The Smart Home: A Growing Fifth-Play Opportunity for … HOME_2015.pdfExhibit 1: Stages of smart...

©2015PyramidResearch|Telecommunications Providers and theGlobalSmartHomeMarket

TheSmartHome:AGrowingFifth-PlayOpportunityforOperators

Author: KerryDoyle,AnalystatLargeEditors: OzgurAytar,ResearchDirector

DanielRamos,SeniorAnalyst,EnterpriseCloud&M2MPracticeLeader

ThisreportispartofPyramidResearch’sThematicReportPortfolio|December2015

©2015PyramidResearch|Telecommunications Providers and theGlobalSmartHomeMarket 2

Tableofcontents

Tableofcontents 2Tableofexhibits 4Executivesummary 6Section1:Introductiontosmarthomeservices 9Smarthome:DefinitionandevolutionSmarthomemarketenablersTypesofsmarthomeservicesTypesofservices:Lightingandappliancecontrol,entertainmentsystemsTypesofservices:Energymanagement,securityandaccess controlTypesofservices:HomehealthcareandexternalhomecontrolsSmarthomemarketdriversandbarriersChangingmarketdriversBarriertosmarthomeadoption:GlobalhomeconstructionBarriertosmarthomeadoption:ConsumercostSection2:Thesmarthomeecosystem 20DefiningthesmarthomeecosystemThesmarthomevaluechainProminentsmarthomeplayersintheUSTheroleoffixedandwirelessbroadbandprovidersTheroleofapplianceanddevicemanufacturersTheroleofutilitiesTheroleofhomesecurityplatformprovidersanddealers


Tableofcontents(continued)

Section3:Telcopositioningstrategiesandmarketingopportunities 28OpportunitiesacrossthesmarthomevaluechainTelcopositioningstrategiesTelcopositioning:White-labelingTelcopositioning:SmarthomesupportservicesTelcopositioning:Bundlingservices,appsanddevicesTelcopositioning:IncorporatingOTTinstrategiesSection4:Keytakeaways 35Section5:Casestudies 39Casestudy:AT&T,USACasestudy:Orange,FranceCasestudy:HKT,HongKongCasestudy:RogersCommunications,CanadaAppendix 52CompaniesmentionedAboutPyramidResearchPyramidResearchcontact information


Tableofexhibits

Exhibit1:Stagesofsmart homeservices 10Exhibit2:Industrytrendsfacilitatingsmarthomemarketdevelopment 11Exhibit3:Typesofsmarthomeservices 12Exhibit4:Controllingthesmarthome 13Exhibit5:Energymanagement 14Exhibit6:Componentsofsecuritymanagement 14Exhibit7:Thegrowingtrendofe-health 15Exhibit8:Rangeofexternalhomecontrol 15Exhibit9:Issuesaffectingsmarthomeadoption 16Exhibit10:Sizeoftopglobalconstructionmarkets 18Exhibit11:Additionalcostsoften determineadoptionofsmarthometechnology 19Exhibit12:Keyelementso fsmarthomecontrol 21Exhibit13:Typesofplayersinthesmarthomevaluechain 22Exhibit14:USsmarthomeplatformcontenders 23Exhibit15:Numberofnetworkeddevicesglobally,2014–2019 24Exhibit16:Elementsinvolvedinsmarthomeconnectivity 25Exhibit17:SmartmeteringprojectsinAsia-Pacific,EuropeandtheUS 26Exhibit18:Marketsharesofhomesecurityservicesbytypeofmonitoring 27Exhibit19:Importantfunctionsthatnetworkoperatorsprovideinsmarthomesystems 29Exhibit20:GlobalIPtrafficpermonth,2014-2019 30Exhibit21:White-labelingeliminatesin-houseproductionandexpenses 31Exhibit22:Elementso ftelcoserviceofferings 32Exhibit23:Valuechainofoperatorbundling 33Exhibit24:HowsmarthomedeploymentscanuseOTTservices 34Exhibit25:Smartmeteringnetworkcomponents 36Exhibit26:Deviceinterconnectivitydependsondiversebroadbandandsensor networks 37Exhibit27:Integratedapproachestocreatingcompellingsmart homeservices 38


Tableofexhibits(continued)

Exhibit28:DigitalLifehasallowedAT&Ttointroducearangeofservicesforthesmart home 40Exhibit29:AT&TDigitalLifeplatformservices 41Exhibit30:AT&Tsmarthomeservicestimeline 42Exhibit31:TheHomeliveplatformdevicesandappliances 43Exhibit32:ComponentsoftheOrangeHomeliveplatform 44Exhibit33:OrangeFrancehomeservicestimeline 45Exhibit34:HKTSmartLiving'srangeofsmarthomefeatures 46Exhibit35:HKT’ssmarthomecontent&serviceson variousPCCWplatforms 47Exhibit36:HKTsmarthomeservicestimeline 48Exhibit37:FeaturesofRogers’smarthomemonitoringplatform 49Exhibit38:Rogers’surveyofCanadiansmarthomepreferences 50Exhibit39:RogersSmartHomeMonitoringservicestimeline 51


• The global smart home market is growing exponentially, attracting an array of service providers, from technology giants andstartups to major media players, device makers, big-box retailers, home improvement companies, utilities and telecom networkoperator. Government mandates and initiatives, ongoing technology innovation and the intense attention paid to conservationare all contributing tomaking the smart home a place with a bright future.

• The global focus on sustainability and growing consumer awareness of energy consumption are major factors driving smarthome adoption, and regulatorymandates on energy conservation are further boosting growth.

• Similarly, providing security services via smart homes represent an important vertical that is ripe for expansion and offersoperators an opportunity to compete in a potentially lucrative field.

• Needing a different application for every stand-alone device (door locks, thermostats, lights, sensors, etc.) is a significantobstacle for endusers.

• The smart home market is currently at a fork in the road, going either toward an open ecosystem where users have to configureand control multiple, heterogeneous devices, or toward a small number of competing vendors of proprietary platforms thatcontrol all access to devices.

• While adoption is increasing in countries where governments actively support faster broadband services, especially fiber tothe home, the costs associated with new equipment, installation and ongoing maintenance are significant deterrents to homeautomation.

Executivesummary


• Most integrated telecom operators and large cable companies in advanced markets today offer some form of smart homesystem ona subscription basis.

• In the competition over smart home customers, network operators have two substantial advantages vis-à-vis almost allretailers and device manufacturers: 1) their numerous and often far-reaching billing relationships and 2) their direct connectionsinto home environments through phone, wireless and Internet services. They supply the networks (mobile, fixed), platforms andwhite-label devices vital to smart home connectivity. Operators also possess dedicated subscriber bases, manage customerrelationships and have the ability to partner with public or private companies from diverse sectors, such as energy,manufacturing and technology.

• In fact, operators are finding that an open-platform approach and white-labeling via strategic partnerships with device andappliance makers offer a means to broaden their smart home subscriber base. These tactics also provide the versatility requiredto successfully enter new regional markets. Ultimately, the success of these smart home initiatives will hinge on the ability ofoperators to create a compelling value proposition for homeowners based on accessibility, ease of use, reliability and security.

• Areas where operators can extend their provider roles and create new revenue streams include platforms, white-label devicesand service bundles that include resources such as tech support.

• Unlocking the smart home market depends on device-to-device communications and an open ecosystem along with robustsecurity to create a compelling value proposition. Moreover, operators possess assets that will allow them to structure the smarthome ecosystem around their connectivity platforms.

