Building a Stickier Smart Home Business – 7 Facts ISP and Telecom Leaders Should Know about IoT
Broadband internet subscriptions once seemed like a forever-growing cash generator for service providers. Unfortunately, the growth has plateaued in most developed markets, and the leading ISPs and telcos are now integrating new IoT capabilities on their Wi-Fi gateways in anticipation of the Smart Home transformation. However, simply putting a Thread 802.15.4 wireless chip in a CPE and rolling it out to millions of subscribers is not yet enough for a viable smart home business. In this blog, Christopher Ince from SILICON LABS explains seven aspects of IoT that ISP and telco leaders should consider in order to build a stickier smart home business.
The Broadband Plateau
In just two decades, the number of global fixed broadband connections increased nearly eight-fold from 200 million to 1.5 billion. This historical growth era, which really took off at the advent of the millennium, has churned fortunes for internet service providers (ISPs) and telcos worldwide. Great cash cow, you might think. Well, it had its moment. Today, the fixed broadband markets in most developed countries have saturated, according to the OECD Broadband Portal. This has led to intense competition, increasing customer acquisition costs, price erosion, and churn, hitting the service providers' bottom lines. In the USA alone, nearly 3,000 broadband ISPs are fighting for the dollars Americans pay every month to get the information highway flowing into their homes.
Smart Home Benefits to Internet Service Providers (ISPs)
The global ISP market was valued at USD 390 billion in 2022 and is projected to reach USD 566 billion by 2032, expanding at a CAGR of 3.9% during this period. Despite promising industry forecasts, the old broadband growth strategies do not apply anymore, and service providers need new ways to grow business.
Bundling new smart home services and IoT connectivity technologies into broadband subscriptions has quickly become one of the most promising ways for the leading ISPs and tTelcos to accelerate their business.
Smart home and IoT provide many clear benefits to service providers – they can become the complete provider of wireless IoT home connectivity alongside Wi-Fi, managing and optimizing connectivity for all types of IoT devices used in homes today and in the future. Owning the home IoT infrastructure, e.g., OpenThread Border Router (OTBR) capability, allows service providers to claim a strategic position in the greater smart home ecosystem and do meaningful and sustained business alongside global smart home brands such as Amazon, Apple, Google, and Samsung. Smart Home and IoT services also help service providers enable new revenue sources, improve customer value-add, and strengthen customer retention, thus improving subscription business and reducing churn.
Figure 1 Internet Service Providers are transforming their legacy Wi-Fi CPE base into a multi-protocol IoT home infrastructure by adding Thread 802.15.4 and other low-power wireless protocols to complement Wi-Fi.
Seven IoT Aspects ISP and Telco Leaders Should Consider
We are witnessing a trend of ISPs and telcos recognizing that it is their role to own the wireless IoT infrastructure of connected smart homes. However, simply integrating a Thread 802.15.4 wireless chip inside Wi-Fi home gateways and rolling them out to millions of subscribers is not yet enough. There are seven critical aspects of IoT that ISP and telecom leaders should consider before locking their smart home strategies:
1.IoT Infrastructure – The existing legacy CPEs typically support Wi-Fi connectivity only. However, the smart home IoT device market is proliferating rapidly, and Wi-Fi is not optimal for all device types. In fact, many emerging IoT devices will use a more energy-efficient and lightweight mesh connectivity technology such as Thread. So, building a scalable and future-proof IoT home infrastructure that supports Wi-Fi, Thread, and even other wireless IoT connectivity technologies such as Bluetooth Low Energy (LE), is the first step service providers should consider. How to choose the right set of IoT technologies that allow you to cover all home IoT connectivity needs today and in the future? Silicon Labs has years of experience in helping service providers and gateway manufacturers to enable optimized wireless multi-protocol IoT solutions such as OpenThread Border Router (OTBR) on gateways.
2.Matter Gateway – As described earlier, enabling wireless IoT infrastructure is the first step toward a scalable and future-proof smart home business. However, if you want to enhance your business from a mere IoT connectivity provider to offering value-added smart home applications to your customers, Silicon Labs’ multiprotocol wireless SoCs, MG21 and MG24, enable the Matter Gateway capability on your CPE, allowing you to increase revenue through your own, branded Matter ecosystem, bundle devices of any manufacturer via the Matter protocol, and allow users to control them all via your App, Amazon, Apple, Google, and, Samsung.
3.Wireless Performance – Every home imposes a unique combination of wireless challenges to service providers – concrete walls, metal surfaces, windows, and other sources of interference can deteriorate user experience, burden your customer service centers, and increase operational costs. As a service provider, you must optimize IoT wireless performance on your gateways to enhance user experience, regardless of where the gateway sits in any given home environment. Silicon Labs IoT solutions are renowned for their superior wireless performance – such as the MG24 multi-protocol chip that offers the market-leading link budget and antenna diversity, delivering efficient connectivity in every corner of the home and beyond.
4.Wi-Fi Co-existence – With the legacy Wi-Fi-only home gateways, service providers didn’t have to worry about 2.4 GHz multi-radio/multi-protocol interference. However, with smart home gateways combining Wi-Fi and IoT radios such as Thread, you will face a new challenge: how to manage Wi-Fi co-existence? Silicon Labs can help you to design the most effective Wi-Fi co-existence solution on your gateway using, e.g., our advanced Packet Transmission Arbitration (PTA) and the patent-pending Signal Identifier capabilities.
5.Energy Consumption – Energy regulations such as the new, stricter EU Ecodesign Standby Regulation 2023/826 (HiNA) effective 2027, will limit the standby power consumption of consumer CPE down to ≤7W, forcing service providers to reduce the gateway power consumption radically. Silicon Labs provides you with many innovations for more energy-efficient gateway design – for example, you can allow users or network operators to turn the power-hungry Wi-Fi transceiver off and on remotely during nights, weekends, or vacations using our patent pending Thread solution, or Bluetooth LE.
6.Platform Integration – Building an IoT infrastructure that scales to millions of homes and supports new devices, services, and connectivity technologies for years to come requires seamless integration of dozens of building blocks. Managing them can become an integration nightmare. To make things easier for service providers, Silicon Labs offers an end-to-end one-stop-shop solution for building a scalable and future-proof IoT home infrastructure. This includes high-performance and ultra-low-power multiprotocol wireless processors, pre-verified wireless software stacks, tools, security, always up-to-date Matter implementation, online Matter Developer Journey, and a Connectivity Lab where you can test your gateways and devices in a friendly environment before taking the official certification tests.
7.Interoperability – A smart home solution without seamless interoperability between gateways, devices, protocols, and ecosystems is like a symphony orchestra without a conductor. If the devices are not playing the same tune, the user experience suffers, customers are frustrated, and vote with their feet. Silicon Labs has worked for decades to become the conductor of the smart home industry – we provide tested and verified wireless IoT and Matter solutions to both, gateway and device makers, allowing us to perfect our standards compliancy and system interoperability, ensuring that you can build a smart home experience where every component plays the same tune.
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