One reason service providers are big on home networks - the belief they'll create more "sticky" customers. Once you've gone through the trouble of getting the network installed, you feel invested in the company.

Catching Customers w/ Home Nets, Part 1

Mike Wolf


By Mike Wolf

One reason service providers are big on home networks - the belief they'll create more "sticky" customers. Once you've gone through the trouble of getting the network installed, you feel invested in the company.

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Perhaps the most scrutinized aspect of the cable-telco war is the battle for high-speed subscribers. In the U.S., cable providers have twice the number of broadband customers as their DSL rivals, a lead that won't likely evaporate anytime soon. Even so, DSL providers are fighting back with lower prices and service bundles. How are the cable guys looking to answer?

One way is with the home network - offering the equipment, as well as installation and management services. Most cable providers have either trialed or implemented some form of home network service, and they're all talking to equipment providers about the equipment they can use to deploy these networks more easily.

Among the large cable providers leading the charge are Cox, AOL Time Warner and Comcast. Today Cox offers a product and support package in several U.S. markets, with plans to expand to most markets by year-end, the company says. Cox offers wired and wireless equipment; the price for a technician to come out and connect two PCs with a wireless network is $299. While on the high side, Cox will likely adjust the price to reflect increasing competition as this market matures.

Time Warner's Road Runner home network service is also available in several markets. It costs $79 for a wireless two-PC network, $49 for wired, and includes a monthly management fee of $14.95 per month.

Time Warner is providing residential gateways - not just modems - that use the new CableHome standard. Developed by Cable Labs, which also developed the DOCSIS cable modem standard, CableHome lets providers manage home network equipment remotely, allowing them to track usage and handle billing for additional broadband services that flow over that home network.

But CableHome brings up a thorny issue. Do consumers really want their home networks managed by a service provider? Many are doing just fine buying routers from the local electronics store. Aren't these guys just looking to get their hands on a piece of the pie while getting a closer look at what you're using your home network for? Maybe. But many consumers who're new to home networks will gladly pay a service provider to handle it.

There's one last reason service providers are big on home networks - the belief they'll create more "sticky" customers. Once you've gone through the trouble of getting the network installed, you feel invested in the company. But as home networks become easier to install and tear down, expect the sticky factor to decline over time.

Mike Wolf is the director of enterprise and residential communications at In-Stat/MDR, where he's responsible for all LAN and connected home research. He is author of Speed! Understanding and Installing Home Networks. Wolf has also worked in the semiconductor and wireless industries, and spent a one-week stint as an ice cream man. Write him at: mwolf@reedbusiness.com


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