Thanks, Gary. That's a nice way to start the day off. I can't speak for
Steve entirely, but I can tell you that maintaining news currency on this
board, or should I say in this sector, particularly, can require several full
time jobs. Some consultancies and brokerage research departments
devote entire sections of staff to do just that.
It's curious to look back and reflect on how much of what has been
covered in a short time (18 months) has become an anachronism already,
in the face of new standards and the directions being taken by the vendor
and carrier communities. It's said that the vendor community generally
leads the carriers by some measure, usually 12 to 24 months. Do you (or
anyone else here) think that this rule of thumb applies here in the VoIP
sector?
I read this time lag (12 mo.) rule cited again in one of this week's Telephony
Magazine's feature article that spoke to residential networking, and what
the service providers are doing to meet the growing residential premises
market, as a result of (and in possible combination with) their broadband
initiatives. The article follows this message.
BTW, my initial post last night was meant in good humor. Thanks for
receiving it as such.
Regards, Frank Coluccio
ps - Stephen, I think that you should find this particularly interesting.
----------------
February 22, 1999
"Networking Comes Home" by VINCE VITTORE
CPE vendors are salivating over the possibility of linking multiple PCs and
set-top boxes. But they can't do it without help. Is anyone listening?
After more than a decade of conceptualization, the home of the future may be
just around the corner for many U.S. consumers. But unlike something out of the
Jetsons, tomorrow's home will resemble something a little closer to the office or,
in some cases, a videophile's dream.
Long considered a hobby for the Silicon Valley elite and others with thousands of
dollars to burn, networking quickly is becoming one of the hottest trends in home
building and refurbishing. At the Winter Consumer Electronics Show in Las
Vegas last month, companies ranging from modem makers to television
manufacturers were busy sketching out visions of houses with electronic nerve
centers that control everything from video service, Internet access and security
systems to heating and electrical systems. According to a recent study by
Cahners In-Stat Group, the U.S. home networking market is poised to grow more
than 600% to more than $1.4 billion by 2003.
"There are two things driving home networking. One is the number of multiple
PCs in the home. The second factor is the number of on-line homes," says
Robert Jacobson, product manager for Diamond Multimedia Systems Inc., which
used the CES to unveil its HomeFree Phoneline solution that lets end users
connect multiple PCs over existing phone lines for about $50 per unit (Table 1).
"As broadband services move into the home, you're going to begin to see people
looking for ways to distribute the content," says Mike Wolf, an analyst at
Cahners and author of the study Home Networking: Markets, Technologies and
Vendors. Among other factors cited in the Cahners study is the increase in
telecommuting, the development of PCs of less than $1000 and an expected
increase in the number of household devices with networking capabilities. "The
PC almost becomes a disposable item," Wolf says.
Such numbers aren't escaping the attention of big industry players, including
telcos and cable operators. However, investigating the market and actually doing
something about it are two very different things.
Easier said than done
Until recently, few telcos or cable operators have put any real effort into the home
networking market, perhaps because it was so limited. In addition, entering the
home networking arena would mean re-entering the residential customer
premises equipment market, which most abandoned in the late 1980s and early
1990s.
"[Telcos] want the market to open up, and what faster way to do it than to provide
the CPE to the customer?" says Wolf. "It becomes really messy when they have
to answer service calls and provide support. At this point, they're kind of sitting
back and waiting."
Industry confusion also is stopping big players from plunging into the market.
Indeed, asking a dozen sources for their concept of home network often
produces at least a dozen different answers.
"Everyone has a different definition of home networking," says Keith Crosley,
product manager of Avio Digital, which has developed a box to connect multiple
devices including televisions, audio systems and PCs (Figure 1). "There's a lot
of noise from people who are starting with connecting PCs," he says. "We want
to look at the converged future. We came at the problem by starting with making
sure you had a high-bandwidth network. As far as control is concerned, we feel
there's going to be many different ways to do it."
