AT&T: From Dumb Pipe to Security and Home Automation

There has been talk within the telecom industry for many years regarding whether communications service providers would eventually just become providers of dumb pipes or provide added value they can charge for. The move to IMS in-part was supposed to allow these companies to add more apps and services to their offerings, allowing them to generate more revenue.

When Apple opened up its iPhone platform, hundreds of thousands of apps began to do many of the things telcos would have liked to provide. Moreover, many functions which telcos used to charge for like SMS were given away for free from the likes of WhatsApp and Facebook.

A natural place for these companies to look for growth is an adjacent industry – one which could not easily be disrupted by an app or a technology shift.

This explains AT&T’s move into the home security market with its Digital Life solutions which also tackle the task of home automation. TMC reported on this news in the past but the big roll out was today in Atlanta, Austin, Texas, Boulder, Colo., Chicago, Dallas, Denver, Houston, Los Angeles, Miami, Philadelphia, Riverside, Calif., San Francisco, Seattle, St. Louis and select areas of the New York and New Jersey metropolitan area. The company plans to introduce Digital Life in up to 50 markets by the end of 2013.

“We know how important security is to our customers, and this was our top priority when we set out to build Digital Life,” said Kevin Petersen, senior vice president, AT&T Digital Life. “People rely on their mobile devices more than ever, so Digital Life offers an easy and convenient way to secure their homes, protect their families and simplify their lives from virtually anywhere.”

The system is designed to be user-friendly and control cameras, door locks, lights, thermostats, small appliances and provide the capability of setting alerts or programs which manage your home.

Customers can choose from two base plans: Simple Security, which is their basic home security package; or Smart Security which includes enhanced security features and the option to add home automation.

  • Simple Security – Includes 24/7 home monitoring, 24-hour battery backup, a wireless keypad, keychain remote, recessed sensors and an indoor siren for $29.99 a month plus $149.99 for equipment and installation.
  • Smart Security – Includes the benefits of Simple Security plus a choice of three of the following features: motion sensor, carbon monoxide sensor, glass break sensor, smoke sensor or takeover kit.  Smart Security begins at $39.99 a month plus $249.99 for equipment and installation.

Customers who select Smart Security can add these automation packages:

  • Camera Package – View live video from inside and outside of the home for an additional $9.99 a month plus equipment and installation.
  • Energy Package – Control appliances, lighting and thermostats for convenience and energy efficiency for an additional $4.99 a month plus equipment and installation.
  • Door Package – Allow a pet sitter or repairman into your home remotely with automated door locks, or check to see whether your garage door is open or closed for an additional $4.99 a month plus equipment and installation.
  • Water Detection Package – Detect water leaks before damage occurs for an additional $4.99 a month plus equipment and installation.
  • Water Control Package – Detect leaks and shut off water at the main water source for an additional $9.99 a month plus equipment and installation.

According to wireless analyst Jeff Kagan, “This is the kind of new and innovative service we can expect from the wireless industry going forward. This is an exciting opportunity for AT&T, and a competitive threat to the traditional home security and automation business. I think we can expect to see much more innovation in this space thanks to this move from AT&T. This service connects every part of a consumer’s home to the AT&T Mobility wireless network. Home automation and security is the next generation of services we will see AT&T offer across the country.”

ADT is the leading player in the market with nearly 16,000 employees and over six million small business and residential customers. They will have to contend with a new and very large competitor in AT&T.

I reached out to Sarah Cohn, Director, Media Relations about the company’s thoughts on the new competition and she said, “With nearly 140 years of experience, our customers have told us that what matters most to them is the quality and reliability of our home automation and security solutions. Telecom and cable companies have been in the security space before, and we welcome their re-entry because we believe it will not only raise awareness of smart home technology, but also expand the category, ultimately helping to attract new customers to ADT Pulse.”

Of course AT&T has the ability to not only offer home automation but can further bundle television, wireless and broadband service into an attractive package which may cut into ADT’s margins if they choose to compete for market share. Consider this the new quadruple or quintuple play. Moreover, AT&T has retail stores which means this real estate has just become more valuable as some customers will certainly be swayed to purchase from the company which allows them to speak to a salesperson about their home security system in their local shopping center or mall. In fact, home automation can be a complex concept to many – seeing solutions in action at a store is likely the best way to sell such solutions.

There is always the chance that AT&T’s marketing clout will grow the market and as a result, the entire home security and automation sector will see a boost. Either way, for AT&T, the move to offer television and now security and home automation shows that communications service providers do have numerous options when it comes to extending their revenue base beyond just dumb pipes.

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