• Operators should consider the strategic advantages of providing tech support across customer and product lifecycles. Helpingconsumers derive more value from their devices – starting with installation and continuing through activation, connectivity andusage – will help telcos become the premier sourceof support. The result will be satisfied and loyal customers.

• Operators can improve the value proposition of home automation by adding an OTT strategy or bundling it with smart homeconnectivity.

Executivesummary,continued


• This report focuses on the role of telcos in the smart home value chain and evaluates the influence of the supplier ecosystem onadoption. It provides an overview of emerging standards and technologies related to home automation and examines the keyinitiatives operators can carry out to gain a dominantposition in this market.

• The report explores the roles of multiple smart home providers, including utilities, security firms, appliance and devicemanufacturers andmedia companies.

• This report also examines a number of key challenges that operators face, including the need for device standardization andinteroperability; new approaches to service bundling; network infrastructure improvements (4G/5G, fiber optic, etc.); and thescramble for dominance among multiple proprietary and open platforms and standards. A unified platform standard would helpexpand smart home adoptionworldwide.

Executivesummary,continued


Section1:Introductiontosmarthomeservices

I. Smarthome:DefinitionandevolutionII. SmarthomemarketenablersIII. TypesofsmarthomeservicesIV. Smarthomemarketdriversandbarriers


• Connectivity• Intelligence

• Sensors• Storage

• Clouds• Standards• OpenAPIs

• ‘Bigdata’ • Artificialintelligence(AI)

CurrentstageNextstage:securityremainskeychallenge Futurestage

Smarthome:DefinitionandevolutionToday's smart home proposition combines the Internet of Things (IoT) with connected home controls and theubiquitous smart devices, such as smartphones, tablets andwearables.

Source:PyramidResearch

EXHIBIT 1:STAGESOFSMARTHOMESERVICES

• The term ‘smart home’ refers to a residence wheremultiple devices and objects are networked so thattheir functions are programmable and responsive toinput from users and other devices. The term is oftenused to refer to the connected technology in such ahome as well.

• Today’s smart home is the product ofmany years ofslow progress, not only in fields such as networkedsecurity or speaker systems, but also in M2Mcommunications, operational technology andwireless connectivity.

• To telecom operators, the smart home marketrepresents an opportunity to establish an enduringnew source of substantial revenue from a value-added service. Whether this will amount to thecoveted ‘fifth play’ – an added business on the levelof the quad-plays: fixed voice, broadband, TV andmobile – will depend in part on the operators’ abilityto keep other parties from gaining control over thecrucial parts of the market.

10

Connectdevices

Collectdata

Accessdata

Complexanalytics

Uniquevalue

• We have identified three broad stages in the evolution of smarthomes (Exhibit 1):• The current stage involves platforms that integrate individual

devices and services.• The next stage will increase reliance on cloud computing and big

data analytics.• Eventually, AIwill truly automate homes.


EXHIBIT2: INDUSTRYTRENDSFACILITATINGSMARTHOMEMARKETDEVELOPMENT

SmarthomemarketenablersThe expansion of mobile data networks and the parallel rise in usage will become increasingly important catalysts forglobal smart home adoption and the connectivity it requires.


The proliferation of mobile device users as well astheir reliance on apps are important componentsof home automationand the overall IoT.LTE and 5G will bring further increases in mobiledata speeds, enabling more efficient and morereliable connections between smart homes andInternet-based services.

Home energy management is growing morepopular in all regions globally. Smart meteringoffers operators, in partnership with utilities, aviable opportunity to provide smart hometechnology services for the mass market.

The global expansion of the Internet isdramatically boosting the capacity for connectingsmart home devices. Moreover, the ongoingdevelopment of the Internet of Things (IoT) willhave a huge influence on the communicationprotocols, software standards and platformsystems that underpin the smart homemarket.

Agrowingrelianceonbig-dataanalytics, crucialtosmarthomefunctionality,supportstheproliferationofhomeautomationdevices.Moreover,asharpdeclineinthecostsofbroadbandconnectivity,embeddedchipsetsandsensorsaswellassimplified,low-costhomeareanetworkingareeachhelpingtoexpandsmarthomeadoption.

SMARTHOMEENABLERS

11


EXHIBIT3:TYPES OFSMARTHOMESERVICES

TypesofsmarthomeservicesBundles that pair energy monitoring with security or other services can now be sold directly to homeowners, alongwith automation platforms. This is a promising new trend for operators.

Source:MistralSolutions,PyramidResearch

Ø Lighting &appliancecontrolØ Securitysystems,accesscontrol

Ø Entertainment systems

Ø Energy management

Ø HVACcontrolsØ Homehealthcare

Ø Child safetyØ IrrigationØ Pool& spa

12


EXHIBIT4:CONTROLLING THESMARTHOME

Typesofservices:Lightingandappliancecontrol,entertainmentsystemsConnected entertainment systems have been available for years, gradually growing more capable; now they are beingintegrated into homeautomation systems. The Internet refrigeratormay stillbe a solution looking for a problem.

Source:ASID

• Entertainment systems: Since wireless LANs took off in the early2000s, wireless speakers have been among the most popularhome devices to be controlled over a network. In December2014, Denon released APIs for home control systems to integrateits audio system, and market leader Sonos says it will follow suit.These systems will be able to automatically respond to theroutines and preferences of residents, for example by turning onSpotify at full volume for a teenager when the parents leave thehome.

• Lights: Smart lights can do more than save energy and make ahouse seem inhabited during vacations: they can change colorand gradually dim as to prepare residents for sleep, they can beadjusted by voice control, and they can briefly turn red in ateenager ’s roomwhen parents return home.

• Appliances: Adding streamed music to a refrigerator, an app to asaucepan or SMS to an oven may seem gimmicky, but addingintelligence and integrating it with a larger system might actuallyhelp: if sensors notice that a resident woke up early, the coffeemaker can have a cup of coffee ready; if the oven is on when thatperson is leaving, it can alert youwith an SMS.

13


• Energy management: Among the measures a smart homesystem can take to save users money are automaticallylowering the temperature when no one is home and time-shifting the use of some appliances to hours when energy ischeaper. Learning and adapting to user behavior, as Google’sNest Thermostat automatically does, takes this a step further,all while making the homemore comfortable.

• Security and access control: Security services can be sold tousers through home automation system installers and new-home developers. Surveillance cameras, locks and garagedoor openers can be remotely controlled. ADT, FrontPointSecurity and Verisure are major security manufacturers forthe smart home.

EXHIBIT6:COMPONENTSOFSECURITY MANAGEMENTEXHIBIT5:ENERGYMANAGEMENT

Source: Pyramid ResearchSource: Pyramid Research

Typesofservices:Energymanagement,securityandaccesscontrolSmart meters, energy monitors and controls, water sensors and security controls will all be a part of integrated smarthomesystems, and all are availablewith a wide rangeof functions.

14

Energycompany

Homenetwork

BluetoothconnectionAppliance

USB

Ethernet

ZigBeeWi-Fi

Flash

Bluetooth

Smartmeter

Cellularnetworkconnection

Keylessaccess

Videomonitoring

Motionsensors

Fireandflooddetectors


EXHIBIT 7:THEGROWINGTRENDOFE-HEALTH

Source: Pyramid ResearchSource: Pyramid Research

Typesofservices:HomehealthcareandexternalhomecontrolsThe demand-response functionality of smart homes enables a range of remote control actions, from the simple(activating lawn sprinklers) to the complex (patientmonitoring).

