All Focused on the Home Front

Home networking is a top priority as strategists on both sides of the cable-telco divide prepare for a showdown in the consumer market.

The ILECs are beginning to exploit Home PNA to give customers a ready means of interconnecting multiple PCs to DSL services. Meanwhile, the cable industry is pushing toward standardization of a cable-friendly system for linking entertainment and computer appliances and phones to a single gateway.

The home networking snowball got rolling in June when SBC Communications Inc. began offering the Home PNA (Home Phoneline Networking Alliance) system developed by 2Wire Inc. in its Pacific Bell, Southwestern Bell and Nevada Bell territories. With Ameritech and Southern New England Telephone territories added to the market base, the product has outperformed sales projections by better than two to one, says SBC spokesman Fletcher Cook. "This has been an extremely successful product for us. We can't give you actual sales numbers, but sales are well into the thousands of customers."

SBC offers a wireline version of the 2Wire gateway, operating at 10mbps, and a wireless version pegged to the IEEE 802.11B standard known as WiFi or WLAN, operating at 11mbps. Customers purchase the devices, which they install themselves, through SBC's data subsidiary, Advanced Solutions Inc., at a one-time purchase price ranging from $199 to $599, depending on the model customers select and whether they already have DSL service and a modem.

In October, Verizon Communications Inc. became the second RBOC to support Home PNA in another deal with 2Wire that offers a product along lines similar to SBC's, but without the wireless option. "We're looking at wireless and other options," says Verizon spokeswoman Bobbi Henson, who adds that once consumers purchase the gateway "they love it."

In fact, she adds, the impact the product has on customer retention is prompting Verizon to develop new marketing programs for the offering. "It's real easy to install and adds value to the broadband service in the eyes of our customers. The more people who use broadband networking in the home, the less likely they are to drop the broadband service."

While the 2Wire solution is Verizon's first mass-marketing foray into the home networking arena, the carrier has long been committed to the concept of home networking as a broadband service driver in the new housing market. The Verizon Connected Solutions unit, which was Bell Atlantic launched in early '99, designs and installs broadband home networking solutions in cooperation with builders and individual home owners.

Now home networking is ready to break into the mainstream, says Bob Burich, president of Connected Solutions. "For the first time consumers are applying the same level of interest to home networking that they give to other key components of the home," he says.

Interconnectivity of all types of devices, not just PCs, has become fundamental to RBOC preparations for competing in the broadband consumer services business. Verizon, for example, has issued an RFQ (request for quotes) calling for 14 million broadband home gateways, says a vendor source that has seen the document. "They want equipment that will address the full range of applications, not just computers," the source says. "Judging from past experience, it will probably be about two years from the time the RFQ has been released until they actually begin deploying product."

"We're looking at all the entertainment applications as well as gaming, home security, education, and how that all ties in with home networking," SBC's Cook says. "Entertainment services are going to be a huge piece of that."

SBC is open to all home networking architectures, many of which are under scrutiny at the company's labs, Cook says. "You're going to see us be among the first to use these technologies as they become available."

Meanwhile, Cable Television Laboratories is working on an architectural framework for home networking that would cover distribution of all types of applications. The goal is to complete the spec this year.

In the meantime, cable operators could move ahead with more generic approaches to home networking, using interfaces, say, between cable modems and gateways like 2Wire's to distribute signals over twisted pair or through the air. However, cable operators would prefer to wait until an industry-endorsed unified approach is commercially available, allowing them to tout interconnection with TVs, game boxes and other appliances as part of the in-home networking platform.

"AT&T is anxiously awaiting the availability of CableHome compliant product," says Susan Marshall, senior vice president of advanced broadband services at AT&T Broadband. "As soon as we are confident that a product is on its path to certification we will deploy it in our field trials."