Why I am Thankful – 2017

Every year at Thanksgiving I take a pause to look at the positive things happening with the small carrier industry. This is not the easiest year to make a list because we currently have an FCC that clearly is in the pocket of the big ISPs like Verizon, AT&T and Comcast. While some of the new FCC policies supporting those big companies will benefit all ISPs, in many cases the FCC decisions are given the big ISPs a leg up over competition. But there are still things to be thankful about in our industry:

Demand for Broadband Intensifies. In the work I have been doing in rural communities it’s becoming clear that broadband has moved from a nice-to-have feature to a must-have commodity. I see evidence of this in several different ways. First, rural communities and their citizens are making a lot of noise to politicians about not having broadband. The broadband issue has become the top priority in many communities. I also see evidence of rural broadband demand when looking at the high penetration rates that come from projects being built in areas that didn’t have good broadband. Over the last few years I’ve seen such projects getting customer penetration rates between 65% and 85%. I call this a good news topic for rural carriers since it means there are still lots of opportunities for expansion, and enough customer demand to help pay for broadband projects. It’s not a positive that there are still so many communities with no broadband, but the positive here is that communities are making demands, which is the first step towards finding a solution.

Public Private Partnerships are Thriving. Very few government entities want to be an ISP and they are instead hoping to find commercial partners to bring better broadband to their communities. In just this last year I’ve worked with half a dozen local governments that have contributed funding to public private partnerships, where the government acts like the bank and the ISP owns and operates the network. Since rural broadband projects are often a challenge to finance this is a promising new trend.

ACAM Money is Financing Fiber. The ACAM money from the Universal Service Fund is being used to expand fiber and advance broadband in rural areas all over the country. The fact that some rural communities are getting fiber is helping to drive the demand for other who want the same thing. We’ll have to wait until next year to see of the CAF II reverse auctions drive similar results.

Wireless Technology Getting a Lot Better. I have a lot of clients who are now deploying point-to-multipoint radios for broadband deployment. Over the last three years these radios have improved dramatically. They are more reliable, almost approaching plug-and-play. By combining multiple frequency bands they deliver bigger broadband pipes, faster speeds and a much-improved customer experience. Depending on customer density the networks can be designed to deliver 25 Mbps to a lot of customers with some speeds as fast as 100 Mbps. There are still big issues with the technology in heavily wooded or hilly areas, but there are a lot of places where the technology is now delivering a great broadband connection.

New Revenue Opportunities Materializing. While voice revenues continue to decline and many of clients are getting clobbered on cable TV, I see a number of them doing well with new products. I have clients getting decent penetration rates with managed WiFi. I have some clients doing well with security. And I have clients making some good margins on smart home technologies. Selling new products is out of the comfort zone for many small ISPs and it requires some new thinking to successfully sell a new product – but I’ve seen enough success stories to see that it can work.

The Practical Impediments to Smart Home

Outdoor cameraThere are a lot of small telcos and ISPs these days flirting with a Smart Home product, and I know a few of them who seem to be having some success. But – at least for now – it is unlikely that the product line will get significant customer penetration rates. A Smart Home product, while interesting, it not yet a replacement for triple play revenues. Here are a few of the issues involved with being successful with Smart Home:

Public Perception. Probably the biggest hurdle is still customer perception of the product. So far the idea has made inroads with some early adopters, but surveys show that the majority of people either don’t know what Smart Home is or else don’t find it of interest. Anybody selling the product has an uphill battle of educating their customers of the benefits first before they can sell it.

Most small carriers are starting with a product that includes security and energy management (a smart thermostat). These two products are the most recognizable to customers and so are the easiest to sell.

But Smart Home products beyond those are a different case. Just look at the options that are available in the Comcast Smart Home product. This includes options like smart door locks, a smart irrigation / sprinkler system, smart lights, smart garage door, indoor and outdoor cameras, and even a smart doorbell that will show you who is at the front door. The general public is largely not knowledgeable about these products and it’s an uphill battle to upsell people past the base product.

Surveys show that there is general dissatisfaction with the state of the IoT industry as a whole. Early adopters that like IoT expect that if they buy some new gizmo they see advertised that it will work with the platform they are using. But there is still no standard industry interface with devices and there are half a dozen or more different ways that devise communicate with users today. The industry is a long way away from plug and play, which is the expected standard today.

