O2’s Richard Porter: Consumer Acceptance of Smart Home Technologies is Accelerated by Delivering a Managed Ecosystem

06 March 2017

  • UK mobile operator O2 saw its mobile customers struggling with the wide range of smart home devices, trying to integrate them into a coherent system.
  • To exploit this opportunity the company has launched O2 Home: an integrated smart home system based on AT&T’s Digital Life smart home platform running on a Technicolor Hub and with a range of devices guaranteed to interoperate with the platform.
  • O2 is marketing O2 Home beyond its mobile customer base to anyone in the UK with a house and is differentiating itself by offering O2 Home for a monthly fee, backed up with installation and customer training.
Richard Porter, Head of Home Products with UK mobile network operator O2

Richard Porter, Head of Home Products with UK mobile network operator O2

Richard Porter, Head of Home Products with UK mobile network operator O2, explains how the company is moving into the smart home market, with an offering based on AT&T’s Digital Life platform and a Technicolor hub.

Richard, there has been much change in the service provider space and in the way subscribers interact with their content and the broadband services they increasingly demand.

How is O2 approaching the connected home market, and what do you see as the key shifts driving the way you deliver services to subscribers?

Porter: We are a mobile provider with 25 million customers and we supply those customers with mobile phones and, increasingly, with other devices like wearables. We see a lot of those mobile devices being used in customers’ homes and over the last few years we have watched those mobile devices being used increasingly to connect to the early smart devices in the home, typically something like a Sonos sound system or perhaps an iKettle.

We have observed those customers going on a journey where they add more and more devices to their home and interact with them through the mobile phone they got from O2. Increasingly they would like those devices to work with each other.

The early adopters — the people who have the time and inclination to make it work themselves — can get a lot of benefit from bringing different devices together and getting them to interact. But for the majority, that is quite hard to do.

There are a lot of barriers. The technology is somewhat impenetrable. It is not always obvious how to get different devices set up and working together. So the mass-market consumer is missing out on the benefits of devices like smart thermostats and indoor cameras.

O2

O2

At O2 we have set out to put a service wrap around all that technology and to make it easy for the mass market to consume it. They can buy it from us and they can wrap it up with a service from us. We can spread the cost of it across time and, of course, we can go into the home, install it and help them to make it work and to get the benefits from it.

That does change the nature of your relationship with subscribers. How have you seen the subscriber base respond to this new value proposition you are bringing to market…that service wrap as you describe it?

Porter: We have seen great excitement from our customer base. O2 is known for new thinking and for testing and trialing new digital services. O2 Home has changed the conversation we have with our customers. They are very used to us being a brand in the mobile space and now they are starting to get used to having a conversation with us about things in their homes.

O2 has 450 retail stores across the UK and those present a great opportunity for customers to come in and touch the new technology and talk to our retail gurus. That can be the start of a journey with us from where perhaps they had heard of smart home technology but did not really know what it could do.

They can have a conversation with us that is not about technology or product but much more about their lifestyle and the way they want to live their lives. Then we can help them go on a journey with the technology, helping them get to where they want to be.

What has been really interesting, so far, is that we don’t only offer O2 Home to our mobile customers; we offer it to anybody in the UK who has a house. So it is delighting our existing customers but also opening up a conversation with people who did not have an O2 phone but are now an O2 Home customer and on a journey with O2 that they perhaps did not expect to be on.

So this is a new market, and a new field of competition. Can you tell me about how you are going after these new subscribers in what must be quite a competitive environment.

Porter: It is a competitive environment and of course it has a number of players from different industries. In the UK we have energy providers coming in and driving smart thermostat sales. Hive is an advanced player in that market.

We have the internet players like Amazon and Google coming into the market and we have service providers like ourselves bringing a different approach to the market that is less about technology and more about making it easy for a mass market customer to start the journey.

Two of the things we do that we think are different and that give us the right conversation with the mass market are:

  • firstly we don’t charge an upfront fee for the hardware they need to get started with O2 Home. We spread the cost of O2 Home ownership across a monthly fee. For a starter pack most customers are paying around £15 to £20 per month.
  • Secondly we visit the home, install O2 Home, take the customer through how it works and do some training. That demystifies some of the technology. That removes two of the barriers that make consumer wary of the smart home journey.

You are clearly focused on the service and not on the technology, but you are putting technology into people’s homes. Tell be about the relationships you are building with partners to address that part of it.  What are the technologies you believe need to be in the home to address this intelligent home environment and opportunity?

Porter: We believe that a smart home needs to have best of breed devices and infrastructure from a lot of different players in the industry. So we are licensing the underlying platform that O2 Home runs on from AT&T, based on their ATT&T Digital Life platform.

We then put a hub into the consumer’s home, which is supplied by Technicolor. That hub then becomes the anchor point for all the devices the consumer chooses to put into their home, whether those be cameras or simple things like contact sensors.

