ resources. Over the top (OTT) service and content providers are challenging the traditional consumer-service provider relationship as never before and they are threatening to turn service providers into mere “access providers.”

Service providers can tap tremendous revenue potential by providing customers with multi-dimensional convergence across their homes. Citizens are looking to live “greener” lifestyles. A connected home that enables them to remotely monitor and control energy usage will appeal to both their wallets and their social/environmental concerns. Meanwhile, a decreasing birthrate and longer human lifespan means an increase in the elderly population, many of whom would benefit from more sophisticated ways to monitor their health from home. Population numbers and health surveys show that this is a lucrative market.

The availability of high-end devices, affordable data plans, intuitive graphical user interfaces (GUIs), video support and 24/7 home IP connectivity means that service providers can offer a connected home solution that will be inexpensive to deploy and yet will generate significant revenue.

The Keys

We’ve established that the connected home strongly appeals to consumers and offers good new revenue opportunities for service providers. However, the connected home must of course be presented to consumers on their terms, in a way that is simple, appealing and meets their primary needs.

OTT and other industry players such as consumer electronic shops are of course not going to concede this promising market, and they will rush to capitalize before the service providers. However, service providers already hold several major advantages:

The biggest advantage is that service providers can offer a do-it-yourself, entry-level, mass-market Connected Home solution for end users at an affordable price. Additionally, service providers will benefit from their:

• Quad-play capabilities – they can bundle their traditional services with the connected home offering
• Retail shop – end customers can see and buy sensors and other necessary equipment at service providers’ shops
• Regional presence – unlike OTT players, service providers can provide dedicated customer care and perform repairs

Service providers who act quickly and intelligently to beat competitors to the punch will find excellent opportunities– home monitoring/security and energy management will be big markets. Telemonitoring, for example, will help the elderly stay independent in their homes, while home monitoring provides security and growing environmental awareness means consumers wish to use energy more responsibly.

Service providers can play a pivotal role as the key point of delivery for connected home services by managing connectivity and service quality, and enabling whichever services customers choose.

The Amdocs Connected Home solution addresses these opportunities by expanding service providers’ established positions as a trusted “in-the-pocket” (mobile) provider and an “in-the-home” (broadband data access) provider into the areas of security, energy management, healthcare, home automation and integrated media..

All devices, including cameras, sensors and even residential gateways, can be connected wirelessly to the M2M gateway. Data collection, analytics, interfaces with specific third-party applications, self-service modules and other functionalities are managed through the Amdocs cloud – the possibilities for innovation are endless and limited only by service providers’ imaginations.

One of the problems for end-consumer with today’s home services is that they mainly run in silo mode. As a result, each home service requires a substantial initial investment because it requires new proprietary hardware and new service subscriptions; along with multiple control interfaces, connections and contacts. This has dramatically reduced the homes service adoption, and this lack of convergence is a clear business opportunity for Service Providers.

An appropriate offering for end-consumers must break the different home services silos and should be a single connected home offering for Home Monitoring / Security, Wellness / Health, Energy Management, Automation / Comfort and Multimedia / Entertainment.

This is exactly what enables the Amdocs Connected Home solution for service providers. With the Amdocs Connected Home, service providers can enter new markets with minimal investment and considerably reduced their time to market. They will be able to cost-effectively deliver a suite of tangible and meaningful home services, while eliminating the unnecessary complexity of the corresponding services management aspects. Breaking these unwieldy vertical business silos significantly creates value for end-consumers and this means increased ARPU for service providers.

However, for service providers, this slew of new connected home services brings with it the necessity to integrate with their own back office systems (BSS/OSS, CRM). Complex BSS/OSS transformation projects will flourish as Connected Home services are rolled out and service providers will need to choose partners with significant experience and resources in back-office integration for fast roll-out.

Bringing it Home

Consumers are ready for the connected world. They are willing to pay for new and improved services and connectivity, and to increase their mobile usage. But are service providers ready for the unknown – new business models, new scale and scope of operations, and new ways of thinking about the services they deliver and the ecosystem they serve?

One thing is already clear – in order to differentiate themselves, service providers should provide customers with multi-dimensional convergence across devices and spaces – and offer them a connected home. But providing a satisfying connected home experience is difficult for service providers who often struggle with product oriented organizations (instead of market oriented organizations) dramatically slowing down the launch of any convergent service implying collaborative work between disparate organizations. The Amdocs Connected Home is a cloud based offering and will help service providers to overcome those organizational constraints.

This situation, which can add up to dozens of BSS and hundreds of OSS scenarios, greatly complicates the delivery of the expected “anywhere experience” to consumers. This is a challenge service providers must overcome if they want to tap lucrative markets such as home security/monitoring, healthcare and energy conservation.

OTT and other industry players are trying hard to penetrate this market, but service providers are very well-positioned to partner and innovate. By leveraging their unique assets – network, customer and product data – and core capabilities, service providers can only succeed in today’s world and thrive in a network-connected future. The doors to consumers’ homes are open –service providers just need to walk inside and start making connections.

Contributed by: Michel Arrede, Head of Marketing, Amdocs Connected Home