EXHIBIT8:RANGE OFEXTERNALHOMECONTROLS

Entertainment

AC,heatpump

Whitegoods

Temperaturesensor

Securitysensor

Two-waydatacommunications

Gateway

Utilitymeter

Fieldservice

Utility/privateline

Serviceprovider

Utilitycompany

• Home healthcare: E-health has the potential to be a key component of smart homes, providing benefits such as aging in place.Old or disabled people can benefit from home automation in ways that often also reduce the need for home care and healthcarefacilities. Integrating health monitoring with smart home systems, for example, can make it easier for health professionals tomonitor patients’ vital signs. Other areas includealerts, automated timers, emergency assistance and security.

• External home controls: Sensors, smart meters and automation can provide more efficient use of energy and other resources foroutdoor lighting, gate access, garden irrigation, poolmaintenance and other areas.

15

++ Health

systems

Community

Informed,activatedpatient

Prepared,proactivepracticeteam


SmarthomemarketdriversandbarriersA key impediment to growth is the multitude of network, platform and software standards used by devices. For smarthomes to reachmainstream adoption, a singleplatform standard for controlling productsmust become thenorm.


UpfrontconsumercostsSlowgrowthofglobalhousingconstruction

RegulatorymandatesIndustrypartnershipsConsumerpreferences

Renewedfocusonstandardization

EXHIBIT9: ISSUESAFFECTINGSMARTHOMEADOPTION

16


ChangingmarketdriversBesides established demand drivers like the need for security, a number of new factors are propelling global smarthomeadoption, frombroad technology initiatives to changesrelating specifically to telecom operators.

17

Governmentinitiatives

• Governmentmandatesformoreefficientenergyusagearegivingsmartmeteringstrongmomentum.

• Smartcityservicesimprovesustainabilityandconservation;manymajorcitiesaremovingtowardadoption.

• Smarthomeadoptionincreasesincountrieswheregovernmentsareactivelypromotingfasterbroadbandservices.Singapore,HongKongandtheUAEhaveallpromotedfiberrollouts.

Industrypartnerships

• Opportunitiesexistforpartnershipsbetweenmediacompanies,OEMs,telcos,utilities,homeimprovementdealersandtechnologystartups.

• Governmentalmandatesandenergyregulationshavepromptedutilitiestopartnerwith telcos forsmartmetering.

• TelefónicaandCGIarerollingoutsmartmetersacrosstheUK.

• AT&TispartneringwithGeneralElectrictomergeGE’ssmartmeterswithAT&T’ssecurecellularcommunications.

Consumerpreferences

• Advancesintechnologyandthemovetowardsustainabilityhavespurredglobaltrendssuchaselectriccars,alternativeenergy,smartcitiesandsmarthomes.

•Wideradoptionofhomeelectricitygeneration(solar,wind,etc.) isboostingconsumerdemandforsmarterelectricsystems.

• Besidestheconvenienceofcontrollingdevicesinthehomeremotely,smarthomesprovideabetterqualityoflife,energyefficiencyandfinancialsavings.

Renewedfocusonstandardization

• Thelackofdeviceinter-operabilityisoftenblamedonplatformsbeingproprietaryratherthan‘open.’

• Aproprietaryframeworkensuresinteroperabilityforselectdevices,buthomeownersarelimitedtousingcertainbrands.

• Anopenenvironmentmeansthatsensordataissharedandthecontrolstructuresareavailableforalldevelopersandmanufacturerstouse.

• TheTR-69protocolwillplayakeyroleintelcos’smarthomestrategies.


EXHIBIT10:SIZEOFTOPGLOBALCONSTRUCTIONMARKETS

Barriertosmarthomeadoption:GlobalhomeconstructionA major factor in the long-term growth of the smart home market is the complexity of retro-fitting existing housingstock comparedwith installing systems during newhomeconstruction.

Source:“GlobalConstruction2030:Aglobalforecastfortheconstructionindustryto2030,”GlobalConstructionPerspectivesandOxfordEconomics

fortheENRGlobalConstructionSummit,NewYork,September2015

• The best time to install a home automation system is during new home construction. However, global housing construction hasbeen recovering only gradually since the 2008 recession. According to industry sources, the market is expected to return tofaster growth thanks to an improving macroeconomic environment, waves of urbanization and population growth in emergingmarkets, particularly across ASEANnations, as well as the recovery of the US market.

18

• The revival of residential construction activity in NorthAmerica is expected to support smart home marketgrowth across the region and reinforce its position asthe largest home automation market.

• So far, smart home adoption worldwide has dependedheavily on the luxury home segment, but for long-termgrowth, adoption in the mainstream housing market willbe crucial.

• Collaboration between companies from differentsectors, including home improvement retailers, will berequired to bring smart home services to the massmarket.

• Substantial investments in building infrastructure andthe need to reduce energy consumption will furtherdrive the global smart home market, especially in Asia-Pacific and Western Europe.

$bn(2014price

s)

China

US

W.Europe

India

Indonesia

Japan


Barriertosmarthomeadoption:ConsumercostWhile smart home platforms can be bundled or purchased as stand-alone services, upfront costs for hardware anddevices are still relatively high, putting a floor under the cost of the installation even for do-it-yourselfhomeowners.• Some smart home features may require structural changes in the home, adding expenses over and above the price of the

equipment itself.• Custom-built, fully integrated smart home systems can be expensive undertakings. On the other hand, new technologies such

as energy monitoring can help reduce household expenditures over the long term.• The costs of a smart home installation can average well outside what is affordable for typical homeowners even in developed

markets in Asia-Pacific, Australia, North America and Western Europe. Moreover, installation fees for smart home systems oftendo not include the costs of subsequent maintenance and repair.

• Operators can capitalize on the growing trend toward all-inclusive subscription-based models as a way to expand their smarthome service footprint.Affordable installationmay offer the leverageneeded in order to boostadoption.

EXHIBIT11:ADDITIONALCOSTSOFTENDETERMINEADOPTIONOFSMARTHOMETECHNOLOGY

50%Wanttheoptionofdoingitthemselves,withnomonthlyfee

21%Wanttheirsystem

professionallyinstalledandmonitoredfora

monthlyfee

Source:Lowe’s

19


Section2:Thesmarthomeecosystem

I. DefiningthesmarthomeecosystemII. ThesmarthomevaluechainIII. ProminentsmarthomeplayersintheUSIV. TheroleoffixedandwirelessbroadbandprovidersIV. TheroleofapplianceanddevicemanufacturersV. TheroleofutilitiesVI. Theroleofhomesecurityplatformprovidersanddealers


• While still embryonic, the global smart home market ispropelled by a convergence of business interests as well ascompetition between multiple platforms, open andproprietary.

• An open system lets all developers access publishedand clearly defined standards and protocols that areindependent of particular suppliers and that offer allcomponents full interoperability.

• Proprietary systems such as those by Samsung and LGlimit competition to companies and componentsapproved by the system owner, which has completecontrol over access to the system.

• As the market moves toward standardization andinteroperability, open systems offer developers and OEMsmuch-needed flexibility.

• The next stage in smart home evolution might consist of apurpose-built wireless router or gateway with control andfeatures residing in the cloud. Essentially, it would movecontrol to the application layer, making it easier to createbehavior-based, context-aware features.

True device interoperability will enable smart home adoptionto reach the mass market. The AllSeen Alliance and the OpenInterConnect Consortium are non-profit organizationspromoting standardization, with major home automationplayers as members.

