Broadband Service Providers Are About to Ride the Home Energy Wave

1Executive Summary

Broadband service providers — both telcos and cable firms — could make a push into the home energy management market before the New Year’s ball ushers in 2010, according to indications from startups and predictions from at least one analyst. Network operators are looking to bundle home energy management services, which will enable home owners to view their electricity consumption online and on broadband-connected dashboards, with voice, video and data, and offer it over their fiber and DSL networks. The idea is that the broadband firms could differentiate themselves and win over new customers (reducing that nasty thing called “churn“), while startups could tap into the market much more quickly than via other avenues like through utilities or directly to the consumer.

That’s the plan, anyway. The reality is that telcos and cable companies have indicated interest in energy management for months (if not years), and it’s unclear how big of a push the broadband firms will actually make. Earlier this year, Verizon told Telephony Online that energy management via its fiber network FiOS is “on the road map” and “could be in the market as early as this year.” Greentech Media has cited unnamed sources that say Verizon plans to support home energy management as part of its FiOS broadband offering within 2009, and that the product would likely be in the form of home energy management software embedded in a broadband home router. We’re still waiting to hear back from Verizon on whether it will launch an energy product this year.

Startups that have been building businesses off the back of selling energy management software to companies like Verizon certainly see the market opening up in the coming months — either this quarter or the first quarter of 2010. EcoFactor, a 3-year-old startup that officially launched this month and has developed smart algorithms to control thermostats and shave off power from heating and cooling homes, says it will soon be announcing partnerships with some broadband service providers. iControl, a 5-year-old company that sells a home energy management product, is backed by cable operator Comcast.

For both iControl and EcoFactor, the broadband service providers could provide a faster way to market than working with a slower moving utility, or getting enough scale over time to sell through a big-box retailer directly to the consumer. Most utilities are regulated, have varying business models in terms of energy-efficiency products depending on their state regulatory market, and are just starting to look into more general (and simple) smart grid products — not exactly the ideal customer for these eager-beaver and entrepreneurial firms. And direct to consumer could be even farther down the road, given that a consumer spending money on a gadget to curb energy consumption is a nascent concept.

Clint Wheelock, an analyst for Pike Research and GigaOM Pro, explains the disconnect between these eager startups and the reality of the utility and consumer markets as “a real void, that some kind of service provider will need to fill.” He says his research indicates that several big players are looking to make investments, or a direct play, in this area in the coming months. But Wheelock thinks the broadband service firms are still moving tentatively. “My impression is that the cable companies and telcos smell opportunity in this space, but most have yet to settle on a strategy…I haven’t seen any indication that the plans are finalized yet.”

I’m getting the same impression. While it’s one thing for Verizon to talk about putting energy management on its “road map,” it’s another thing for the telco to offer home energy management software in any kind of widescale deployment to its customers. There are only weeks left of 2009 for Verizon to meet that end date, and despite requests for information, no one at the company could talk about time lines, products, or even pilot markets.

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  1. Good story..imho…. I think stand by for cable companies…very big smart grid opportunity. Networks evolve to their most cost effective use case and its clear the AMI mesh fetish will give way to other forms of high speed IP based wide area connectivity including protected, licensed, secured and clean frequencies…. Wixax, Private Broadband Networks, with service level guarantees and scaled cable company AND utility deployment success with proven performance… with backing of track records built over many years a few years…

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