We’ve partnered with Yale — a very well-known consumer brand in the UK — to make digital door locks, and we are working with tado°, a Munich based company that makes what we believe to be the best smart thermostat on the market today.

So we are bringing different suppliers and brands together that are all experts in their own fields — and with AT&T we are making all the individual bits work together so the consumer gets everything pre-integrated, up and running and talking.

No one company can do all of this on its own. Different companies need to come together on a suitable platform that and glue everything together.

Clearly, interoperability is important to manage the complexity for your subscribers in the home. Will this be important to take your business forward in the months and years ahead?

Porter: Yes. Interoperability is key. With AT&T and Technicolor we aim to take away the pain of interoperability and deal with it so customers can get on with their lives.

What we think of as interoperability is one lever to pull [to be successful in this market].

Another lever tied quite closely to it is security. The technology is complicated; it is sitting in a customer’s home and in many cases it is quite close and personal to their lives. So we also need to be able to offer a degree of security such that they don’t need to worry about putting this technology into their homes.

Interoperability and security really sit on opposite ends of the same balance: the more interoperable you make things, generally the harder it is to keep them secure. So, we are aiming for what we call a “managed ecosystem of devices.”

It will not be an open platform where people can bring any device and add it to the O2 Home. They will be able to select from a subset of devices that we, working with our partners, have brought together and made sure they are secure, and that they work.

We aim to offer sufficient devices to give the customer choice but not so many that we cannot be confident in their security or our ability to support them.

Those two elements: making things easy to use and making them secure go to the meaning of your brand. Tell me what the brand story is and how you are positioning yourself in this very complex but very exciting and dynamic marketplace.

Porter: O2 is one of the best-known consumer brands in the UK. We are known for the work we do in mobile. In particular we have a relationship with our customers where they can trust us to do what we say we will do. As a result we have the lowest churn in the UK mobile market and the lowest number of customer complaints.

We are leveraging that relationship into the new connected home space and saying to customers ‘You can trust us to do what is needed to make the journey right for you’.

We are also adopting a customer language and a customer-led conversation that does not say ‘Would you like a camera in your home?’ but that says ‘How would you like to look after you family and stay in touch with them when you are travelling on business?’ for example.

We are moving from what I think in this industry have been quite technology-led sales conversations to much more consumer-friendly, benefit-led conversations leveraging our great reputation in the mobile space and drawing that through into the connected home space.

  • UK mobile operator O2 saw its mobile customers struggling with the wide range of smart home devices, trying to integrate them into a coherent system.
  • To exploit this opportunity the company has launched O2 Home: an integrated smart home system based on AT&T’s Digital Life smart home platform running on a Technicolor Hub and with a range of devices guaranteed to interoperate with the platform.
  • O2 is marketing O2 Home beyond its mobile customer base to anyone in the UK with a house and is differentiating itself by offering O2 Home for a monthly fee, backed up with installation and customer training.
Richard Porter, Head of Home Products with UK mobile network operator O2

Richard Porter, Head of Home Products with UK mobile network operator O2

Richard Porter, Head of Home Products with UK mobile network operator O2, explains how the company is moving into the smart home market, with an offering based on AT&T’s Digital Life platform and a Technicolor hub.

Richard, there has been much change in the service provider space and in the way subscribers interact with their content and the broadband services they increasingly demand.

How is O2 approaching the connected home market, and what do you see as the key shifts driving the way you deliver services to subscribers?

Porter: We are a mobile provider with 25 million customers and we supply those customers with mobile phones and, increasingly, with other devices like wearables. We see a lot of those mobile devices being used in customers’ homes and over the last few years we have watched those mobile devices being used increasingly to connect to the early smart devices in the home, typically something like a Sonos sound system or perhaps an iKettle.

We have observed those customers going on a journey where they add more and more devices to their home and interact with them through the mobile phone they got from O2. Increasingly they would like those devices to work with each other.

The early adopters — the people who have the time and inclination to make it work themselves — can get a lot of benefit from bringing different devices together and getting them to interact. But for the majority, that is quite hard to do.

There are a lot of barriers. The technology is somewhat impenetrable. It is not always obvious how to get different devices set up and working together. So the mass-market consumer is missing out on the benefits of devices like smart thermostats and indoor cameras.

O2

O2

At O2 we have set out to put a service wrap around all that technology and to make it easy for the mass market to consume it. They can buy it from us and they can wrap it up with a service from us. We can spread the cost of it across time and, of course, we can go into the home, install it and help them to make it work and to get the benefits from it.

That does change the nature of your relationship with subscribers. How have you seen the subscriber base respond to this new value proposition you are bringing to market…that service wrap as you describe it?