DefiningthesmarthomeecosystemDevice manufacturers, major IT companies such as Google, Samsung and Apple, home improvement retailers, utilitiesand telecom operators areall competing for a piece of the smart home market.


EXHIBIT12:KEY ELEMENTS OFSMARTHOMECONTROL

Wirelessnetworksensors

Mobiledevice

Internetservice

Hub

21


Operators can participate across the value chain either directly by offering connectivity, services and applications orvia strategic partnershipswith vertical specialists.

EXHIBIT13:TYPESOFPLAYERSINTHESMARTHOMEVALUECHAIN


Thesmarthomevaluechain

• Fixedaccess• DSL,fiber

• Wireless access• 2G,3G,4G• Wi-Fi• Dedicatednetworks

• Connectivitymanagement

DEVICEVENDORS

VERTICALSPECIALISTS

TELECOMSERVICEPROVIDERS SMARTHOMEAPPLICATIONDEVELOPERS

PROFESSIONALSERVICESPROVIDERS

• Electricity,water,gas,garbage, etc.

• Security• Healthservices• Appliances• Retailsales• Telecomservices• Media services• DIYinstallations

• Homemediasystems

• Securitycontrols• Smartmeters• E-health trackers• Sensors• Thermostats• Etc.

• Techsupportandservices

• Implementation&installation

• Applicationdevelopment&management

• Homeautomation:cameras,lighting,homeentertainment,appliances

• Securityandsafety: alarmsystems, smoke&flooddetectors,doorlocks,windowsensors

• Energymanagement: climate&HVACcontrol,utilitymanagement

• E-health:emergency services,wearabledevices,airqualitysensors

DEVICES OPERATIONS APPLICATIONSSERVICESCONNECTIVITY


By being able to drive adoption in the world’s largest smart home market, three companies are emerging as the maincontenders in theUSmarket for softwareplatforms that tie function-specific peripherals and services together.

EXHIBIT14:USSMARTHOMEPLATFORMCONTENDERS


ProminentsmarthomeplayersintheUS

Company Apple Google Icontrol Networks

Platform HomeKit NestWeave OpenHome

Selectdevice,software&servicepartners

August,Chamberlain,ecobee3,Elgato,GE,GridConnect,Haier,Honeywell,iDevices,iHome,Incipio,Insteon,Kwikset,Lutron,Netatmo,Osram,Philips,Schlage,SkyBell,Withings

BigAssSolutions,Dropcam,Icontrol,Jawbone,Legrand,LG,LIFX,Logitech,Lutron,Osram,Pebble, Petnet,Philips,SkyBell,Tyco,Whirlpool,Yale,Zuli

AccuWeather,Bosch,CentraLite,Jasco,Nest,Piper,Rachio,Sercomm,Sylvania,TriTech,Yale

Marketingpartners

Retailers,Apple Store AmericanFamilyInsurance, AustinEnergy,LibertyMutualInsurance,NationalGrid,NRGEnergy,SouthernCaliforniaEdison

ADT,BestBuy,Bezeq,Comcast,Cox,iTSCOM,Rogers,TimeWarnerCable,Swisscom

Devicenetworks;controls

ZigBee,Z-Wave,BluetoothLE(bridged),Wi-Fi;controlledfromAppleWatch, iPhone,iPad,Mac,AppleTV

Wi-Fi,Thread;controlledfromAndroidoriPhonehandsets

Wi-Fi,ZigBee,Z-Wave;devicecontrolvaries

Comments Plusses:Sirihands-freevoicecontrol;iPhoneandAppleTVcustomerbase,whichistechsavvy andhigh-income;theApplebrand. Itisasecurewalledgarden;certificationisdifficult.

UsersofWeave,ameshnetwork, mustownaNestproduct;securitymaysufferfromtheopenapproach.TheBrillioOSforIoTdevicesisaplusfordevelopers..

Itsapproachisvendor-agnosticbutbasedondevicestandardization;in mid-2014,70applicationsanddeviceshadbeencertified.Itreliesonresellersandintegratorstoreachcustomers.


EXHIBIT15:NUMBEROFNETWORKED DEVICES GLOBALLY,2014–2019

Telecom operators provide four types of smart homefunctions:

1) IoT connectivity: Sensors and other devices send andreceive information and user commands over fixedbroadband andmobilenetworks.

2) Platforms: Whether proprietary or open, a platformallows different products to work together, with a smartdevice as a remote control.

3) Applications: Users control home automation viadevice-specific apps provided by platformmakers.

4) Services: Their customer relationships and ability tobundle services make telcos natural agents of smarthome support. They can also provide other services,such as home security and energymanagement.

Telcos can grow their smart home base by supporting multiplesubscription options, offering tiered services and folding smarthome connectivity into data plans. Both AT&T Digital Life andOrange Homelive offer these platform and product innovationsin specific regions.

TheroleoffixedandwirelessbroadbandprovidersNetwork operators are in a prime position to drive smart home adoption based on the need for connectivity and theincrease in global IoTdevices expected to result from declining chipset prices.

Source:Cisco,VisualNetworkingIndex(VNI)

24

0

5

10

15

20

25

2014 2019Num

berofnetworkeddevices(bn)


• Increased complexity has led to a growing number of partnerships between platform providers (telcos, utilities, etc.) andappliance and device manufacturers (Honeywell, Schlage, Whirlpool, etc.) to ensure that differentdevices work together.

• Devices such as the Nest thermostatuse dataanalytics to learn behavior patterns in order to automatically adjust settings.• Home automation systems have a number of components,with a central hub relaying commands to home devices (door locks,

thermostats) via local networks. This hub then connects the smart home to both Internet-based services and the platformprovider (telco, utility, retailer, etc.) via mobile or fixed connections.

Theroleofappliance anddevicemanufacturers


From the perspective of manufacturers of everything from refrigerators to water leak sensors, the market is held backby a lack of unifying standards for integration and interoperability – fragmentation on thenetwork and control levels.

EXHIBIT16:ELEMENTS INVOLVEDINSMARTHOMEINTERCONNECTIVITY

Controllingdevice

Sensors

Setofcommands

§ Profile§ Predefinedschedule§ Behavioralpatterns

Internet,SMS

Processingbasedonend-userattributesHub

25


EXHIBIT17:SMARTMETERING PROJECTSINASIA-PACIFIC,EUROPEANDTHEUS

• Home energy management products help customers track consumption patterns in order to reduce their energy costs orimprove their energy efficiency. HEM providers sell both directly to consumers and to utility companies. Opower and Google’sNest are leadingbrands in the US.

• Telcos can contribute to the HEM market by partnering with utilities and connecting home automation to smart meters. Forexample, in Europe,Orangepartnerswith EDF to provideHEMsystems in France and Vodafone with npower in the UK.

• Energy conservation is influencing public policy in North America and Europe. Government measures such as emission standardsand conservation programs (US Energy Star, EuropeOdyssee) promoteawareness and the advantages of smart homes.

• By partnering with utilities, network operators can provide not only energy monitoring, but also services such as remotediagnostics, repair and ongoing tech support.

TheroleofutilitiesHome energymanagement (HEM) is a compelling opportunity for utilities.

