North America is projected to continue to be the largest market for connected home applications over the coming years, despite growing signs of deployment in both Asia and Europe.
The connected home has been defined as living space that allows people to manage all aspects of their homes in convenient ways. Connected homes typically include automation, interconnection of home electronics and appliances, paired with energy conservation tools that offer remote monitoring. Connected homes are typically recognized for performing such operations as controlling lighting, heating, air conditioning and security and life-safety systems.
Within North America, home monitoring is expected to continue to be the primary driver of system installations within the mass market. However, energy management, as well as comfort and convenience applications, are expected to grow significantly in North America as secondary value propositions.
Connected home applications are completely dependent upon high-quality access to broadband or the Internet at home. As levels of broadband access increase, the range of existing companies offering connected home systems and services to consumers will also climb.
The Pew Research Center estimated that in May 2013, 70 percent of American adults ages 18 and older had a high-speed broadband connection at home.
According to IHS, close to four-fifths of the continental United States is now connected in some form to broadband Internet. According to their research, approximately 86.1 million U.S. households at the end of the first half of 2013 had broadband Internet access, translating into a 70.2 percent penetration of all American households. Penetration will reach a projected 71.3 percent at the close of 2013, up from 69.6 percent in 2012.
The demographic factors most correlated with home broadband adoption continue to be educational attainment, age, and household income. Almost nine in 10 college graduates have high-speed Internet at home, compared with just 37% of adults who have not completed high school. Similarly, adults under age 50 are more likely than older adults to have broadband at home, and those living in households earning at least $50,000 per year are more likely to have home broadband than those at lower income levels.
In the U.S., an increasing number of households have also been migrating to higher-bandwidth-speed broadband packages as communications service providers upgrade their networks to increase bandwidth throughput. As a result, faster broadband Internet will continue to blanket ever-larger portions of the U.S. landscape, with coverage estimated to hit 74.1 percent of households by 2017, equivalent to some 94.7 million homes in the United States. In the last five years the U.S. broadband market experienced especially dramatic growth, adding 19 million households.
A recovering economy and resurgent housing market, along with an increased need for speed and connectivity, were the main reasons for the growing demand for broadband among American consumers.
As consumers adopt broadband, quickly have been adding connected devices to their home networks. Until three or four years ago, consumers primarily accessed the Internet through PCs and laptops but now consumers use multiple screens to perform various activities that require both fixed and mobile Internet connectivity, from watching and sharing videos and photos, to playing games, to accessing social networks, to banking and paying bills online. On average, there are at least five Internet-enabled devices in the typical U.S. home today and while consumers primarily use home networks to share and view video content, they also enable other applications, such as home protection, monitoring and security, as well as fitness and health monitoring.
The increase in connected devices will require reliable broadband connectivity that is networked throughout the home. Fixed broadband connection enables the most reliable and robust online experience within the home that can be shared, via a home network, to multiple Internet-connectible devices, such as tablets, TVs, set-top boxes, digital video recorders (DVRs), video players, game consoles and cameras.
The combination of an increasing number of Internet-connected devices and the expanding need for Internet services beyond communication, information and entertainment to include home monitoring and security will create interesting opportunities for communications service providers. These include upselling possibilities for providers, such as selling faster fixed broadband services to preserve the user experience and to create a competitive advantage over other providers offering similar services.
Improvement in bandwidth throughputs will also be combined with more sophisticated home networking and monitoring offerings. These services, mainly projected to be offered by cable and telecom providers, will ultimately constitute and underpin the core offerings of fully integrated, connected homes.
About Rawlson O’Neil King
Rawlson O’Neil King is Communications Director at the Continental Automated Buildings Association.