Home networks

1 Overview

Home networks are used to enable people to connect electronic devices within the home or to broadband connections to the internet. There are three broad types of network:

1. Networks for computers and digital phones, often referred to as hubs, enable a broadband connection to be shared between these devices (increasingly via wireless) for internet access, file-sharing and voice over IP (VoIP) calls

2. Networks for home entertainment systems enable somebody to watch a TV programme stored on a personal video recorder (PVR) in another room, for example, or to listen to music stored on a PC in the study on the stereo in the living room.

3. So-called home automation networks can be used to run air conditioning systems, domestic appliances, burglar alarms and similar systems.

Ultimately these three types of network will converge, but this is a long way off at present. The major issue in home networking is that these networks often exist as islands. This is particularly significant for the first two, which make up the overwhelming majority of home networks today.

The strongest growth to date, has in broadband hubs, which are integral to the development of digital communication services, namely internet access, digital voice and increasingly mobile phone access.

Progress towards a standardised, reasonable-cost home entertainment network has been much slower and more complex, although this is slowly starting to change.

With more and more households wanting to connect multiple devices and share content around the home, the market for home networking has considerable room for growth. From the ISP/telco point of view, home networking provides three key opportunities:

• An effective home network can provide a competitive advantage, and the popularity of home networks, particularly wireless, is growing rapidly.

• A home network provides an effective gateway through which to manage a customer’s services.

• Networks offer the potential for additional revenue from home networking products and services.

Key issues

The rise in digital music and internet video. The past two years have seen large-scale growth in digital music services such as iTunes and podcasting via sites like MySpace and YouTube. This increases the pressure to find solutions for sharing digital media content around the home. More mainstream content is now being broadcast over IPTV and the internet. This is driving a rapid increase in the viewing of content on devices other than the traditional TV

Enabling distribution of real time video content around the home remains the biggest challenge for home networks. High-quality digital content, particularly in HDTV format, requires a robust distribution network. Despite increased bandwidth into consumer households and rapid improvements in techniques such as multi-casting, quality of service (QoS) remains an issue for content broadcast over pure IP, but especially across wireless networks.

Currently, the most common way of distributing video content around the home remains the power line. A handful of service providers now offer digital and even high-definition (HD) plugs. However, with the launch of Apple TV and the first ‘TV with internet link’ initiatives from the likes of Sony, things are slowly beginning to change.

Variety of hubs. There is no clear answer to the question of what will be at the hub of tomorrow’s home network. Today, most consumers will have a digital hub (for broadband and phone, plus a set-top box (STB) for digital TV. However, consumers are also likely to have other devices, such as an Xbox, Apple TV, or Windows Media Centre, and there are a number of additional devices in these categories. Any of these can be used as a hub of sorts to transmit digital entertainment. But despite efforts by PC manufacturers and innovators such as Slingbox, many consumers continue to regard the PC as second best for viewing TV and movies. The fight to become the main hub will remain a key battleground in the coming years.

Enabling PC content to be viewed on TVs around the home. This is a key area for development as more and more consumers want to access internet-type content on larger-screen viewing devices. However, it remains a difficult area to crack, owing to the high quality required for video viewing. Solutions to date have often been complex involving significant amounts of software.

Prices for network equipment continue to fall. The internet service providers (ISPs) covered by this profile have dropped home networking product prices by half in less than two years. There is also a continuing trend toward more home networking services being automatically bundled in with broadband packages. This is good news for consumers, and makes it easier for ISPs to deliver networking to more customers.

Wireless is becoming more popular and effective. 2007 saw a significant increase in wireless home networking penetration. Point Topic’s survey data showed a 12% increase in wireless networks in the UK over the year, bringing it to 59%. More ISPs are including wireless routers/capability as a matter of course in bundled packages. However, wired still remains more robust for video transmission and less prone to connection faults.

VoIP is becoming ubiquitous, particularly as a second line. Many service providers now offer digital voice as part of an overall communications package. Where a home networking gateway is included as part of the package, VoIP capability is built in. Multiple voice lines are an additional selling point for some providers offering home networks.

New profile content

This profile has been updated. Section 3.1 now includes revised market size and revenue figures to end-2006. Section 2.3 contains an update on some of the forums and alliances pushing for standardisation and compatibility in home networking. Section 2.4 provides an update of key player activity, including Apple TV and Slingbox. Section 3.2 details the latest pricing for home networking equipment.