Source:MadridElectric

26

4 1 39

3 6

58

22 12

1AMI

ProjectAMI Pilot AMR

ProjectAMR Pilot

United States (119 projects)

83 11

45

157

1AMI


ProjectAMR Pilot

Europe (82 projects)

Water Gas Eletricity

25 5 4 4AMI


ProjectAMR Pilot

Asia-Pacific (20 projects)


EXHIBIT 18:MARKETSHARESOFHOMESECURITYSERVICESBYTYPEOFMONITORING

• Telcos have an opportunity to compete with already established home security companies by providing branded platforms thatoffer security devices – door andwindow locks, smart alarms, sensors, alerts and video monitoring – at affordable fees.

• Security pure-plays see their value-add capabilities as clearly differentiating them from operators. Integrating security in smarthome systems can, however, be lucrative for operators. Research in 2014 by platform maker Icontrol Networks found personaland family security to be the key driver in smart home adoption.

TheroleofhomesecurityplatformprovidersanddealersSecurity services, from sophisticated door controls to networked security cameras, are a major driver of smart homeadoption.

Source:Securitysales.com

Nomonitoringofanykind

23%

Professionallymonitored

65%

Fee-basedself-monitored

12%

27


Section3:Telcopositioningstrategiesandopportunities

I. OpportunitiesacrossthesmarthomevaluechainII. TelcopositioningstrategiesIII. Telcopositioning:White-labelingIV. Telcopositioning:SmarthomesupportservicesV. Telcopositioning:Bundlingservices,appsanddevicesVI. Telcopositioning:IncorporatingOTTinstrategies


• Operators provide the connectivity between end-user controls (smartphone and tablet apps), platform devices (hubs, bases)and the Internet via their wireless and fixed broadband networks.

• Creating strategic partnerships to provide white-label devices, platforms and apps are critical to increasing adoption. In 2011,Deutsche Telekom launched Quivicon to provide a platform that controls appliances from partners such as Samsung and Sonos.The operator also partneredwith startup Yetu for its home devices and software.

• A significant asset for operators is their central role in customers’ lives, a relationship they can use to offer smart home servicebundles and supply much-needed technical support. For example, AT&T,Orange and HKT each offer comprehensive maintenancepackages and service upgrades to increase adoption.

OpportunitiesacrossthesmarthomevaluechainNetwork operators havea role in every aspect of thedelivery, daily functioning andmaintenanceofsmart homes.


EXHIBIT19:IMPORTANTFUNCTIONSTHATNETWORKOPERATORSPROVIDEINSMARTHOMESYSTEMS

Connectivity Devices,platforms,hubs Applications Services

Wirelessbroadbandnetworks

Fixedbroadbandnetworks

Feature-rich,brandedproducts

Home-basedplatforms

Centralhubs

Device-specificapps

Interconnectivity

SLAs

Techsupport

29


EXHIBIT20:GLOBALIPTRAFFICPERMONTH,2014–2019

Telcos with successful platforms tackled five tasks:1) Integrate stand-alone devices and apps into a single

platform, such as AT&T’s Digital Life andOrangeHomelive.2) Partner with smart home service providers as well as

OEMs to offer innovativehardware. For example:• HKT collaborates with Cypress Systems, SchneiderElectric and Philips.

• AT&T partners with Samsung, LG Electronics, LutronandQualcomm.

3) Upgrade wireless and fixed networks to handle increaseddata flows. For example, HKT launched its “ultra-broadband” in 2014 and expanded fiber-to-the-homedeployments due to government directives.

4) Offer maintenance: Providing tech support and servicesadds new revenuesources.

5) Invest in startups: Funding new initiatives that provideinnovative smart home products and services has helpedtelcos stay competitive. Telefónica and Deutsche Telekomeach own startup incubators for innovative techcompanies.

Combininganumberofapproachestolaunchingsmarthomeservices– diversepartnerships,networkupgrades,techsupport,etc.– willenabletelcostocapitalizeonalltheirassetsandincreaseadoption.

TelcopositioningstrategiesTelecom operators are on the front lines of the onslaught of data traffic. They also have the tools for solving thecomplex issues related to smart home interoperability, installation, integrationand data analysis.

Source:Cisco,VisualNetworkingIndex(VNI)

30

020406080100120140160180

2014 2019

Exabytesperm

onth


Resellersolutions

EXHIBIT21:WHITE-LABELINGELIMINATESIN-HOUSE PRODUCTIONANDEXPENSES

• Selling white-label products and services from third-partyvendors can benefit companies financially. Retailers (Iris byLowe’s, Connect by Staples) and network operators (OrangeHomelive, Swisscom SmartLife) have built their brandedplatforms on top of SaaS or white-label technology from pureplays such as AlertMe (bought by British Gas), IcontrolNetworks, Xanboo (acquired by AT&T), MiOS and Zonoff.

• White-labelling enables operators to take advantage of newinnovations by third parties, saves resources and acceleratesplatform launches. For example, until British Gas acquired itin early 2015, AlertMe partnered with the UK utility toprovide the infrastructure for HEM controls via its Hive ActiveHeating system.

Telcopositioning:White-labelingBy relying on white-label smart home devices and services and on products from established OEMs, operators canreduceoverhead and accelerate thego-to-market process.


White-labelproductsSmarthomedevices&components


EXHIBIT22:ELEMENTS OFTELCOSERVICEOFFERINGSAble to draw on multiple assets – connectivity, devices, apps –operators are well-positioned to offer platforms. They alsohave other strengths:

1) Secure, regular billing relationships with phone andbroadband subscribers are a direct line to potentialsmart home customers. Operators can support multiplesubscription and payment options, including flexible splitbilling.

2) Operators can use their existing sales forces to promotesmart home offerings to customers seeking technicalsupportor sales guidance.

3) Operators already have extensive tech supportcapabilities, which can be used to acquire and servicenew customers. Smart homes would of course also offera new source of tech support revenue.

4) Remote diagnostics and maintenance specific to thesmart home can reduce homeowners’ reliance on techsupport and cut service costs. For example, Dutchenergy company Eneco partners with platform makerQuby to provide smart metering that enables frauddetection and self-diagnosis, minimizing dependence onsupport services.

Telcopositioning:SmarthomesupportservicesTelcos are the leading players in terms of penetrating households with smart home products – their Internet gateways,which offer an access point for support services.


Telecomoperatorsmarthomeofferings

Customsystems

Products,devicesand

enhancements

Smarthometechsupport

Platformanddevice

integration

Systemdesign

32


EXHIBIT23:VALUE CHAINOFOPERATORBUNDLINGConsumers of smart home products and services aredemanding a single source of support. Since operatorsalready provide support for broadband or multiplay services,they are perfectly positioned to extend those supportactivities to include home automation.• The resulting service bundles add new revenue streams

from related features, such as app sales and advertising.Moreover, operators can get more out of their platformsupportby offeringmultiple tiers of service packages.

• Broadband operators can capitalize on their double- andtriple-play services by providing smart home packages thatinclude operational and technical support, repair, firmwareupgrades,warranties and billing.

• Operators can leverage online and retail portals:- To promote their smart home services to potentialcustomers.

- To sell their own or branded devices as part of largersmart home packages.

- To bundle data network subscriptions with smart homedevices and services.

Telcopositioning:Bundlingservices,appsanddevicesHistorically, connected home services were led by home automation system manufacturers and installationcompanies, but telecomoperators’ bundled services have compelling advantages for users.