And then there is price. Without considering the equipment costs and the connection charges, Comcast charges $49.95 per month for the package. There is a lot of work to do to convince customers that there is enough benefit to them where they need to take on a new monthly bill of that magnitude.

Quickly Obsolete. Probably the next biggest concern for anybody entering this business is if the components used to deliver the product will remain available. There are a huge number of big and small companies that are offering Smart Home hubs and add-ons. Past experience reminds us that there is always an eventual shake-out in a new industry and that most of the companies selling IoT won’t be here a few years from now.

You can’t even trust going with a large vendor for components. Earlier this year Google’s Nest walked away from their smart hub product and turned off the web servers that supported the product.

Controlling Truck Rolls. The next big worry of companies I know who are considering the product is that it’s going to involve a lot of truck rolls. There’s not just the trucks rolls needed to initially install the product, but adding a new device to a customer’s system is probably going to need a truck roll.

And like any new technology there are going to be bugs and user errors and it’s likely that the product is going to require a lot of maintenance calls.


I think most homeowners are intrigued by the idea of having a Jetson’s home where an automated home makes life easier. But we are still a decade or two away from having a fully integrated and easy-to-use Smart Home product that can deliver some of that promise.

This doesn’t mean that you can’t be successful with a limited Smart Home product now. But you must be aware of the risks and have a plan for somehow controlling excessive truck rolls for the product to be profitable. What nobody wants is a product line that takes a lot of work but that doesn’t move the bottom line.

The Marketing Challenge for Smart Home Products

speakersIn reading all of the press releases out of the Consumer Electronics Show you would think that all of our homes are going to get flooded with smart devices in the next year or two. There is a huge range of devices being shown there that have at least some connectivity and that can be categorized as smart devices.

One has to wonder how much the American public is really ready for smart home devices. A survey late last year by the Demand Institute showed that there is still a relatively low interest in smart homes by the general public. The survey showed that 36% of the public was willing to incorporate smart technology into their homes and but that only 22% thought that smart home technology was of any real importance. This survey estimated that about 20% of homes already have some sort of smart home device.

The trouble with a poll on this topic is that you have to wonder how much understanding a lot of people have about the question. I would guess that the responses might be different if people were asked about specific applications – like using wireless speakers, a washer that senses the size of the load, or some similar device that many homes might already have. My guess is that interest in smart devices varies according to the type of device; people likely think differently about a smart thermostat versus a smart lightbulb versus a smart door lock, because each of these has a different value proposition – and a very different set of risks.

As you would expect, age plays a big factor in how open consumers are to smart home devices. 53% of those under 34 are open to the idea of smart homes while less than 20% of those over 65 are. And this perhaps might be a good way to highlight the confusion of the general public on the topic because I’ve seen several other polls that show a large percentage of elderly people would be interested in smart devices that would allow them to stay in their homes to an older age. These would all be smart home devices and yet nobody is thinking of these devices when asked the question.

As might also be expected, renters, being statistically younger, are more open to the idea in general than homeowners – although the age of a given person looks to be more of the determining factor.

The specific smart application that got the most attention was a way to cut down on energy usage. 71% of homeowners said that they would be interested in something that could do that, which varies significantly from the responses for smart home devices in general. Again, another example showing that the public might not have a good picture of what the term smart home device really means.

This poll and similar polls showing the same sorts of results should be of value to companies who are in, or thinking of getting into, the smart home business. It’s obvious that one of your biggest challenges in that business is educating your customers about what you are selling and why they ought to spend money for your solution.

I think these polls suggest that you should be careful about how you label smart home products and that, at least for now, you don’t want to be selling a ‘smart home solution.” Rather, the polls suggest that you would do a lot better in selling specific solutions – energy management or security. People might be interested in those without even realizing that they are smart home solutions.

One good news about this and other recent polls is that a significantly large percentage of people say that they expect smart home technology to be widespread within the next five years. If they aren’t interested now their disinterest is likely due to not understanding what “smart home” means. But the average person, at least, can foresee the coming change in technology and that a large percentage of the devices we buy in the future might be smart devices.