When Dallas-based AT&T finalized its acquisition of DirecTV last year and bought internet TV pioneer Quickplay Media this past June, it became a new kind of company. As a result, it has a completely different set of competitors as the company aims to become more valuable for in-home digital services.
In the past, AT&T was a phone company and functioned as a sanctioned, regulated monopoly. In 1984, the government decided to encourage more market competition via a divesture that left a new, smaller AT&T and seven regional phone companies. In 21 years, AT&T and four of those seven phone companies, Pacific Telesis, Southwestern Bell, Ameritech, and BellSouth, eventually came back together via a long string of mergers and acquisitions.
Now, AT&T describes itself as “a content distribution leader across mobile, video and broadband platforms.” The company’s offerings include a mix of internet, mobile, and pay-TV services, sometimes coming from different networks and being delivered to multiple devices. It’s a new world with new competitors, but AT&T does have reach: It has more than 25.3 million pay-TV subscribers and, at the end of 2015, had 137 million wireless subscribers.
Where competition is tough, AT&T is providing new services. Take TV, for instance. Fewer consumers are taking pay-TV subscriptions these days. In the second quarter, analysts said pay-TV subscriptions across all providers in the U.S. had fallen by 1.29 million over a 12-month span. Thanks to its recent acquisitions, AT&T can now provide its pay-TV content via the internet to mobile devices. Its challenge is to chase Netflix, the established leader in internet video with 83 million members in over 190 countries watching more than 125 million hours of content per day.
Delivering basic connectivity is no longer enough to stay on top. “This does pose a challenge for telecoms,” says professor Amit Basu, chairman of the Information Technology and Operations Management Department at SMU’s Cox School of Business. “When they first started providing internet access, you had maybe one or two machines in the house, and the primary objective was connectivity. That picture has changed. Now it’s not simply a case of connecting consumers to the outside, it’s also managing a lot of stuff on the inside.”
Hot on this trend are a new wave of products and companies focused on bringing new types of connectivity and services to consumers. It’s worth noting that AT&T provides its broadband subscribers with internet filtering software and virus protection software, as well as a Wi-Fi router. But several companies argue that these basic tools are outdated and inadequate for today’s connected consumers with multiple mobile devices. “They’re network operators,” says Nick Weaver, CEO of eero Inc., about companies like AT&T. “They don’t build consumer electronics experiences.”
Weaver’s company, a consumer router startup, aims to simplify the process of setting up and maintaining a powerful home network. Instead of providing one router per home, eero delivers Wi-Fi via mesh networking, a technology that uses several small base stations to carry faster signals and provides continuous software upgrades that add new features.
“We can roll out features uniformly across our customer base,” Weaver says. Eight weeks after the product launched in February, the company added sophisticated parental control features and improved its security. Weaver says eero’s target consumer is one who is currently paying for a higher bandwidth broadband service: 20 Mb or more. Telecoms have done a great job of increasing broadband speeds and reliability, Weaver says, but companies like eero help consumers enjoy more reliable connections in the home, and they provide useful software and services, too. “We want our products to stay new and keep getting better,” he says.
Eero is not alone. Luma Home Inc., Ignition Design Labs, Securifi, and Torch all offer competitive routers with features once only seen in large enterprises. “New routers are seeking to address several key areas of concern for home networking infrastructure; namely performance, coverage, aesthetics, and security,” says Brad Russell, a research analyst at Parks Associates in Dallas. “New models are also designed for over-the-air updates that keep the router up to date with security patches and also enable them to roll out new features, such as [Google] OnHub’s recent integration of IFTTT for smart home control recipes.”
IFTTT, which stands for If This, Then That, is a web service that allows you to easily build connections between devices that might be made by different manufacturers or run on different operating systems. With router makers integrating this kind of web service, you’ll start to see home automation becoming more flexible to set up and less expensive to enable. The capability could allow you to, for instance, have the router send an email when your child gets home from school (as his or her device connects to the home network).
Companies like Google are showing a real understanding of how home networking has changed by providing, not only powerful routers, but ways to use the router as the hub to control a variety of devices. “The average U.S. broadband household currently has 8.1 connected consumer electronic devices [including routers], and 10.5 connected devices when including smart home devices,” Russell says. “The volume of connected devices is expected to grow substantially as the Internet of Things matures, placing even greater demand on home networking.”
It’s tough to tell if AT&T’s digital home services are in step with these trends. For its U-verse internet subscribers, AT&T’s basic parental control software only works with personal computers using Windows 7, or earlier operating systems. For virus protection, AT&T offers users McAfee Internet Security, which protects computers, but doesn’t automatically shield smartphones or other devices from prying eyes or harmful code.