Products

• White-labeldevicesandhardware

• Software

Services

• Supportservices• Billingsolutions• Systemintegration

• ITinfrastructure

Networks

• Broadband• 3G, 4G• Wi-Fi• ZigBee• Ethernet

Operators

verticalmarkets

platformproviders

Energy Security Healthcare Entertainment

inconjunctionwith

toofferintegratedservicesto

Apple,Google,Icontrol,etc.

ConsumersHomeowners

33

developproductsandservicesfor

customers


EXHIBIT24:HOW SMARTHOMEDEPLOYMENTSCANUSEOTTSERVICES

• Regulations, technology and competition are driving openaccess, removing barriers between OTT and networkproviders,whether fixed or wireless.

• By bundling their services with other features, platformproviders can improvethe value of automation.

• Service bundles such as the classic quad-play provide theability to layer more services on top, such as home alarms,motion detection, monitoring, streaming media, HVAC,lighting, home access and health monitors.

• Apple’s HomeKit is an inclusive platform that capitalizes onthe OTT services available on the Apple TV device by addingautomated device and appliance control. Similarly,Microsoft’s Home OS enables control of multiple kinds ofhome devices as well as a variety of media content via itscentral dashboard.

Partnering with OTT (over-the-top) players can expand the range of home-based digital services and increase smarthomeadoption.

Telcopositioning:IncorporatingOTTinstrategies

TelecomOTThub

WI-FI,ZIGBEE,Z-WAVE,KNQ

SMARTDEVICES

OTTmediaserviceproviderAdmin.platform– cloud

SoftwareandcontentApplication– appstore

Internet

Smarthomedeployments


Section4:Keytakeaways


EXHIBIT25:SMARTMETERING NETWORKCOMPONENTS

Pyramid Research expects that beyond providing mobile andfixed broadband connectivity, operatorswill:

• Provide tech support services while offering white-labeldevices and platforms.

• Help consumers derive optimal value from their smart homedevices through installation, activation, connectivity andsupport.

• Improve the smart home proposition by bundling servicessuch as broadband,HEM,device automation and support.

• Telcos are in a uniquepositionwith customers thanks to:

1) Preexisting billing and phone support relationships.2) Direct connections into the home environment via

phone,wireless and Internet services.

Security and safety, smart meter deployments, energy conservation, government regulations and home electricitygeneration are spurring smart homeadoption.


Smartmeters

Utilitycompany

Wirelesswide-areanetwork

Utilityaccesspoint

Homeareanetwork(HAN)

Keytakeaways


EXHIBIT26:DEVICEINTERCONNECTIVITY DEPENDSONDIVERSE BROADBANDANDSENSORNETWORKS

• Telcos should use their online and retail portals to sell smarthome devices and services.

• Regulatory mandates for energy conservation are spurringsmart homemarket growth.

• Adoption is increasing in countries where governmentsactively promotefaster broadband services.

• The TR-69 standard will play a major M2M role in deliveringfuturesmart home services.

• Operators can expand their service footprints by offering all-inclusive subscription-based smarthome packages.

• Partnerships with companies from different industries are keyto ensuring the roleof operators in smart home functionality.

Telcos improve the value proposition of home automation by implementing a multi-play OTT strategy that offers arangeof capabilities (security, HEM, appliance control, etc.)and by bundling services.


Keytakeaways

Videosecurity Set-topbox Smartmeter Accesscontrol Environmentsensor Appliance

Ethernet,Wi-Fi,HomePlug,USB

IPV4/V6IPV6,ZigBee,Z-Wave, x10

TR-69/SNMP

Broadbandrelieson: Sensors relyon:

ZigBee, CPL,MBUS

Forhomeautomation

Forhomeenergymanagement

(Networkingstandards)


EXHIBIT27:INTEGRATEDAPPROACHES TOCREATINGCOMPELLINGSMARTHOMESERVICES


SmartHomeDevicesandSolutions

Systemintegration•Providetheskillsandcapabilitiestoplan,maintainanddeploysmarthomeservices.

•Engage withcustomerstosupportthesales processusingtechnicalguidance.

•Developregion-specific smarthomeplatformsandmobileapps.

Serviceprovisioning•Offer white-labeldevices andplatformsforconsumers.

•Providecompletemobileandfixedbroadbandconnectivity.

•Offer smarthomeservices thatconsumersare lookingfor.

Billing•Provideflexible,splitbillingcapabilitiestocustomers.

•Supportmultiplesubscriptionandpaymentoptions.

•Enablesmarthomeconnectivitytobepartofashareddataplan.

Channel•Leverage onlineandretailportalstosellsmarthomedevicesandservices.

•Use theoperatorbrandforownorpartnersmarthomeservices.

•Promoteservices totheexistingcustomerbase andbundlethemwithdevicesubscriptions.

Provideacompletesmarthomeplatform,bundlingitwithpreexistingservices.

Integrateflexiblebillingcapabilities.

Selldevicesandplatforms as partofcomprehensive

smart homeservices.

Buildandoperate

smart homeservicesorelements.

Operators can combine elements from different approaches to create, market and operate compelling smart homeservices.

Keytakeaways


Section5:Casestudies

I. AT&T,USAII. Orange,FranceIII. HKT,HongKongIV. Rogers,Canada


• AT&T charges a monthly fee for Digital Life services,depending on the type of service and the level offunctionality. Digital Life is available regardless of thecustomer ’s broadband provider.

• Packages start at $39.99 per month and range up to $64.96per month, not including installation. Installation prices

depend on the package selected. The service requires a two-year monitoring contract.

• Digital Life comes with an AT&T wireless connection andrequires neither an AT&T fixed or mobile networksubscription nor wireline broadband. It is not bundled withAT&T’s U-verse fiber or DSL services.

EXHIBIT28: DIGITALLIFEHASALLOWEDAT&TTOINTRODUCEARANGEOFSERVICESFORTHESMARTHOME

Case study: AT&T, USA

Source:AT&T

Automation Energy Health Entertainment

Alarms,accesscontrolsystems,surveillancesystems,doorcontacts,touchscreens,motionsensors,keypads

Keypads,displaysystems,advancedmeteringinfrastructure(AMI)

Remotemonitoringandcontrol,vitalsignsmonitoringthroughsensors,datagatheringovermobilenetworks

Videostreaming,smartTVs,onlinecontent,virtualTVcommerce

AT&T introduced its Digital Life security systemwith homeautomation, energymanagement and e-health in 2013.


• AT&T’s smart home service, Digital Life, uses a proprietaryplatform that allows third-party devices, apps and services tobe integrated. It can be used with broadband from anyoperator, but a monthly service fee and a two-yearmonitoring contract are required.

• The Digital Life portfolio is vertically integrated, offeringvarious packages of hardware, such as a hub and sensors, foruse with cloud-based applications. Instead of developingproducts and services solely in-house, AT&T has expandedthe reach and influence of Digital Life via partnerships withother home automation companies.

EXHIBIT29:AT&TDIGITALLIFEPLATFORMSERVICES


Source:AT&T

• AT&ThasintegrateditsDigitalLifeofferingswithproductsinstrategicareassuchascloudcomputing,virtualizationandsecurity.

• Additionally,AT&TsupportsDigitalLifethroughpartnershipsanditsenterprise-focusedprogramofopeningitsnetworkAPIs,whichencouragesdeveloperstointroduceandintegrateagrowingnumberofapplications.

AT&Tdatacenter

PlatformUser

interface

Cloudserviceslayer

Third-partydevices&services

Bring

Buy

Build

Devices

100m+connectionsWebportalCallcenterRetail

SalessupportSensorsControlsCamerasOther

Con-troller

Technician Handyman

AT&TdigitalmonitoringEmergencymedical

Theopen platform for globalhome monitoring and automation offers an advanced ecosystemofsupport services.


