Policy

Cracking the Home-Security Code

6/13/2011 12:01 AM Eastern

Sound the alarm: Cable is breaking and
entering into the sleepy home-security market, and it has
some pretty cool new tools up its sleeve.

Among major broadband providers, Comcast is out
in front in trying to tap into what analysts estimate is
a $8 billion category. After offering homesecurity
service in Houston for about a
year, the nation’s biggest MSO last week
said it is expanding Xfinity Home Security
into six additional U.S. market areas.

The Xfinity Home Security service provides
traditional home-security features,
like police and fire-alarm protection,
with 24-hour professional monitoring.
But it also delivers useful and gee-whizzy
“smart home” capabilities, such as the ability to adjust
digital thermostats, turn lights on or off and watch live
streaming video from wireless cameras remotely — over
the Internet or via an iPhone app.

“We think it’s a natural integration with our other
products,” Comcast Cable senior vice president and
general manager of new businesses Mitch Bowling said.
“The reason we’re doing this now is, the technology capabilities
have just recently become something that isn’t a
custom install.”

Comcast first introduced the service in Houston in
mid-2010 and is now rolling it out in parts of Philadelphia,
Portland, Ore., Jacksonville, Fla., Sarasota/Naples,
Fla., Chattanooga, Tenn., and Nashville, Tenn.
The MSO said it will bring the home-security offering
to additional markets on a rolling basis.

Home security is Comcast’s “fourth anchor product,”
Bowling said, though he added that the cable operator
does not intend to position home security as part of a “quadruple
play.”

The home-security market in the U.S. represents about
$8 billion in service revenue
annually, according to Parks
Associates.

The biggest provider is
Tyco International’s ADT
Security Services, a business
that generated $2.6 billion in
2010 residential and smallbusiness
revenue. Otherwise,
it’s a very fragmented
industry, and that presents a ripe opportunity for cable
and telco operators to not just take share but grow the category
with enhanced home-automation features, Parks director
of home-systems research Bill Ablondi said.

“Broadband providers have millions of subscribers, and
they already provide the pipe into the home,” he said.

Why this is happening now: Home-security and automation
products are less expensive and more standardized
than they were in the past. “These products can be easily installed,”
Ablondi said. “They’re more plug-and-play.”

Before, it may have cost several thousand dollars to outfit a
home for home-security monitoring. For a $200 installation
fee and about $40 per month, Comcast can provide the same
service with other bells and whistles like remote video-camera
viewing and cooling and heating system controls.

The installation is simpler because the components like
window and door sensors communicate wirelessly instead
of needing to be hard-wired, Bowling said.

The Xfinity Home Security service is based on the Internet
protocol-based home-automation platform from iControl
Networks, which merged with competitor uControl in
November 2010.

“Before, basic monitoring was about the only thing that
was available,” iControl co-CEO Jim Johnson said. “Now, you
can get a much richer service for roughly the same price.”

What’s also important is that through the iControl software,
Comcast’s system provides a cellular connection
and battery backup so that even if the broadband connection
is out of service — or if, say, a thief cuts the coax
to the home — the Xfinity Home Security sensors will still
be able to send alerts to the authorities and the subscriber.

Another factor compelling broadband operators to offer
home-security services is that they’re looking for new
revenue streams as the growth of the high-speed Internet
and telephony legs of the triple-play slows, Ablondi noted:
“They’re looking at, What else can I provide in the home
on top of the broadband connection?”

As Johnson put it, “For folks like Comcast and Time
Warner Cable, this is the last billion-dollar market left.”

SAFETY IN NUMBERS

Other operators are getting into the home-security game.

Time Warner Cable just relaunched a home-security service
— also based on the iControl system — in Syracuse, N.Y., and
soft-launched it last week in western New York state.

Actually, TWC has been in the home security business
in some of its systems for nearly 35 years. The operator has
more than 30,000 customers, mostly in former Advance/
Newhouse Communications properties in Syracuse, Charlotte,
N.C., and Bergen County, N.J.

“For us, it’s kind of an evolution,” Time Warner Cable senior
vice president of smart home products and solutions
Keith Burkley said.

Now, with the IP-based iControl system and wireless
sensors, TWC is looking to go wide with a home security
and automation offering that it can bring to the masses
cost-effectively. After a 10-month trial last year the MSO
launched the new iControl system in Syracuse in February.
After expanding to western and central New York,
Time Warner Cable plans to launch in Albany and New
England next.

“Based on what the results are, we’ll do a full-market
launch throughout the Time Warner Cable footprint by the
end of the year,” Burkley said.

A traditional home-security system would take
anywhere from four hours to two days to install. The
iControl system helps knock that down to a 90- to 120-minute
install.
“The economics improve, obviously, because of the
wireless capabilities,” Burkley said.

During the soft-launch period, Time Warner Cable’s
Smart Home Security is priced at $33 per month as part of
a bundle with other services or $39 standalone (although
high-speed Internet access is required). Like Comcast’s
version, the TWC service has a free app for iPhone and
iPad to remotely arm or disarm the system, view live cameras
and perform other tasks.

TWC, because of its history of offering home security
in a few markets, operates its own central monitoring
station to provide emergency dispatch of police, fire and
ambulance. The operator’s
facility received a “five-diamond”
rating, the highest
designation of excellence
awarded to only 5% of all
providers, from the notfor-
profit Central Station
Alarm Association trade
group.

