Service Providers Have Home Networking Hole to Fill

Service providers have a huge opportunity in front of them with home networks, according to a Forrester report out today — but they need to move quickly. The firm found that around 33 percent of U.S. households — or 39.3 million — have a home network, which they use to connect their devices and move digital content around. That’s up only 5 percent from last year, but the slow growth is something on which service providers can capitalize, as Forrester expects that 62.9 million U.S. households will have home networks by 2013. Victory, however, is by no means assured.
Home networks, 78 percent of which use wireless, are highest in homes with fiber — nearly half of households with a ?ber broadband pipe have one. This may be a function of faster broadband speeds, but it’s also likely a result of more hand-holding on the part of service providers when it comes to getting a home network set up. For example Verizon (s vzn), the largest fiber-to-the-home provider in the country, sets up the wired network inside a subscriber’s home. AT&T (s t) does the same with its U-verse service. In the meantime, tech-savvy consumers are more likely to subscribe to fiber or high-bandwidth services and are typically able to set up a wireless home network with ease.

In the meantime, the PC has become a gateway to entertainment for many people, especially young folks, which means they don’t subscribe to high-definition TV service. Indeed, according to the Forrester report, 17 percent of young singles and couples eschew HDTV; it’s far more prevalent among those 40 years of age and older. And that’s become an area of concern for service providers, especially when it comes to video. With that potential loss of a web-savvy customer base in mind, service providers from Verizon to the cable companies are pushing more networked services such as multiroom DVR.

But the PC has benefits as well, especially when used to manage devices connected via a Wi-Fi network. Cisco (s csco) and Intel (s intc) are both trying to create wireless home networking protocols that will help consumers do just that. Intel’s approach keeps the PC central to the process, whereas Cisco is trying to use its HNAP protocol to let devices talk to each other without having to go through the PC.
Home networks may be in the minority for now, but with content increasingly being produced and delivered in digital form, their adoption is going to spread. It’s up to service providers to see how much of that market they can grab by rolling out faster broadband to homes and holding consumers’ hands as they try to get those networks up and running.