• AT&T Digital Life differs from competing offers by networkservice providers, with more devices and package options toincrease customer loyalty and revenue. The operatorcoordinates installations, and there are straightforwardsmartphone apps to control everything. AT&T stands to gainsignificant ARPUfromsubscribers.

• By allowing third-party products to work with Digital Life,AT&T makes it easier for the platform to keep growing andremain relevant as the number of digital home and wearabledevices explodes.

• In 2014, Telefónica unveiled a plan to run a limited trial ofAT&T’s home security and automation service in Europe inH1 2015. If the trial and evaluation in Europe weresuccessful, this will perhaps be extended to its LatinAmerican markets.

EXHIBIT30:AT&T SMARTHOME SERVICESTIMELINE



2012 2013

AT&T acquiredXanboo. AT&T launchedDigitalLifein15UScities.

AT&T openeditsDigitalLifeplatformtothird-party

products.

AT&T alreadyhadsomeprocesses inplaceforserviceandinstallationwithitsConnecTech

serviceprogram.

InpartnershipwithTelefónica,DigitalLifewasintroducedinEuropein2015.Acommerciallaunch

isexpected in2016.

2014 2015

BySeptember 2014,DigitalLifewasavailablein82UScitiesandhad140,000USsubscribers.

42

Digital Life is designed formulti-country use, enabling OEMs and developers to extend newservices to globalmarkets.


• Orange Homelive lets users manage appliances as well assecurity and energy devices and services remotely using theHomelive control platformon smartphones, tablets or PCs.

• The Homelive offering includes intelligent sensors and otherdevices from Orange partners that are compatible with the Z-Waveprotocol.

• The service is not restricted to Orange customers and can beinstalled in any home with an Internet connection.

• The devices and other hardware are available from Orangestores throughout France and via the Orange.fr online shop.A basic pack is available for €79 ($87), and users have to pay€9.99 per month for a 12-month subscription, which includesunlimited SMS alerts, tech support, data storage, servicemonitoring and notifications in case of Internet failure.

EXHIBIT31:THEHOMELIVEPLATFORMDEVICES&APPLIANCES

Case study: Orange, France

Source:PyramidResearch,Orange

Door&windowsensors Motionsensors Intelligentsocket

ThebasicOrangeHomelivepackincludesaHomelivehub,doorandwindowcontrols,amotionsensorandanintelligentsocket(whichcontrolsenergyusage)fromthird-partyOEMs.

Homelivehub

OrangeFrance launched Homelive in 2014; the service relies on a single smart app to controlconnectedappliances.


• Orange offers a feature-rich, easy-to-install platform thatallows a smartphone or tablet with an HMI (human-machineinterface) to control all home appliances. To provideadditional peripherals and devices, the operator partnerswith Fibaro for smoke sensors, door and window sensors,motion sensors and more, with Vera for a cellular-capablehub and with Sercomm for cameras. Built on an open sourcemodel, Homelive lets customers add extra functions.

• While it has a smart-home-as-a-service (SHaaS) cloudcomponent, the Vera platform is self-contained. Thehardware includes a SIM card and cellular radio access forcontrolling devices when the home Internet access is down.

• Orange France plans to open concept stores focusing on thehome, entertainment and office markets and to offerproducts and services for sectors such as smart cars andwellness.


EXHIBIT32:COMPONENTSOFTHEORANGEHOMELIVEPLATFORM

Remotedevices forHMIsHomeautomationplatformSharedsensors

The Homelive platform provides customers with a diverse set of benefits, including security and monitoring of energyconsumption.

Source:OrangeFrance,PyramidResearch


• Orange France intends to expand its smart home business byfocusing on low-cost and easy-to-use offerings via OrangeLabs, its R&D wing. For its home automation research,Orange Labs is setting up partnerships with a wide range ofindustry participants: new suppliers of connected devices,established OEMs and large service providers.

• Orange plans to further expand Homelive, which had morethan 10,000 customers in March 2015. It is opening theservice to third-party equipment and integrating IP-enabled

devices, including Philips Hue, the Netatmo weather stationand health-related wearables. It aims to develop a smarthome platform that combines interoperability with an openarchitecture, with cloud storage for applications, data and itsAPIs, andwith connections to a home network.

• Orange’s developer program, Orange Partner, and its open-API platform, Datavenue, will also drive the company’s smarthome business.

EXHIBIT 33:ORANGEFRANCEHOME SERVICESTIMELINE



2011 2013

Orangelaunched"InteligentnyDom"(SmartHouse)inPoland.

OrangeselectedMiOSfortheplatformpoweringitssmarthomeinitiative.

OrangepartneredwithVeoliaWatertolaunchm2ocity,asmart-meteringoperator.

ItlaunchedHomeliveonSigmaDesigns’Z-Wave.

2014 2015

ItisfocusedonexpandingthetypesofservicesanddevicessupportedbyHomelive.

45

OrangeplanstoincorporateIP-enabled

devices.

Homelive will be opened to third-party equipment, andOrangeplans integrationwith IP-enabled devices.


• The Smart Living system from HKT includes home devices,security, media services (now TV, Moov), e-health(eSmartHealth) and cloud storage (uHub), accessed andcontrolled via HKT’s white-label tablet, Eye. The operator alsooffers services like automation, network design andequipment installation.

• In addition to the Smart Living platform and its unique quad-plays, HKT also plans to offer customers content,

applications, cloud services and transactional services.

• The price of the Smart Living home automation package,which can control air conditioning, lighting, curtains and TVsets, starts at HKD 11,800.

• HKT plans to expand the number of smart home devicesconnected to its existing in-home modems, STBs, now TVboxes and home networks, which are monitored andmanaged via its tech support service.

EXHIBIT34:HKT SMARTLIVING’S RANGEOFSMARTHOMEFEATURES

Case study: HKT, Hong Kong

Source:HKT,PCCW,Huawei

Home automation

Home entertainment

Home monitoring & security

Digital product and e-health

Home networking (fiber broadband, Wi-Fi, mobile, ZigBee)

Home IT consulting

HKT launched its Smart Living platform in 2012 to provide customerswith comprehensivehomeautomation.


• HKT pursues a quad-play strategy for its Smart Living homeautomation system, offering a uHub cloud storage service ontop, with a promotional 25GBof free storage.

• Because it supplies broadband service to more than 68% ofHong Kong residents, HKT has a number of devices in thehome, including modems, STBs and the EYE device. Thiscreates an already-in-place network for smart homeconnectivity.

• In order to expand its global footprint, HKT has partneredwith Dubai-based du to offer smart home services across theUAE. Their cooperation will focus on five pillars: homenetworking (Wi-Fi, cloud); home automation and control;home entertainment (AV and TV services); surveillance andmonitoring (intercom, IP cameras); and retail (VAS, devicesand consoles).

EXHIBIT35:HKT’SSMARTHOMECONTENT&SERVICESONVARIOUSPCCWPLATFORMS


Source:HKT,PCCW,Huawei

HKT’s global partnershipsshowa companywith a strong international focus on smart home innovation.


• In order to improve ARPU and reduce customer churn, HKThas been increasing the number of installed devices – STBs,modems, white-label Eye tablets and fixed phones – that areconnected via fixed, Wi-Fi, ZigBee or other networks.