AT&T’s premium service for home automation and physical home security offering, called Digital Life, is much more comprehensive, and it can be sold in areas where AT&T is not the incumbent broadband supplier. The Digital Life service offers a fully integrated set of security sensors, cameras, and other devices, which can be controlled via a smartphone app. It’s a professionally installed, monitored service, and, as such, it requires a monthly fee and two-year contract.
While Digital Life focuses on physical security, competitors are aiming at providing better online protection. Software provider AVG Technologies is partnering with Canadian router maker Amped Wireless to create ALLY, a Wi-Fi router with enhanced security. “As IoT becomes a reality and homes become increasingly connected, people will need to guard themselves against new security risks,” says Todd Simpson, AVG’s chief strategy officer.
But new services aren’t just showing up in routers. Some standalone network devices are aiming to provide greater in-home controls to broadband households. Los Angeles-based Cujo LLC’s device plugs into a home’s network and inspects incoming and outgoing traffic for viruses, malware, and other security threats. Cujo’s subscription service keeps the device up to date to fight the latest threats.
Portland-based Circle Media Inc., is aiming to manage content choices and internet use. Circle’s device pairs with a consumer’s current Wi-Fi router to provide internet filtering, parental controls for all devices and family-friendly content, via a partnership with Disney. The Circle product can disable ads and manage each device’s connection based on individual permissions, and its subscription service manages devices on other networks, like the cellular network, outside the home.
Boston’s Starry Inc. is also taking on AT&T in the home. The startup’s Starry Station is a touch-screen router that depicts devices and network issues with color-coded dots. It shows, at a glance, which devices in the home are consuming the most data. The company is testing its own broadband wireless internet service in Boston this fall based on a high-frequency millimeter wave technology that requires a rooftop antenna.
Starry says its routers will give consumers better connectivity inside the home and a better idea of how well their broadband service is performing, no matter who supplies the service. “This is really becoming the heart of the digital home,” says Starry CEO Chet Kanojia. The company has designs on breaking what Kanojia calls “a monopoly on broadband” in most markets. “We believe that as you create more access to broadband and keep increasing speed and capacity, the societal impact will be really great,” he says. “Our hope is that people see the quality of the company and realize that we’re rethinking the consumer experience.”
AT&T declined to comment for this column.
In the past, AT&T was a phone company and functioned as a sanctioned, regulated monopoly. In 1984, the government decided to encourage more market competition via a divesture that left a new, smaller AT&T and seven regional phone companies. In 21 years, AT&T and four of those seven phone companies, Pacific Telesis, Southwestern Bell, Ameritech, and BellSouth, eventually came back together via a long string of mergers and acquisitions.
Now, AT&T describes itself as “a content distribution leader across mobile, video and broadband platforms.” The company’s offerings include a mix of internet, mobile, and pay-TV services, sometimes coming from different networks and being delivered to multiple devices. It’s a new world with new competitors, but AT&T does have reach: It has more than 25.3 million pay-TV subscribers and, at the end of 2015, had 137 million wireless subscribers.
Where competition is tough, AT&T is providing new services. Take TV, for instance. Fewer consumers are taking pay-TV subscriptions these days. In the second quarter, analysts said pay-TV subscriptions across all providers in the U.S. had fallen by 1.29 million over a 12-month span. Thanks to its recent acquisitions, AT&T can now provide its pay-TV content via the internet to mobile devices. Its challenge is to chase Netflix, the established leader in internet video with 83 million members in over 190 countries watching more than 125 million hours of content per day.
Delivering basic connectivity is no longer enough to stay on top. “This does pose a challenge for telecoms,” says professor Amit Basu, chairman of the Information Technology and Operations Management Department at SMU’s Cox School of Business. “When they first started providing internet access, you had maybe one or two machines in the house, and the primary objective was connectivity. That picture has changed. Now it’s not simply a case of connecting consumers to the outside, it’s also managing a lot of stuff on the inside.”
Hot on this trend are a new wave of products and companies focused on bringing new types of connectivity and services to consumers. It’s worth noting that AT&T provides its broadband subscribers with internet filtering software and virus protection software, as well as a Wi-Fi router. But several companies argue that these basic tools are outdated and inadequate for today’s connected consumers with multiple mobile devices. “They’re network operators,” says Nick Weaver, CEO of eero Inc., about companies like AT&T. “They don’t build consumer electronics experiences.”
