The connected home offers a unique opportunity for telecom companies seeking to expand their business lines and look for ways to stay competitive in the market. As we discussed in last week’s post, telcos have good reasons to offer smart home services to their customers. Now, we would like to offer some insight on why they are in such a good position to take hold of a big share of the IoT market and become one of the major players in the connected home industry.
Infrastructures already in place
Just like security service providers, telcos are in a privileged position to offer smart home services to a large customer base, since they are trusted providers that have already set foot in millions of households. Also, they have all the necessary elements in place to market a new product or service: sales force, offerings on a subscription model, customer support, communications channels – broadband gateways or 3G, bundles of services, and big data analytics.
Innovation capacity
Their large customer base and stable revenue streams based on subscription models provide telcos with a huge investment power and innovation capacity. They are in a unique position to explore new business models and test what works among consumers, introducing new devices and solutions in a very short period of time and reaching a very wide audience, something which will, in turn, favor mass market adoption of the smart home.
Customer trust
For the connected home market to take off, consumer must feel comfortable with their provider. Users have to trust the technology they acquire and the company that provides it to them. Telcos offer consumers well-known brands that they know and trust, years of experience and the confidence that they will receive technical support with their services. Telcos are in prime position to leverage this trust factor. In fact, according to research, consumers over 45 years old are more likely to purchase a smart home system from a cable or telecommunications company.
Technical support
Telcos can offer their customers all the support they may need, from sending technicians to perform the installation (the popular Do-It-For-Me instead of Do-It-Yourself model), call centers with the expertise to provide technical support, troubleshooting and regular assistance from their large and well established customer support departments.
Need for a “leader of the pack”
At present, no existing industry can take hold of the entire connected home market on its own. Although some players are better positioned than others, none of them will be able to work it out without creating some alliances that will result in new business models. Telcos, for example, have the infrastructure in place to offer connectivity and support, but they are not well prepared to offer security monitoring, which would be a natural extension of a connected home. Collaboration between different industry players will therefore be necessary, and telcos are in a very good position to negotiate the terms and conditions, consolidating their central position as instigators of these services.
The connected home market has a great potential, and it is yet to be defined who will take the leading role in the arena Telcos are positioning themselves as big players in the competition. They have all the key assets to capture value from the Connected Living industry: innovation capacity, investment power, recurring revenues, a large customer base, technical support and brands that customers trust. Besides this, the central role they play in customer relationships places them in the perfect position to become market leaders.
Soon, smart homes will not be a luxury, but a necessity. Not a trend, but a required strategic move for all players.
