Beginning January 2017, US-based Comcast will launch a new Connected Home platform that will automatically enable 10 million eligible Xfinity internet subscribers to utilize their whole-home solution, which the cable provider expects to grow to 15 million customers by year end.
- Creation of a whole home experience that pairs a cloud-based platform with their current and upcoming compatible Xfinity Wireless Gateways
- Utilization of Xfinity Plug-and-play Wi-Fi extenders supplied by Comcast to create better signal throughout the premise
- Launch of mobile application to allow customer to perform network health checks with troubleshooting capabilities as well as monitor network usage
Comcast’s announcement is a defining moment in their undertaking to be the main supplier for their broadband subscribers’ connected home devices. The facilitation of Xfinity-supplied devices ranging from Wi-Fi extenders to thermostats (and everything else deemed “smart home”) will allow Comcast to be in possession of the entire connected home ecosystem. This ownership of the home network will allow for greater flexibility in troubleshooting, reducing both potential truck rolls and time spent on customer service calls. Also, this can create new revenue stream opportunities, including licensing out their platform to other service providers looking to get into the Connected Home market.
The “cord-cutting” era has seen US pay-TV subscriptions decline 2.2 million households since 2012 with an additional loss of 3.2 million subscribers projected through 2020. This is due to the availability of less expensive, third-party OTT options. This has forced service providers that once bundled multiple service platforms per household to innovate upon their current revenue creation strategies. US broadband subscriptions grew 115% from 2005-2015 and are expected to grow 3% annually through 2020 to a total of 113 million US broadband households. Providers need to cultivate this broadband base to increase ARPU as a way to offset declining pay-TV revenue.
Growing Connected Home device offerings are expanding the retail market’s footprint by giving consumers easy-concept, out-of-the-box solutions that enhance their lives and solve everyday problems. Devices such as Amazon’s Echo, Eero’s mesh network, and Belkin’s WeMo are examples of emerging smart products which function off of the Wi-Fi connection to the home broadband network and pose a threat to revenue growth opportunities for broadband service providers. If providers are not quick to advance their next level, home connectivity offerings by incorporating these products into their services, they will lose this market to the retail option and thus, their opportunity to raise ARPU.
The more services and devices that can be offered under Xfinity to broadband subscribers, the more it enables the provider the opportunity to keep ARPU high and create brand recognition as a provider of not only home broadband connection, but also the provider of all devices that connect to that network. It will be more difficult for subscribers to cancel their service if they have multiple devices provided and connected by their service provider. This also strengthens their ability to potentially capture customer data that can then be sold to advertisers or used to tailor additional product offerings. Privacy concerns of this practice have been brought up recently in regards to Comcast and their plans to opt-out subscribers from the gathering of their information for a monthly premium.
The new platform will be automatically enabled for 10 million eligible Xfinity broadband subscribers in the first part of 2017 onto currently compatible gateways, including the ARRIS TG-1682G, the Cisco DPC3941T, both branded as the XB3, and the Cisco DPC3939, branded as the XB2. Technicolor acquired Cisco’s Connected Devices division in 2015, which includes these models. The platform will be deployed through a firmware update, at no cost to the customer, which will push a new back-end platform and front-end mobile application.
Comcast expects the introduction of their newest Xfinity Advanced Wireless Gateway to raise subscribers using this functionality to 15 million by end of year. This newest product, named the XB6, is to be made by both Arris and Technicolor. The XB6 will have the capability to connect Xfinity-provided, plug-and-play Wi-Fi extenders. The self-configuring functionality of these extenders presents the opportunity for increased ARPU without a corresponding increase in their OpEx for truck rolls to set up the new equipment. Another form of possible cost savings comes from the troubleshooting functionality of the app, which has the potential to decrease calls to technical support.
For the benefit of current pay-TV Xfinity subscribers, the already deployed voice-activated Xfinity remote will allow customers to query which devices are currently utilizing the network to appear on the television screen. This is not likely to convert any cord-cutters back to pay-TV subscriptions, but can incentivize current multi-service customers to stay with their bundled package. The new ecosystem also contains increased security features for the growing presence of IoT connected items in the home.
Comcast’s new whole home solution for Xfinity demonstrates a service provider’s ability to be more than just a downstream pipe for connectivity, but a vehicle for investment in the in-home network that brings connected devices together into a cohesive single platform ecosystem. There should be an expectation moving forward by consumers and providers alike that the role of a broadband service provider needs to evolve to be more involved in the home’s interconnectivity in order to stay relevant and profitable in the growing Smart Home market. It needs to become the responsibility of the provider to make sure a subscriber’s home is outfitted properly for the new age of connectivity. By doing this, they take the burden off of the busy consumer from having to research, obtain, and install new technology for their home and raises ARPU potential whilst potentially reducing churn with a wide-range of Connected Home product offerings.