Carriers aim to get a foot in door of ‘digital home’ sector

Telcos like Bell Canada and cablecos such as Rogers Communications Inc. may be poised to pull in substantial revenue from digital home services, but the carriers face some serious competition in this emerging market. Digital home systems link heating, air conditioning, entertainment devices and even appliances, and let homeowners control them all from one place or one device, perhaps a wireless enabled PDA or a wall panel. Thus a user would learn that the laundry’s done via a flashing icon on the TV screen, for instance. Communications companies in the telecom and cable space seem the most obvious providers of such systems. Telcos and cableco’s know all about networking, and many of them also have plenty of experience serving the residential market. But the likes of Bell and Rogers also face competition from some alternative sources, according to a survey from Decima Research Inc., an Ottawa-based market research firm and owner of Decima Reports. Decima Research conducted a survey in early February, asking 1,094 Canadians for their opinions about the digital home. In the end, 15% of respondents said they would prefer to use a telephone company for digital home services, and 11% would prefer a cable TV provider – good news for communications companies. However, 21% of respondents said they would prefer an ISP, 16% would prefer a home energy provider and 14% a homebuilder. Rick Nadeau, VP of telecommunications at Decima Research, figures the field is wide open. "Canadians have given service providers an equal chance," he said during a presentation at the Digital Home Summit in Toronto, held February 21 and 22. But the field is also crowded, which makes the digital-home market a tough one for communications service providers to win. In its survey Decima Research asked about specific companies, to see if any one service provider or vendor stands out as a preferred digital home services supplier. Telcos such as Aliant and Bell, as well as cablecos such as Vidéotron ltée and Rogers, were among the popular choices. IBM Corp., a force in the systems integration sector, also fared well. But interestingly, Microsoft Corp. ranked first or second in every market tested – Atlantic, Quebec, Ontario and the West. Nadeau said it’s a testament to the Redmond, WA software-maker’s brand reach. History suggests one should never discount Microsoft’s potential; that holds as true in the digital homes sector as it does in the Internet browser, word processing and PC media-player markets – segments that Microsoft has conquered. In digital homes, the firm already belongs to the Continental Automated Buildings Association (CABA), a non-profit group focused on digital-home equipment. "Microsoft is a player," said Ron Zimmer, CABA’s CEO. Decima Research’s survey results indicate that the digital home concept is not completely foreign to Canadians, but there is room for improvement. In the poll, 46% of respondents were somewhat familiar with the digital home. But just 11% were very familiar and 3% were not familiar. As well, just 6% of respondents said they would purchase a digital home system today. Participants in the Digital Home Summit – carriers, systems integrators and home builders among them – suggested that consumers are sometimes baffled by technology, and perhaps that’s the reason for the limited interest. Curt Vasterling, divisional merchandise manager of electronics retailer Radio Shack, said consumers are tentative with tech. "There’s still the fear that I’m going to break something." There were also concerns that consumers balk at the cost of digital home systems – cabling alone can cost tens of thousands of dollars. Texas Instruments Inc. director of broadband strategy Peter Percosan wondered if small service providers would fare better in this tumultuous market. "When people are afraid, you need a way to make them not afraid, and you don’t get that with a Bell or a Microsoft," said the TI director. The down-home feel of a local service provider might alleviate that feeling, he explained. Nonetheless, 65% of respondents to Decima Research’s survey said they might acquire a digital home system down the road. "Canadians are intrigued by the concept," Nadeau said. "They can see themselves adopting it in the future." Some audience members wondered why Decima Research’s survey didn’t include certain potential digital home suppliers, like Telus Corp. and security systems installers. Nadeau said Telus was left out because the research firm was particularly interested in carriers that provide not only wireline, wireless and data, but also TV services. Telus just recently started offering TV. As for leaving out security system installers, "we couldn’t include everybody," Nadeau said, adding that the audience suggestions are "duly noted for the next wave of research."Data was collected from February 8 to 12, 2006 using Decima Research’s national online panel eVox. Results are considered accurate within +/- 3%, 19 times out of 20.

Carriers aim to get a foot in door of ‘digital home’ sector

News | March 7, 2006

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