Comcast is using a thirdparty
alarm-monitoring
provider, COPS Monitoring,
based in Williamstown, N.J.

Meanwhile, up in the
Great White North, Canada’s
Rogers Communications
has said it intends
to offer home monitoring.

Among major telcos, Verizon
Communications is
testing a home-management
service for FiOS that
lets customers remotely lock
or unlock their doors, check
video cameras, adjust thermostats
and power settings,
and control lights.

However, the service does
not yet include ongoing security-
system monitoring.
Verizon hasn’t announced launch plans or pricing details.

Verizon’s FiOS smart-home service was developed with
home-control software startup 4Home, acquired in December
2010 by Motorola Mobility. The New Jersey homes
participating in the telco’s trial are outfitted with an energy
reader, smart appliance switches and thermostats,
a smart power strip, smart
door and window locks, motion
sensors, a pan-and-tilt
camera, and fixed indoor and
outdoor cameras.

AT&T also has dipped a
toe into the market. In December
2010, it bought
home-automation company
Xanboo, which developed
a system that lets users
access and control of devices
via a TV, mobile phone or
computer. To date, however,
the telco has not announced
what it intends to do with
Xanboo.

‘MAMMOTH MONITORING’

ADT — which has 15,700 employees
serving more than
6.3 million home and smallbusiness
customers — is responding
to the incursion on
its home turf by the likes of
Comcast, Time Warner Cable
and others.

“We have mammoth monitoring
capabilities versus the
competition,” ADT director of
public relations Bob Tucker said. ADT operates eight redundant
monitoring centers in North America and responds
to “tens of thousands of alarm events each day.”

Plus, ADT has enviable name recognition: The firm has
been in the security space for more than 135 years and claims to have 95% brand awareness.

In addition, ADT has already
brought out its own security package
with smart-home features,
called Pulse. That service launched
in October 2010, “well ahead of the
other competitors,” Tucker added.

ADT Pulse packages start at $399
for installation with a monthly fee
in the mid-$40s. Interestingly, ADT
also is using the iControl Open-
Home broadband home management
software platform.

ADT and Comcast are both investors
in iControl, along with Cisco
Systems, GE Security, Intel Capital,
Kleiner Perkins Caufield and Byers,
and Charles River Ventures.

According to iControl’s Johnson,
the market is big enough for all
players to compete and grow. “There
is a set of services important to ADT, and a different one
to the cable companies,” he said.

Part of the reason iControl wanted to merge with
uControl was to obtain more engineering expertise —
the company now has more than 100 staffers in Austin,
Texas, and Palo Alto, Calif. — to meet the needs of its diverse
customers. “We are going directly to the guys who
already have the relationships with the customers,” Johnson
said.

The new breed of hybrid security/home-automation
service is designed to provide a coolness factor that Comcast,
for one, is playing up in its marketing.

For example, the free Xfinity Security app for iPhone
and iPad, available through Apple’s
iTunes App Store, lets customers
access many of the features
of the service remotely, including
live video streaming. Of course,
the app is password-protected although
a user can choose to have
the password stored if their iPhone
is locked, Bowling noted.

Xfinity Home Security customers
also can create personalized settings
to provide real-time e-mail or
text alerts based on events, such as
when doors open or close or when
motion detectors report activity
occurring inside or outside of the
home.

The service’s touch-screen control
panel provides a central place
to manage the Xfinity Home Security
devices and includes a menu
of widgets that provide weather,
news, traffic, and sports scores.

More options are on the way.

Last week Technicolor launched a Home Control and
Security edition of its MediaTouch tablet, a new solution
developed in partnership with iControl. The Wi-Fi-enabled
tablet, which features a 7-inch touch screen, is designed
to let broadband-service providers proffer another
sleek, attractive amenity to prospective customers.

For now, Time Warner Cable’s Burkley is taking a waitand-
see view of the market. Currently about 18% of U.S.
homes subscribe to a security service. “To make sense for
us as a business, we need to move that number to 30%,”
he said. “If all we do is trade customers with the incumbents
like ADT, it’s probably not a good business.”

The way the market can grow is for providers to offer
additional capabilities, such as home-health monitoring
and other notification services, on top of home-security
packages. If the industry is successful, the home-automation
category could expand to more than 50% of all
households in the next 10 to 15 years, according to Parks’
Ablondi.

“The smart-home concept is coming back,” he said.
“But it’s going to take a while for cable companies to build
awareness. Entertainment sells itself in some ways, but
security requires more of a sales process — and not everybody
is in the market for home security.”

Bowling said Comcast will engage the “full complement”
of marketing channels for Xfinity Home Security,
including direct mail, e-mail, radio and TV.

As for whether customers will be reluctant to hand
their the keys to the cable company, “research shows otherwise,”
Bowling said. “We believe based on our own research,
and based on consumer feedback, that we are the
right company to provide service.”

Cable does suffer from lower-than-average customer
satisfaction, but the industry is in no worse shape than
others in the competitive environment, according to
Ablondi: “People who subscribe complain about their
MSO or telco, but by and large people have migrated to
the one they feel reasonably comfortable with.”

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