Porter: We have seen great excitement from our customer base. O2 is known for new thinking and for testing and trialing new digital services. O2 Home has changed the conversation we have with our customers. They are very used to us being a brand in the mobile space and now they are starting to get used to having a conversation with us about things in their homes.

O2 has 450 retail stores across the UK and those present a great opportunity for customers to come in and touch the new technology and talk to our retail gurus. That can be the start of a journey with us from where perhaps they had heard of smart home technology but did not really know what it could do.

They can have a conversation with us that is not about technology or product but much more about their lifestyle and the way they want to live their lives. Then we can help them go on a journey with the technology, helping them get to where they want to be.

What has been really interesting, so far, is that we don’t only offer O2 Home to our mobile customers; we offer it to anybody in the UK who has a house. So it is delighting our existing customers but also opening up a conversation with people who did not have an O2 phone but are now an O2 Home customer and on a journey with O2 that they perhaps did not expect to be on.

So this is a new market, and a new field of competition. Can you tell me about how you are going after these new subscribers in what must be quite a competitive environment.

Porter: It is a competitive environment and of course it has a number of players from different industries. In the UK we have energy providers coming in and driving smart thermostat sales. Hive is an advanced player in that market.

We have the internet players like Amazon and Google coming into the market and we have service providers like ourselves bringing a different approach to the market that is less about technology and more about making it easy for a mass market customer to start the journey.

Two of the things we do that we think are different and that give us the right conversation with the mass market are:

  • firstly we don’t charge an upfront fee for the hardware they need to get started with O2 Home. We spread the cost of O2 Home ownership across a monthly fee. For a starter pack most customers are paying around £15 to £20 per month.
  • Secondly we visit the home, install O2 Home, take the customer through how it works and do some training. That demystifies some of the technology. That removes two of the barriers that make consumer wary of the smart home journey.

You are clearly focused on the service and not on the technology, but you are putting technology into people’s homes. Tell be about the relationships you are building with partners to address that part of it.  What are the technologies you believe need to be in the home to address this intelligent home environment and opportunity?

Porter: We believe that a smart home needs to have best of breed devices and infrastructure from a lot of different players in the industry. So we are licensing the underlying platform that O2 Home runs on from AT&T, based on their ATT&T Digital Life platform.

We then put a hub into the consumer’s home, which is supplied by Technicolor. That hub then becomes the anchor point for all the devices the consumer chooses to put into their home, whether those be cameras or simple things like contact sensors.

We’ve partnered with Yale — a very well-known consumer brand in the UK — to make digital door locks, and we are working with tado°, a Munich based company that makes what we believe to be the best smart thermostat on the market today.

So we are bringing different suppliers and brands together that are all experts in their own fields — and with AT&T we are making all the individual bits work together so the consumer gets everything pre-integrated, up and running and talking.

No one company can do all of this on its own. Different companies need to come together on a suitable platform that and glue everything together.

Clearly, interoperability is important to manage the complexity for your subscribers in the home. Will this be important to take your business forward in the months and years ahead?

Porter: Yes. Interoperability is key. With AT&T and Technicolor we aim to take away the pain of interoperability and deal with it so customers can get on with their lives.

What we think of as interoperability is one lever to pull [to be successful in this market].

Another lever tied quite closely to it is security. The technology is complicated; it is sitting in a customer’s home and in many cases it is quite close and personal to their lives. So we also need to be able to offer a degree of security such that they don’t need to worry about putting this technology into their homes.

Interoperability and security really sit on opposite ends of the same balance: the more interoperable you make things, generally the harder it is to keep them secure. So, we are aiming for what we call a “managed ecosystem of devices.”

It will not be an open platform where people can bring any device and add it to the O2 Home. They will be able to select from a subset of devices that we, working with our partners, have brought together and made sure they are secure, and that they work.

We aim to offer sufficient devices to give the customer choice but not so many that we cannot be confident in their security or our ability to support them.

Those two elements: making things easy to use and making them secure go to the meaning of your brand. Tell me what the brand story is and how you are positioning yourself in this very complex but very exciting and dynamic marketplace.

Porter: O2 is one of the best-known consumer brands in the UK. We are known for the work we do in mobile. In particular we have a relationship with our customers where they can trust us to do what we say we will do. As a result we have the lowest churn in the UK mobile market and the lowest number of customer complaints.

We are leveraging that relationship into the new connected home space and saying to customers ‘You can trust us to do what is needed to make the journey right for you’.

We are also adopting a customer language and a customer-led conversation that does not say ‘Would you like a camera in your home?’ but that says ‘How would you like to look after you family and stay in touch with them when you are travelling on business?’ for example.

We are moving from what I think in this industry have been quite technology-led sales conversations to much more consumer-friendly, benefit-led conversations leveraging our great reputation in the mobile space and drawing that through into the connected home space.

Show less