Verizon later this year plans to expand its offering with home energy management and security, a move that could signal a quicker route to delivering smart-grid services to consumers.
The company is currently developing an "integrated home management system" that includes both energy and security services, according to spokesman Jim Smith. The intent is to add home management to the menu of options Verizon offers.
Last year, Verizon first let out word of its home energy-management plans, but the company is now providing further details on how it could work for consumers.
The security and energy services would piggyback an existing home network and broadband connection, Smith explained. The goal is for Verizon to deliver the services via the cloud so that they are accessible from multiple devices, including TVs and phones. For example, a homeowner could receive a cell phone text when the doorbell rings and display what the front door camera sees, he explained.
In energy, Verizon envisions using a home automation network where a touch-screen display allows a person to put the home into "night mode," in which all the lights are turned off and the thermostat reset. Overall, the expansion into energy and security is a play at capturing more consumer home spending with advanced services.
"Our view is that home management has enormous potential when you consider how the focus on 'apps' can relieve the strain on individual services to be effective and profitable," Smith said. "As for the business model, we see home services as a fourth leg on the stool, joining phone, Internet, and entertainment as another essential, not a bolt-on."
Better channel than utilities?
It remains to be seen how well Verizon's home management services will be received by consumers. But in the burgeoning smart-grid business, phone and cable TV service providers are a promising channel for automated energy conservation goods and services.
Several companies have developed in-home energy dashboards and software to let people see how much energy they are using at home. With tools to better track electricity consumption and control appliances and electronics, consumers can cut their monthly utility bills by 5 to 15 percent, according to research and industry estimates.
Many home energy companies are working through utilities, in part because smart meters can feed information to energy dashboards and energy portals. But utilities are notoriously slow to move on new technology and most smart-grid programs are still limited to trials.
By contrast, cable and phone companies are eager to provide more services with their existing broadband connections. And for many services, such as basic energy monitoring and some automation, a utility smart meter isn't required, said Seth Frader-Thompson, the CEO of home energy management start-up EnergyHub.
EnergyHub is one of a handful of companies seeking out partnerships with cable and phone companies for its home energy management software and equipment, which includes an energy dashboard that could sit on a counter or hang on a wall. The New York-based company has existing deals with utilities to offer its gear as part of smart-grid programs.
"For cable companies, (energy) is just another simple service that fits into your life. It makes your thermostat easier to program and gives you feedback and hopefully, it saves you money," he said.
The technical model many companies are pursuing is to use an energy dashboard, or display, as a hub for connected devices in the home, such as a thermostat or appliances. Existing appliances or lights can be managed using plugs equipped with radios that connect them to the home automation network.
Many other companies have taken a bundled approach when bringing home conservation tools to consumers. iControl, for example, is extending home security with energy automation tools. Tablet maker OpenPeak is building home energy management as one of the applications on its touch-screen tablet computers.
In the case of cable and telecom operators, though, the business models for offering energy services are not fully worked out. One possible approach is the cell phone model where the hardware cost is subsidized by a monthly fee, said Frader-Thompson. For consumers, that monthly fee for energy services should result in less wasted energy and trimmed bills.
"If you live in a big suburban home that's 2,000 or 4,000 square feet in suburban Houston or a place that has brutal summers, you're probably paying $500 a month. That creates an opportunity to save $10, $50, or even $100 in the worst times," he said.
A representative from the National Cable and Telecommunications Association (NCTA) said there aren't yet any high-profile trials involving cable companies and home energy and security, but she noted the cable companies provide Internet service to 41 million homes.
If cable and telecom providers start offering energy services, they will still need to partner with utilities to get access to information that can be used for advanced applications, cable industry research company CableLabs said in a white paper published earlier this year. (Click for PDF.)
For example, demand-response programs, where utilities give consumers a rebate to reduce energy use during peak times, require getting information from utilities to signal when connected appliances, such as clothes driers, go into energy-saving mode.
The paper's authors argued for federal policies to clarify how energy usage data is handled and an open technical architecture. "If the public utility were to become the sole supplier of energy management services, there would be less competition and less innovation in energy management," they said.