Connected-Home Services Become Another OTT Challenge for NSPs

Eric Bruno, SVP, product management, Verizon Telecom

Eric Bruno, SVP, product management, Verizon Telecom

October 28, 2011 – Are cloud-based connected home services shaping up to be another OTT challenge to network service providers? A swelling tide of below-the-radar activity worldwide suggests the answer is yes.
“We’re working with a wide range of customers globally, including service providers as well as consumer electronics companies and others who are pursuing ways to build value through over-the-top services,” says Scott Burnett, director of global consumer electronics industry business at IBM. “It’s a question of who can sweep up the proxy relationships with consumers. The telecommunications companies have a lot to lose.”

From where IBM sits the combination of cloud-based specialists working with network operators is the best of all worlds, providing new opportunities for providers of compelling new smart-home niche services while helping NSPs avoid the “dumb pipe conundrum,” as Burnett puts it. “We see the cloud and interrelationships among providers and operators as really important,” he says.

But there are players offering OTT cloud-based platforms who believe there’s a way to generate a mass market for smart-home services with or without engagement of NSPs’ service-assurance capabilities. Given the service-reliability requirements attending broadband-delivered home security, energy management and other applications, this is a huge challenge.

Verizon recognizes the threat and also recognizes it can’t be the provider of everything people may want, so it’s moving to a hybrid model where, as it offers its own Home Monitoring and Control service (see July issue, p. 14), it’s also laying a foundation for other providers to leverage its network to deliver their own branded services. “There are only so many services Verizon can provide,” says Eric Bruno, senior vice president of product management at Verizon Telecom. “We’re thinking through what we can integrate and pull through as a service for our customer and what you as a consumer can do yourself.”

Verizon next year will introduce a software developers’ kit for outside providers to use to gain access to the carrier’s connected home platform. “You have to have a balance between chaos and choice,” Bruno says. ”We can see different things happening in the home where maybe there are app conversions happening on a Samsung smart TV in the basement with other things happening on TVs controlled by our gateway.”

New Directions in OTT Strategies
A firm positioning itself to provide a point of integration for multiple outside providers regardless of whether the NSP plays a role is Zonoff, a spinoff from OEM wireless home control specialist BuLogics. With BuLogics playing a key role in Z-Wave product certification under authorization by the Z-Wave Alliance, Zonoff was created to leverage BuLogics’ proprietary technology with a software system that manages and automates all aspects of the home, from any IP-connected device located anywhere, says Zonoff CEO Mike Harris.

“We’re seeing disruptions in the old business models where new types of service providers are emerging from many different directions,” Harris says. “It’s creating an a la carte model where consumers can pick what they want from Web-based services without having to take a bundled offer of things they may not want from the network service provider. Some of these new providers are giving their services away for free and then upselling consumers on features once they get hooked. We’re seeing a lot of people trying to move into each other’s silos.”

The upshot is a consumer needs access to a platform that creates a consistent user interface to give them access to multiple services no matter what combinations they cobble together from a la carte sources. “Maybe I have a connected LG TV running with my FiOS service and I’m taking security from a third-party supplier,” Harris says. “I need to be able to see my security service interface on that TV.”

Operating as a standalone third-party supplier of such services is a challenge, but’s experience as a leading player in the market with a private cloud-based platform processing millions of messages from customers all other the U.S. proves it can be done, says Jay Kenny, vice president of marketing at “We have a massive operations center and over a half million subscribers sending 25 to 30 messages per household daily over IP on Wi-Fi in the home and out over the broadband network,” Kenny says.

The software service platform, sold through vertical security dealers into the residential market, has grown over’s ten-year lifespan to include energy management and advanced security features. “There’s a ton of information about what’s going on that has to be handled with total accuracy,” Kenny notes., which is another Z-Wave adherent (ZigBee is the major competing standard), earlier this year announced its emPower solution now supports remote control of lights, appliances, door locks and thermostats with new rule features that allow customers to customize settings. They can dictate, for example, what circumstances trigger lights to be turned on or off, how locks are coordinated to react with unlocking or locking the primary entrance, what actions determine a lowering of the thermostat and much else. Remote management of settings and access to security and other information via mobile phones and laptops is part of the service portfolio as well.

Such scope, intelligence and flexibility have become the standard in home management, as evidenced by the new Verizon home management system. In that case, the service is employing the Actiontec SG200 Service Gateway, which integrates 802.11N Wi-Fi access and Z-Wave home control support with high performance processing and abundant memory. The service, priced at $9.99 per month, lets customers remotely turn lights on and off, check in on their home through networked cameras and make sure their child arrives home safely. An optional energy control package allows customers to remotely control thermostats and other appliances, as well as measure their home’s electricity use in near real-time.

But for a third-party provider relying on someone else’s broadband pipe to deliver the service attaining the reliability required for advanced home services is no small task, Kenny acknowledges. “It’s been a huge investment for us to have the redundancy of backup you need and the ability to separate people out and recognize when something is deficient,” he says. “But we’ve had no issues to date.”

Leveraging Existing Intelligence

One extension of OTT cloud-based services that promises to test just how far software can go in establishing a failsafe environment for such mission-critical operations is the use of intelligence nested in existing home devices to create virtual connected home gateways. Along with creating a universal interface that aggregates whatever services a household picks from Web-based providers, this is a goal of Zonoff, Harris says.

“You need intelligence in the home, but it doesn’t have to be a standalone device,” Harris says. “You can put that lightweight intelligence in a lot of places and manage it in the cloud, with low enough power consumption where battery backup provides you failsafe protection against power outages. A PVR can be an always-on open connected device. You can perform a software download through a consumer electronics or Best Buy channel instead of requiring a whole new installation process.”