Weaver’s company, a consumer router startup, aims to simplify the process of setting up and maintaining a powerful home network. Instead of providing one router per home, eero delivers Wi-Fi via mesh networking, a technology that uses several small base stations to carry faster signals and provides continuous software upgrades that add new features.
“We can roll out features uniformly across our customer base,” Weaver says. Eight weeks after the product launched in February, the company added sophisticated parental control features and improved its security. Weaver says eero’s target consumer is one who is currently paying for a higher bandwidth broadband service: 20 Mb or more. Telecoms have done a great job of increasing broadband speeds and reliability, Weaver says, but companies like eero help consumers enjoy more reliable connections in the home, and they provide useful software and services, too. “We want our products to stay new and keep getting better,” he says.
Eero is not alone. Luma Home Inc., Ignition Design Labs, Securifi, and Torch all offer competitive routers with features once only seen in large enterprises. “New routers are seeking to address several key areas of concern for home networking infrastructure; namely performance, coverage, aesthetics, and security,” says Brad Russell, a research analyst at Parks Associates in Dallas. “New models are also designed for over-the-air updates that keep the router up to date with security patches and also enable them to roll out new features, such as [Google] OnHub’s recent integration of IFTTT for smart home control recipes.”
IFTTT, which stands for If This, Then That, is a web service that allows you to easily build connections between devices that might be made by different manufacturers or run on different operating systems. With router makers integrating this kind of web service, you’ll start to see home automation becoming more flexible to set up and less expensive to enable. The capability could allow you to, for instance, have the router send an email when your child gets home from school (as his or her device connects to the home network).
Companies like Google are showing a real understanding of how home networking has changed by providing, not only powerful routers, but ways to use the router as the hub to control a variety of devices. “The average U.S. broadband household currently has 8.1 connected consumer electronic devices [including routers], and 10.5 connected devices when including smart home devices,” Russell says. “The volume of connected devices is expected to grow substantially as the Internet of Things matures, placing even greater demand on home networking.”
Some standalone network devices are aiming to provide greater in-home controls.
It’s tough to tell if AT&T’s digital home services are in step with these trends. For its U-verse internet subscribers, AT&T’s basic parental control software only works with personal computers using Windows 7, or earlier operating systems. For virus protection, AT&T offers users McAfee Internet Security, which protects computers, but doesn’t automatically shield smartphones or other devices from prying eyes or harmful code.
AT&T’s premium service for home automation and physical home security offering, called Digital Life, is much more comprehensive, and it can be sold in areas where AT&T is not the incumbent broadband supplier. The Digital Life service offers a fully integrated set of security sensors, cameras, and other devices, which can be controlled via a smartphone app. It’s a professionally installed, monitored service, and, as such, it requires a monthly fee and two-year contract.
While Digital Life focuses on physical security, competitors are aiming at providing better online protection. Software provider AVG Technologies is partnering with Canadian router maker Amped Wireless to create ALLY, a Wi-Fi router with enhanced security. “As IoT becomes a reality and homes become increasingly connected, people will need to guard themselves against new security risks,” says Todd Simpson, AVG’s chief strategy officer.
But new services aren’t just showing up in routers. Some standalone network devices are aiming to provide greater in-home controls to broadband households. Los Angeles-based Cujo LLC’s device plugs into a home’s network and inspects incoming and outgoing traffic for viruses, malware, and other security threats. Cujo’s subscription service keeps the device up to date to fight the latest threats.
Portland-based Circle Media Inc., is aiming to manage content choices and internet use. Circle’s device pairs with a consumer’s current Wi-Fi router to provide internet filtering, parental controls for all devices and family-friendly content, via a partnership with Disney. The Circle product can disable ads and manage each device’s connection based on individual permissions, and its subscription service manages devices on other networks, like the cellular network, outside the home.
Boston’s Starry Inc. is also taking on AT&T in the home. The startup’s Starry Station is a touch-screen router that depicts devices and network issues with color-coded dots. It shows, at a glance, which devices in the home are consuming the most data. The company is testing its own broadband wireless internet service in Boston this fall based on a high-frequency millimeter wave technology that requires a rooftop antenna.
Starry says its routers will give consumers better connectivity inside the home and a better idea of how well their broadband service is performing, no matter who supplies the service. “This is really becoming the heart of the digital home,” says Starry CEO Chet Kanojia. The company has designs on breaking what Kanojia calls “a monopoly on broadband” in most markets. “We believe that as you create more access to broadband and keep increasing speed and capacity, the societal impact will be really great,” he says. “Our hope is that people see the quality of the company and realize that we’re rethinking the consumer experience.”
AT&T declined to comment for this column.
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