A new service industry is emerging from the cottage-based structured wiring and allied businesses that dot all major and secondary markets. Companies will expand and consolidate as new regional, and ultimately national, branded players design, install, upsell and service sophisticated digital integration.
This integration includes entertainment, communications, data, networking, security, automation and other lifestyle features of today's increasingly digital homes.
How are cable operators positioned to either compete or cooperate with this emerging industry?
Of all broadband-service providers, the cable industry is arguably in the best position to provide digital integration services and support in the home. However, looking at it from the consumer's perspective, the obvious may be far less than obvious.
It isn't hard to understand that making integrated services in a digital home "remote-control simple" requires complex systems, support and execution. Consider subscribers who now find themselves with multiple PCs, a common printer and the need to share files and Internet access. The integrated home network is the "next nirvana" after high-speed/always-on access. However, despite the improvements in do it yourself gear and falling prices, this "first step" integration is simply beyond the scope of the typical homeowner.
What may be less clear is that broader ongoing digital integration and support is also beyond the scope and responsibility of any of the discreet broadband, hardware or service suppliers providing any components of those services … including the cable operator.
Why? First, there are so many overlapping systems in an integrated home that no single provider of service or hardware can adequately support the problems that arise out of integration. Is the problem with the router, the software, the PC, the A/V? How about the broadband connection? Every player needs to establish customer service "boundaries" around their own "position" in the integrated home, to the frustration of the homeowner. (Imagine "simplicity" getting more complex!)
Second, the cable-industry view of home integration is high-speed data, a home network and possibly connection to A/V media through use of a compliant media server. However, the new standard for integration — led by evolving systems for new homes — includes connection of A/V, PC networks, security and automation as a baseline.
In fact, most activity in this sector is currently taking place in new home construction, primarily production homes. Advances in technologies are increasingly making retrofit services in existing homes more practical and affordable. However, the level of technician field skills required for a high touch, high customer satisfaction experience is significant. Make no mistake; this is the "white smock" technician.
These unanswered integration "needs" will drive an entirely new, nationally branded service industry around the digital home. What shouldn't surprise is that direct-broadcast satellite has always been more "friendly" to this cottage industry than cable and is an underlying reason why many of cable's best customers's drop coax in favor of DBS for high-end video integration.
Since the DBS industry provides annuity financial incentives to contract installers, home integration specialists favor DBS in their solutions. This further helps account for cable's poor record of keeping customers when they make their move to a new home.
One of the critical strategic considerations about this entire service quagmire is that it impacts the best and most influential customers on a broadband network. There may be value in partnering schemes that offer a very high level of service in coordination with the subscriber's cable service, rather than leaving the subscriber unsatisfied or on their own to determine who best to serve their needs. In fact, there is every reason to believe that a service package can actually generate new revenues out of the home — revenues that not only can add to the revenue base (most likely bundled with high-end digital packages) but divert customer service issues to a new "profit center" and away from driving up costs at cable's customer service centers.
What is needed is a digital plumber who can install and service every digital fixture and system in the home. One way this may evolve is with a new kind of branded company with trucks in the field and a sophisticated triage back room.
Imagine the marketing and strategic value if cable were to deliver a very high level of service to its top, most demanding customers generating the kind of "buzz" that restores cable's reputation as the best platform for all high end digital home services. Imagine generating revenue where we currently see only rising costs and exasperated customers. Imagine as the needs and wants of the digital homeowner expand, multiply and reach a tipping point for those who will always seek the "next nirvana".