Network operators have been providing the vast majority of the residential Wi-Fi routers consumers use in their homes for many years. However, many operators have realized that the traditional approach (driving down the costs of these routers by creating as much competition as possible between their CPE vendors) was not enough.
The strategy was not without a good reason. Every new customer typically requires a new CPE to be shipped and installed. Keeping the installation costs down not only reduced the customer acquisition and installation costs, but it also improved the lifetime value of each customer.
Residential broadband market today
The residential broadband market evolved with the introduction of new smart devices and the evolution of the connected home concept. It became evident to many providers that the traditional approach was no longer going to serve them well.
Over the same period, companies like Amazon, Google, Apple, Samsung, and others have all accelerated their efforts to get consumers to adopt new hardware devices in the home. Alexa, Google Home, Apple HomePod, Smartthings hub and other similar devices have value propositions around ease of use, home automation and peace of mind.
All operators had to do is to watch how companies that are trying to sell incremental hardware into the home. Servicing the evolving needs of the broadband consumer was a struggle. Driving adoption of these new hardware solutions was a long process. It takes several years for even the most successful hardware products to reach the 10 million home plateau.
The difficulty lies in getting consumers to adopt new hardware and the uncertainty that results from consumers having to choose between competing platforms. It also creates an opportunity for Broadband Network Operators that want to capitalize on these market trends.
New entrants face the inherent challenges of introducing new technologies and convincing customer to spend another $150 to $300 per household to purchase the new hardware. Most broadband carriers today already have the hardware that is capable, with some investment, to provide most services that new hardware companies are trying to sell into broadband homes.
With managed CPE in close to 1 billion broadband homes globally, these operators realized their advantaged position in the market. The importance of having a controlled device in these homes has not escaped them. Many technology and product executives within network operators are on top of these trends. They have pushed their companies to evolve their CPE strategy to take advantage of these market opportunities.
As a result, network operator’s CPE strategy has evolved quickly. It moved away from a focus on minimizing what they pay for a certain level of performance (mainly the CPU and memory) in the CPE towards choosing CPE that is capable of enabling new services at an acceptable cost point.
It is a very different world for CPE vendors. It presents some considerable revenue and service opportunities for network operators. Of course, they come with a set of unique challenges that are common to the broadband network operator segment as a whole.
Opportunities for Network Operators
CUJO AI has identified three main areas of opportunity over the last year through our interactions with network operators worldwide.
The broadband CPE plays a central role in delivering against all of these opportunities:
- Enable customers to manage their broadband homes better.
- Protect broadband customers (and your network) from new threats that take advantage of the connected devices customers are bringing home.
- Provide families with tools to manage their children’s use of the internet and protect them from internet threats.
In the following articles, I will talk more about how CUJO AI enables Network Operators to capitalize on these opportunities.
In the meantime, if you want to learn more about what we do, take a look at our whitepaper. Learn more how a platform that is powered by artificial intelligence can enable new services, improve the customer experience and reduce customer support costs.