David Stevenson, vice president and general manager for the Motive Product Division at Alcatel-Lucent agrees, although he stresses the model pursued by his division is in keeping with A-L’s mission as a supplier to NSPs. Motive, an Austin-based startup acquired by A-L in 2008, has performed numerous trials to prove the point, Stevenson says.

“In our model, carriers act as enablers to other providers,” Stevenson says. “We provide a tool that maps to the areas of [service focus] from any CPE platform – PCs, tablets, set-top boxes. You manage the set-up from the cloud and run it on any device that can plug into a DVD running on a Blu-ray player.”

In this scenario carriers can use these tools to act as enablers to other providers, Stevenson says. But control over QoS is in the hands of the consumer, who can establish the parameters without having to set up a router.

“The foundation is that of a connected home application that takes advantage of existing device intelligence to set up the diagnostics, distribution and other requirements,” he says. “The infrastructure integration ties into some of the tools of customer experience management used in the service provider’s relationship with the subscriber. The [NSP] can give other providers a view of what’s going on in the home, giving them access to the consumer, network QoS and the functionalities of the managed network.”

The Emerging IBM Ecosystem

But can cloud-based approaches win consumers’ confidence? “The cloud can be a slippery slope when you increase the amount of connectivity,” says IBM’s Burnett. “That’s why IBM hasn’t rushed in with a rent-a-cloud solution. The technology exists to make the cloud failsafe but it’s a question of how easy it is to use if you’re providing bullet-proof security.”

One way around that conundrum is “voice-print” security, Stevenson counters. “Network service providers are well-place to use that technology,” he says. As previously reported (October 2010, p. 8), TradeHarbor, a leading supplier of voice authentication solutions in finance, health and other sectors, has begun offering its SaaS (software-as-a-service) solution for integration and applications in cable customer service and TV Everywhere. Interest is high but applications haven’t gone beyond the trial stage.

“If you’re relying on the cloud you need a local cloudlette,” Burnett insists. “If you have a problem with the broadband service you need to have a failsafe environment supported by the gateway over the local home network.”

Rather than attempt a single cloud-based solution IBM is partnering with technology firms worldwide to create a cloud-based ecosystem that’s tunable to a wide range of applications. At the same time, the firm is attempting to create a standardized workflow environment around its backend management platform which it believes will overcome a lot of the chaos intrinsic to today’s connected-home systems, whether they’re cloud based on anchored by servers in the home.

With 1.2 billion connected consumer electronics devices expected in the more than 800 million homes with broadband connections by 2013, IBM says today’s Internet of people is evolving into an “Internet of things.” But CE manufacturers are challenged to build the IT infrastructures required to efficiently manage the tidal wave of smart, connected devices and their related service components. They are also challenged to glean customer insights form all the data to aid in further product and service development.

“IBM believes smarter products and services innovations in the CE industry will be galvanized through a cloud computing infrastructure using a common services delivery platform based on industry standards,” says Bruce Anderson, general manager, IBM Global Electronics Industry. “This will help CE companies not only manage the connected devices, but also maintain a direct, continuous connection to end users through the smarter devices, offering the potential to change the way the industry operates and provides services to its customers.”

One of IBM’s initiatives in the connected-home space involves work with the German gateway supplier Shaspa Research. The Shaspa Bridge, a small box that acts as a universal translator for ZigBee, ZWave and other platforms based on embedded IBM software, enables interaction between sensors, appliances and IBM’s cloud-based services in support of multiple applications, including smart management of electronic devices and energy management.

In effect, Burnett notes, the Shaspa Bridge becomes part of the cloud, while easing connection of devices to the network by translating protocols and acting as traffic concentrator. The device offers an important example of how failsafe performance can be built into the home device to build greater consumer confidence in cloud-based services, he adds. “In failsafe mode the basic operations of the device persist in adverse circumstances,” he says.

The Proliferation of Smart Devices

Another intriguing IBM partnership points to the scope of applications that are coming into play with real-world commercial developments in contrast to the futuristic smart-home demos of the past. In this case the company is working with technology integrators Granny & Smith with another German firm, Miele@home, which is distributing high-end appliances with advanced connected apps built in worldwide.

The partners have developed an integrated user interface which, through IBM cloud services, allows users to connect with Miele@home appliances and get status updates and consumption data on energy used or money spent. “Green-oriented services are happening now in Germany,” Burnett notes. “For example, people are seeing real energy savings in the use of washing machines with connectivity into these types of services.”

The Miele machines have 80 data points that interface with network-based control, including “time of day, number of cycles – all kinds of information that save energy and can reduce manufacturer’s repair costs on warranties by pre-emptively identifying potential breakdowns,” Burnett says. Such capabilities lead to more engagement of potential revenue-producing players, he adds.

“When you’re providing service from a robust cloud-based ecosystem you’re creating opportunity for all kinds of parties,” he says. As a hypothetical case in point in reference to the connected washing machine, he notes Proctor & Gamble would be able to pick up data from the machine to gain an opportunity to sell a customer on a product. “Maybe the customer is using Tide but she’s not using the clean cycle soap rinse available with that product,” he says. “P&G can alert her to that.”

“We see an emerging Facebook of devices,” he continues. “The underpinnings of the logic enabling such engagement is our play.”

The sources of data can spring up anywhere, he adds. “In Japan, there’s an ‘iPot’ that’s connected wirelessly to the network and sends SMS messages that let you know grandma is having her tea, so she’s all right,” he says, noting there’s an opportunity there for tea companies. “We’ve identified 17 industry verticals that are looking for access to consumers or data in connected devices.”

Clearly, the wave of connected service apps is coming down the broadband pipe, with or without NSP engagement. Positioning to be in the front of this wave is now top priority for cable and telco providers alike.