Cable Players Link Up On Home Networking

Author:
Publish date:

Up to now, home networking has been a service found mostly in the homes of technology geeks. But at least two recent signs indicate the technology has made its way into the broadband mainstream — and into cable operators' new-service rollout plans.

First, broadband-savvy Internet-service provider EarthLink Inc. is readying a home-networking offering for cable-modem customers in 21 Time Warner Cable systems by the end of this quarter. The service, which uses a gateway provided by networking partner 2Wire Inc., was rolled out to the ISP's digital subscriber line customers last year.

"Home networking is one of the more strategic products and services that we are offering in conjunction with our high-speed [product]," said EarthLink vice president of value-added services Erika Jolly. "I think that it is a great Trojan horse application for an Internet-service provider such as ourselves.

"It's a great opportunity for us to extend the value of our consumers' access with EarthLink, and it also provides us an opportunity to sell additional services to them."

It isn't too hard to link broadband and home networking. A December Jupiter Media Metrix survey found that 28 percent of broadband homes had some type of home-networking setup, ranging from two computers that share a printer to multiple computers sharing Internet and peripheral connections.

By contrast, only 5 percent of dial-up households employ home networking.

As with the DSL offering, the cable-based home-networking service will be offered for $9.95 per month, plus $149.95 for the 2Wire box that uses a wireline Home Phone Line Networking Alliance scheme or $300 for a box with a wireless 802.11 connection.

That buys the consumer a managed service, including firewall and security features. EarthLink believes both items will have particular appeal to the new broadband customer.

"I do think our greatest opportunity is to position and sell to cable customers when they first sign up," Jolly said. "You've got an opportunity. They are obviously interested in buying and they are obviously interested in wiring their home, so that is our greatest opportunity.

"We will target existing cable subscribers that we have today, but we will be trying to target and upsell customers at the point of sale."

Meanwhile, broadband networking gear provider Linksys Group Inc. cracked the cable market in January, landing a marketing deal to sell its gear to AT&T Broadband cable-modem subscribers.

The Irvine, Calif., company expects to see plenty of home-networking deployments among cable operators and DSL providers in the second half of this year.

"Year 2002 is going to be pretty exciting," said Linksys vice president of broadband business development Janie Tsao. "I think with all of the service providers preparing in the past two years, they all have to be dealing with the home networking as one of the integrated pieces for their services to be rolled out this year. So for us, it is a very significant moment when AT&T sends out the press release supporting home networking."

About 40 to 50 percent of broadband households have multiple PCs, according to Linksys, so gaining such marketing agreements with broadband-service providers is a key step in the business plan.

And as cable operators realize the additional services that can be offered through the broadband pipe, they're also showing more interest in home networking, said Tsao.

"We do see the MSOs — not only the MSOs, but the telcos — are all recognizing how critical this path is, which is a very positive sign," she said. "A lot of MSOs are going to be working with us in terms of getting their trials going.

"In their mind they really have to say, 'Hey, are we really ready to deal with our end users this way?' "

Which wired or wireless connection scheme to use is just one question for cable operators. Another is which service to deploy.

"One key thing the MSOs are all trying to finalize is what is really the best business model for their subscribers," Tsao said. "And this is very difficult, because each corporate entity has its own philosophy, so whether I charge this or don't charge this, or whether I offer the installation or I don't offer the installation, whether I give them a few benefits like the anti-virus or the parental control or whether I charge them — every MSO or telco has a little different philosophy."

Although cable operators have lagged behind the digital subscriber line competition with respect to home networking, there are signs that MSOs are catching on, said Jupiter Media Metrix broadband analyst Joe Laszlo. In part, that's because of the potential for added revenue, he said.

"At the same time, it is sort of a way to justify the cost of broadband," Laszlo added. "I think it is starting to sink in with consumers that sharing a broadband connection in the home, if they have multiple PCs, is a way to make it seem more cost-effective, even with a little bit of a premium charge.

"It's still a way to look at the cost so it doesn't seem so expensive, relative to dial-up."

The ability to offer home networking within a broadband service package has marketing advantages for the provider, but customers may find that it limits their choices.

"There is good and bad to that," said Laszlo. "On the good side, it means your broadband ISP can help you with a home network if you need help. On the other hand, if you are sort of a technically proficient household, you don't have the freedom that you might want in terms of choice of technology and device and vendors.

"So there is good and bad there, but I definitely think it is the smarter move to try to sell and focus on the new households."

For now, home networking is centered strictly on connecting PCs, cautioned Laszlo. Other schemes that add entertainment or try to harness the digital set-top box as a computer connection are questionable at this point.

"I think a lot of that is probably premature," Laszlo said. "It probably is going to come to pass, but I think it is not going to be practical anytime soon, anytime in the next two or three years. I think the broadband ISPs will probably do best to concentrate on the device in the home that they serve — the PC."

Related