Bell Atlantic is alone among big telcos in taking a stab at the market. Through its
Bell Atlantic Communications and Construction Services Inc. subsidiary, the
carrier has contracted with about 100 home builders over the past three years to
provide home networking services in new homes. And although much of the work
consists of connecting multiple PCs and home theater systems in upper-income
households, the demographics are changing, albeit slowly, says Bill Schutz,
general manager of enhanced services for BACCSI.
"Telecommuting is going to become more prominent, but right now most of my
focus is the premises," Schutz says. "I'm bundling camera services in the house
so you can do things like monitor the baby and monitor the front door."
Early this month the company signed an agreement with IBM to distribute the
IBM Home Director system, which is based on an in-home hub that lets various
devices share data, voice and video signals.
"We're going to bring the hands and feet on the street while IBM brings their
research and development, marketing and funding expertise," says Schutz.
You make the first move
Bell Atlantic is the exception to the rule because for most telcos, home networks
are too small of a niche market to begin marketing services. That may change
soon, though, partly because vendors are making the first move.
It's often been said among telecom industry observers that manufacturers are
nine to 12 months ahead of telcos on the technology curve. If that holds true in
the home networking market, next year at this time, carriers should be rolling out
service en masse. Among the flurry of product introductions in the last two
months, both Lucent Technologies and General Instrument have been among the
most aggressive in the arena.
Late last year, GI signed licensing agreements to integrate Sony's Home
Networking Module middleware and Aperios operating system into its advanced
set-top boxes. Earlier in the year, the two companies made their first tentative
steps into the home networking market with a demonstration of high-speed
Internet access, video telephony and the ability to control multiple digital
audio/video appliances.
And while GI has yet to sign any agreements with multiple systems operators,
the company's position as one of two dominant cable vendors gives it the
potential to become a big player.
Lucent, which has dabbled in the market for several years, recently announced a
series of agreements with homebuilders that will put its HomeStar Wiring
System in 55,000 new homes in three major western developments. Among the
projects are:
Summerlin, a Las Vegas development of the Howard Hughes Corp.
Power Ranch, a DMB and Sunbelt Holdings property being built in Gilbert,
Ariz.
Sunset Lakes, a Miramar, Fla., development built by the Atlantic Gulf
Communities.
Previously, Lucent also announced that it would provide wiring systems for DC
Ranch, the Scottsdale, Ariz., development that is quickly becoming a lab of
competition among broadband Internet access providers.
Even though the three developments represent more than $22 million in
equipment and are among the largest ever announced in the home networking
market, Lucent put the deals together with little help from local telcos. Indeed,
telcos' lack of expertise in the market makes it more of a hindrance, but that
may change as the industry expands.
According to a Lucent spokesman, telcos represent a natural channel for
HomeStar because they have installation crews on the ground when new
developments go up. "Right now we're not selling through the telcos, but there
are some natural alliances that we definitely could see exploring," he says.
The broadband entry
What could give the biggest boost to telco/cable fortunes in the market is the
widescale deployment of broadband services. Although early in the development
phase, a number of carriers have started hinting that they will deploy home
networking services this year.
Cable operators, whose cable modems act as a router/hub, have been the first to
jump into the market. @Home, the cable-based Internet service provider,
currently offers a multiple PC package that lets users share bandwidth among
several machines. And although the service hasn't been marketed much, the fact
that AT&T may soon control @Home's fortunes has served as a wakeup call for
telcos, says Wolf. "As these guys build out their infrastructures, you're starting
to see them act as channels for the first piece of home networking equipment,"
he says. "Do they want to stay in that area? Not necessarily, and it's because
broadband services are going to be very tied to the application."
