1. Comment
  2. Comment
February 6, 2020updated 09 Dec 2021 5:26pm

The smart home market offers great opportunities for European telcos

By GlobalData Technology

Telecom operators in Europe have already perceived the need to expand their portfolio beyond connectivity to monetise the growing smart home opportunity. The smart home ecosystem, market, and use cases are developing at a rapid pace. Telcos are trying to strengthen their role in this ecosystem and monetise the smart home opportunity.

Telcos tend to choose the partnerships route in order to expand their smart home portfolio. For the launch of their smart speakers and digital assistants, Deutsche Telekom Germany and Orange France, for instance, partnered together. Furthermore, Deutsche Telekom partnered with SoundHound, speech recognition company, to enable AI capabilities in its smart speaker. Other examples include Telefonica Spain partnering with Microsoft to develop connected home solutions, or Telia Sweden partnering with Datek, smart home solution provider, to bring smart home solutions to its customers.

Most of the European telecom operators are selling smart home devices, however, bundling strategies in Europe are becoming more prominent. Telecom operators are bundling smart home solutions with existing services like fixed broadband, postpaid mobile plans as well as fixed-mobile convergent packages. Telecom operators bundle smart home solutions with existing services in order to increase their value proposition, improve customer experience and drive subscriber churn down. Service bundling also allows telcos to cross-sell and up-sell customers. For example, smart home services often require faster Internet speeds. This encourages customers to upgrade to more premium broadband speeds with their bundles which helps telcos drive their overall ARPUs up.

With the expansion of their smart home portfolios, a number of telcos have been able to increase their smart home subscribers’ base and ARPU. Deutsche Telekom Group, for instance, increased their smart home subscriber base from 42 thousand in 2015 to over 400 thousand by Q3 2019.