Smart home adoption is difficult. I know from experience: I led a smart home platform company and we had both successes and setbacks. Many telecommunications companies struggle with this market, and there are several clear reasons why.
For years industry analysts have predicted that communication service providers (CSPs) would find large new revenue streams in the smart home. Reports from respected consultancies suggested smart home services were a prime opportunity for telcos to expand their offerings. Forecasts even projected billions in potential revenue. Yet despite those optimistic projections, only a handful of CSPs—most notably Deutsche Telekom and Comcast—have so far achieved meaningful success in this space.
What problem are you trying to solve?
One fundamental issue is that many service providers still haven’t defined a clear customer problem to solve. “Home automation” appeals mainly to affluent customers and tech early adopters, not to mainstream consumers. The average household is more concerned with straightforward, tangible worries: Are my children getting home safely? Will the house be well lit when I arrive? How can I help aging parents remain independent at home longer?
Addressing these real-life concerns typically requires multiple devices, careful configuration, and integrated solutions. CSPs must decide which customer problems matter most, learn to communicate those solutions clearly, and execute them reliably. Without that customer-centric focus, offerings will struggle to gain traction.
Have skin in the game
A few carriers—Comcast, Deutsche Telekom, Orange and AT&T among them—have made significant investments in smart home services. Many others, however, have only dipped a toe in the water, allocating minimal resources and treating smart home like any other retail product. They’re comfortable selling handsets, TVs, and broadband where the manufacturer often owns most of the customer interaction. But the smart home requires more: educating customers, training staff, understanding the customer’s problem in-depth, and investing in marketing and support. It’s not a low-effort, quick-win initiative; it requires sustained commitment, learning, and reinvestment.
Fear of failure
Many CSPs fall victim to analysis paralysis. They run lengthy vendor evaluations, solicit proposals, perform extended tests, and repeatedly revise strategy. Years can pass before they select a partner and launch a pilot—if they ever get that far. Meanwhile, tech giants and specialized providers such as Google, Amazon and Alarm.com move quickly to capture customer relationships, data and lifetime revenue. By trying to avoid mistakes at all costs, some telcos inadvertently cede the market to more agile competitors.
Complex bureaucracy
Large organizations face internal complexity that can dilute a focused smart home strategy. Launching a new service requires coordination among procurement, operations, marketing, sales, training and customer care. In layered organizations, that alignment is hard to achieve and easy to lose.
I worked with a CSP where the product and marketing team had a clear, focused strategy centered on connected smoke detectors and home safety devices. By the time the initiative reached retail, however, it had been reduced to a miscellaneous shelf of products with no clear narrative. Sales staff, who prioritized faster, more familiar transactions like selling phone and broadband plans, didn’t take the time to explain the benefits of the smart home solution. The result: a promising strategy undermined by poor execution.
Good at selling devices, not solutions
Part of the challenge is that smart home solutions are often more complex than standard consumer electronics. Single products that solve a specific need—Ring doorbells, Nest thermostats, Amazon Echo devices—have achieved mainstream success because they’re simple and obvious in value. But when a solution requires multiple devices working together—scenes, triggers, schedules, alerts and coordinated automation—the complexity increases dramatically. Those multi-device systems are still not straightforward DIY projects for most consumers, which raises the bar for service providers that want to deliver complete solutions.
Is it too late?
Many CSPs that waited are now facing stiffer competition and must ask: How do we enter and differentiate now? Delaying entry means losing the learning curve gained through early trials, failures and iterations. New entrants risk being labeled “me too” or offering an inferior product. These fears can cause further postponement, deepening the challenge.
Why should you care?
There are several strong reasons for CSPs and other service providers to invest in smart home offerings:
- Additional service revenue. Commoditization pressures are constant; adjacent services like smart home can diversify and strengthen revenue streams.
- Deeper customer understanding. Data from smart home solutions provides insights into customer behavior and needs, enabling better support and closer relationships.
- Protecting customer relationships. Handing the customer relationship to external product providers risks giving competitors like Amazon, Google, Apple or other platforms greater insight and influence over your customers. CSPs should consider whether they want to cede that ownership.
Now what?
Analysts weren’t wrong: the smart home opportunity exists, but it’s harder to capture than many expected. The remedy is straightforward in principle, though it requires disciplined effort:
- If you lack internal expertise, recruit or partner with people who have it.
- Invest—meaningful progress requires budget and resource commitment.
- Accept failure as part of learning: fail fast, iterate and refine what works for your market.
- Align all stakeholders around a single mission and strategy.
- Secure a visible senior sponsor who will champion the initiative.
- Start now—delay only hands the opportunity to more nimble competitors.
Interested in hearing industry leaders discuss these topics and share use cases? Consider attending relevant industry events where practitioners and vendors present real-world experiences and lessons learned.