U S West, which has been among the most aggressive telcos in digital
subscriber line service, also is close to announcing its first home networking
service. Sometime in the second quarter, the company will roll out a service
through its !nterprise group that lets users share resources from a single DSL
pipe into the home, says Larry Yokell, director of product development for
Megabit Services at U S West. The company isn't planning a big splash with
kitchen appliance and heating system networking, but it will start with a
home-based local area network. "The concept of the home LAN is something
we're very excited about. It's definitely on our road map," Yokell says.
The key difference of the U S West plan is in its architecture, which delivers IP
over an asynchronous transfer mode environment directly to the modem/router in
the home.
"By definition, over time we'll be able to slice and dice that bandwidth right to the
home," says Yokell. "Now if you wanted to take an Ethernet hub and put it
behind our modem you can call it a home network, but that's not really
addressing things." Such a solution has to do more than just enable connectivity,
he says.
But before that can happen, many "basic blocking and tackling" issues must be
addressed, he says. First on the list is a regulatory question and whether such a
service would fall under U S West's regulated arm. Second is the application. If
the regional Bell operating company wants to get beyond connectivity alone, how
will applications be developed? And who will be the developer?
"My first gut instinct is that we'll have to work with application-savvy companies,"
says Yokell. "We think in terms of boosting sales of Megabit [DSL service],
though it's a no-brainer."
Ironically, one of the least important questions is the end device because with
home networking, data and applications can be shared. "We really view that
once you get inside the house you have a PC/TV/telephone continuum," Yokell
says.
Bell Atlantic also is contemplating bundling DSL service with its home
networking packages, though the access technology is not deployed widely
enough yet. "If you bundle it with DSL in the home, it's a nice package," says
Schutz. "The telcos haven't explored this beyond alarm circuits, and part of it is
that we never had the bandwidth."
Despite vendor advances and the sketchy visions of telcos and cable operators,
it likely will be several years before home networking reaches its predicted
height, Yokell says. "We have just scratched the surface with Megabit. Right
now, we're trying to check all the boxes up front. We're still noodling through
this."
Adds Cahners' Wolf: "The technology is there, but it's going to be a few years
before people see this as less Jetsons-like and more practical. It's not going to
happen overnight."
Home away from home
Smoking or non? It's a standard question asked by most hotel clerks when
guests check in. Over the next few years they might well add, "High-speed
access or 28.8?"
As hotels continue to battle for the corporate travel dollar, one of the newest
amenities is high-speed Internet access and expanded information services.
Among the most aggressive companies in the market is CAIS Internet, which
last year signed an agreement with Hilton Hotels to provide guests with Internet
access at speeds up to 10 Mb/s. Using its Overvoice technology, which is based
on 10BaseT technology, guests with Ethernet-equipped laptops simply plug into
an existing wall outlet to access an in-building LAN.
"Most of the hotel industry has been looking at high-speed access because the
Internet has been a problem on their voice networks," says Evans Anderson,
senior vice president of sales and general manager of CAIS. The company, which
also provides the Internet service (see figure), is touting its ability to give hotels
an additional revenue stream. Hilton, which will incorporate the technology
across its North American properties in the next year, will charge less than $10
for the service.
For even less--exactly nothing--guests checking into certain Chicago hotels will
find an enhanced information service right on the TV. Using a recently completed
fiber ring running around downtown, Tele-Communications Inc. has begun
providing a series of information services through its InnTelevision program. Aside
from 30 channels of traditional pay-per-view fare, InnTelevision consists of several
menus, including a city guide and a menu that can be used by hotels to promote
restaurants and other facilities. It also can display events broadcast from
McCormick Place, Chicago's main convention center.
TCI is working on Internet access via the TV, according to Tyrone Thompson,
customer business manager of business development for TCI Chicago, but
"there's a number of issues. Is it browsing the Web? Is it e-mail delivery?"
For the moment, the objective is to give hotels the equivalent of an electronic
concierge and perhaps additional ad revenue from local businesses.
Says Thompson: "While it doesn't eliminate the concierge, it certainly reduces
the amount of traffic that comes their way."
--Vince Vittore
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Telephony February 22
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