• Devices on connected home networks can be discovered,configured, monitored and maintained through HKT’snetwork operations center.

• HKT makes use of the capabilities of its partners: Panasonic(home monitoring and security), Cisco (smart device apps),Samsung (remote devices) and Schneider Electric (automatedelectrical devices, control technology).

• Upgrading its GPON FTTH network to 1Gbps and 10Gbps andadding interactive services such as applications, content andtransactional services to its Smart Living portfolio willstrengthenHKT’s home entertainment offerings.


Source:RogersCommunications

EXHIBIT36:HKT SMARTHOME SERVICESTIMELINE

2012 2013

HKTintroducedtheSmartLivinghomeautomationservice.

ItpartneredwithSamsungtolaunchtheeye3SmartCommunicationsServiceon

Samsung’sGalaxyTab3.

HKTpartneredwithSchneiderElectricforitssystemintegratingelectrical,

multimediaandtelecomtechnologies.

HKTiscreatingnewrevenuesourcesfromcontent,appsandtransactionalservicesthattakeadvantageofthespeedof

Huawei’sGPONtechnology.

2014 2015

HKTlaunchedhigh-speed10G-PONservice.

HKT-PCCWpartneredwithdutooffersmarthomeservices

acrosstheUAE.

HKTsignedwithCypressSystemstodistributeCypress’CarrotHomeautomation

products.

The operator aims to add interactive services to its Smart Living portfolio and upgrade its fixed network to 10G PONconnectivity.


• Rogers Communications’ Smart Home Monitoring (SHM)platform lets users control alerts, access, cameras,thermostats, lights and appliances fromsmartphones or PCs.

• The home automation system is offered with free installationon a two-year contract. For $19.99 per month, Rogers sells abasic plan that includes remote access, alerts, appliancecontrol, a touchpad rental, a smart light bulb, a smallappliance module and a door or window sensor.

• Because the operator subsidizes the hardware, customersmust pay back the subsidy prorated if the contract iscancelled within the two-year limit.

• Customers are not required to take on additional services,and the platform functions with any ISP. Discounts offered byinsurancecompany Allstate can offset any initial investment.

EXHIBIT37:FEATURESOFROGERS’SMARTHOMEMONITORING PLATFORM

Case study: Rogers Communications, Canada

Source:RogersCommunications

Centralizedmonitoring

Remotedevices

Livevideostreaming

Smoke&firemonitoring

Thermostatcontrol

Lighting&appliancecontrol

Videostorage

Waterleakdetector

Carbonmonoxidedetector

Products

Features

Doorlock

Thermostat CameraKeypad Carbonmonoxidesensor

Motionsensor

Curtaincontrol

The communications andmedia company launched its SmartHomeMonitoring platform on its cable network in 2011.


• Rogers built the SHM platform on the OpenHome softwareplatformfromIcontrol Networks.

• The affordability of the operator ’s basic smart home packageshould leave room in household budgets for additionalconnected devices, such as door locks and cameras.

• Besides its cable network, Rogers owns media, sports andentertainment properties that may benefit its smart homeforay; it also has partnerships with broadcasting companiesand provider agreements with Canadian utilities. Thecompany has extensive experience with bundling services.

• Rogers strengthened its position in the Canadian smart homemarket inmid-2015 by acquiringmobile operator Mobilicity.

EXHIBIT38:ROGERS’SURVEYOFCANADIANSMARTHOMEPREFERENCES


Source:Rogers

Rogers’ Smart Home Monitoring platform could disrupt traditional home security service providers by capitalizing ondemand for connected devices.


• Rogers ventured into the smart home market in response tothe energy efficiency and spending preferences of Canadianhouseholds. Because of the climate in Canada, energyefficiency is crucial to household cost savings, interest insmart home technology is higher than in most comparableeconomies.

• Smart Home Monitoring users can control their homes usinga smartphone app and a central online portal, which are

powered by OpenHome automation software from IcontrolNetworks. Rogers also partners with third-party vendors forthe apps that run on the platform.

• Roger wants to extend its smart home footprint acrossCanada: in 2015, it launched service in Calgary, Edmontonand Vancouver. It also rebranded its retail stores and added‘connected Home Zone lounges’ featuring its Ignite Internetbundles and Smart HomeMonitoringofferings.

EXHIBIT39:ROGERS SMARTHOMEMONITORINGSERVICESTIMELINE



ItlaunchedtheSmartHomeMonitoringplatforminCanada.

ItexpandedSHMtocustomersinAtlanticCanadaandOntario’sGolden

Horseshoearea.

RogerssignedwithIcontrolNetworkstouseOpenHomesoftwarefortheSHMplatform.

Rogersrebrandeditsretailstoresandadded“connectedHomeZonelounges”featuring

itsIgniteInternetbundlesandSHM.

ItextendeditssmarthomeofferingsinCalgary,EdmontonandVancouver,therebyallowingits

customerstoconnectremotelythroughsmartphonesorlaptops.

51

Rogersplanstoextenditssmarthomeofferingstomedicalmonitoringandadvancedenergyconservation.

The operator is extending its national smart home service footprint by launching services and rebranding its retailstores.

2011 2013 2015


Appendix

I. CompaniesmentionedII. AboutPyramidResearchIII. PyramidResearchcontact information


Companiesmentioned

ADTAlertMeAllstateAppleAT&TBritishGasCGICiscoCypress SystemsDenonDeutscheTelekomduEnecoeSmartHealthFrontPointSecurityGeneral ElectricGoogleHoneywellHongKongTelecom (HKT)IcontrolNetworksLGElectronicsLowe’sLutronM2ocityMicrosoftMiOSMobilicity

MoovNetatmoNowTVOrangePanasonicPCCWPhilipsQualcommQubyQuiviconRogers CommunicationsSamsungSchlageSchneiderElectricSonosSpotifyStaplesTelefónicauHubVeoliaWaterVerisureWhirlpoolXanbooYetuZonoff


AboutPyramidResearch

ADVISING LEADERS IN THE GLOBAL COMMUNICATIONSINDUSTRIES ON EMERGING MARKETS AND SERVICESOPPORTUNITIESPyramid Research (www.pyramidresearch.com) offers practicalsolutions to the complex demands our clients face in the globalcommunications industry. Its analysis is uniquely positioned at theintersection of emerging markets, emerging technologies andemerging business models, powered by the bottom-up methodologyof our market Forecasts for more than 100 countries — a distinctionthat has remained unmatched for morethan 25 years.

HOW WE COVER COMMUNICATIONS MARKETSOur highly structured analysis closely examines the performance,technology trends, and macroeconomic and regulatory environmentsof service providers and equipment vendors in each of the more than100 countries we cover. Using a bottom-up approach, we size marketdemand across services and countries, and conduct end-user surveysto validate adoption trends and anticipate shifts in demand. Ourcommitment to intensive, direct interviewing of regulatoryauthorities, service providers and manufacturers — complementedwith end-user data — ensures the most reliable portrait of everymarket we examine.


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Email:[email protected]

Email:[email protected]

Telephone:+44(0)2074066608

PLEASE ENGAGEWITH USVIA:

@pyramidresearch

OFFICE LOCATIONS:

EMEA,Asia-PacificJohnCarpenterHouse7CarmeliteStreetLondon,EC4Y0BSUnitedKingdomTel:+44(0)2079366530

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To learn more about Pyramid Research’s product offerings and how they can be of service to your company, please [email protected] visit us on theWeb at www.pyramidresearch.com.

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