Enhanced Information Wiring
The Smart House, Digital Home, Intelligent House, Automated Home, Home Network and SOHO (Small Office / Home Office) are some of the terms being used to describe the developing market of improved residential information wiring which will be of growing interest to cable makers. In this article we look at this evolving market and its potential implications for cable makers with special reference to Western Europe. For those interested in more detail we also give an overview of available technologies in the ICF News Tech Section.
What is »Enhanced Information Wiring«?
In the residential market, enhanced information wiring has long been the stepchild of the much larger market for energy wires. One or two low-grade telephone outlets and a single TV outlet have been acceptable even in new homes in most countries but this is beginning to change.
The »Smart House« … at present, more of a futuristic vision than reality
Some consumers are beginning to expect multiple outlets for telephone, data and TV throughout the house capable of high-speed data communication. Moreover, connectivity within the home is coming to be expected.
As mentioned above a multitude of terms is being applied to describe enhanced information wiring. Each of these terms implies some form of data networking, with characteristics and functionalities taken from the following list:
- Access to broadband communications
- Multiple access points to the external telecom and data network
- Internal connection of multiple computers and peripherals
- Multiple access points to the external TV network
- Internal connection of audio visual equipment
- Internal connection of audio visual with computer equipment
- The linking of other electrical equipment within a network to allow remote control
- The integration of sensors to allow automated event-driven control of the home environment
At its simplest level, enhanced information wiring includes only the first three items on this list.
The »Smart House« satisfying all eight of the criteria listed is (at present) more of a futuristic vision than reality, although the electronics manufacturers are currently working very hard to change this in the not-to-distant future. In our discussion of the market, we apply the term »residential structured wiring«. This includes any system of information wiring that is capable of carrying broadband signals running to multiple points from a central distribution unit that allows internal network connection between equipment attached to different outlet points. CAT 5 data cable or above is used in such networks. Using this fairly limited definition, the market for residential structured wiring is not particularly large, but it is growing rapidly.
Residential Structured Wiring
Market in 2001
The size of the global residential structured wiring market, according to consultants BSRIA, stood at US$ 236 million (€ 264 million) in 2001. The market, which BSRIA labeled »residential cabling«, included components as well as cable, indicating a cable market of a little over US$ 100 million (€ 115 million). The study looked only at the countries that BSRIA deemed to be significant markets and only at installation in new buildings, which accounted for the lion’s share of the
business.
Current Status of the Market
The BSRIA report (produced early in 2002) was very optimistic about the near-term prospects for residential cabling systems. It forecasted the United States rate of penetration rising over the three-year period to 2004 from 10 to over 40% in new buildings, while that in Western Europe was expected to grow from around 1 to nearly 20%. From the higher base, significant growth was also expected in Asia, driven by a near doubling in the rate of installations in China.
Prospects may be greatly impacted by the influence of government and inter-governmental bodies.
Reality turned out to be much less encouraging than the forecasts. In the context of a decline in the 2002 market for data cable and flat sales in 2003 as the commercial market fell away, the rate of penetration of structured wiring in new residences in the United States rose from 10 to nearly 15%, with a slightly more modest increase occurring in Asia. In Western Europe structured wiring has still failed to gain a mass-market (with only about 3% penetration rate).
We estimate that in 2003 the total market (including components but excluding installation) stood at around €35 million. This figure includes installation in existing properties (10-15% of the market) and countries not covered by BSRIA, so the data is not strictly comparable.
Looking at the amount of data cable sold in residential structured wiring systems in 2003, we estimate the figure at around €17 million.
The total amount of LANs-type data cable sold to the residential market is somewhat larger than this as it includes a small element of pre-wiring for optional networking where the option is not taken up and also data cable sales to the residential market where the end use is not part of a structured wiring system.
Even with these additions, however, it is clear that in Western Europe at least, residential sales of data cable still form a relatively small part of the overall premise market, valued at around €800 million in the region in 2003.
Market Prospects to 2008
Over the next few years, it is virtually inevitable that the penetration of home networking will increase substantially. According to In-Stat/MDR figures, only 3% of existing homes in Western Europe are networked.
The development of norms and standards … is necessary to achieve a real penetration of home networks
If, as we have seen so far, network installation continues to be concurrent with or soon after broadband connection, then the number of networks in place should grow quickly as the rate of broadband take-up soars. In most cases, however, the type of home networking concerned, in existing homes, is almost exclusively wireless. For residential structured wiring to really grow, rather more is required.
For the cabled solution to get anywhere near its potential, the market will have to perceive that it is a vastly superior option to wireless and that its capacities are either necessary now or will be sufficiently soon to justify the higher cost of cabling. Because of this, the use of the home network for high level data services is important. In the entertainment area, there are encouraging developments both in the online material becoming available and in the network capability of audio/visual (AV) equipment.
Potential Market Drivers and Barriers
It is clear that the perceived need for home networking is advancing quickly and that this should, with a little luck, be very good for cable. For cable to gain a really high penetration, however, network utilisation has to be of a type that makes cable installation necessary. Market experience to date has not been particularly encouraging. US-based research suggests that the expectations of what a home network can achieve are fairly limited.
The performance of the construction market will have a major impact on the
In a recent newsletter Park Associates claims that »most of the 27% of U.S. households that will own a home network in 2007 are unlikely to have anything more than a PC network or a simple point-to-point multimedia network (one most likely enabled by a wireless home network and a digital media adapter) and most networks are in homes with broadband access, the home network thus being a means by which the investment in broadband can be fully utilised«.
Governments and Inter-Governmental Bodies Market prospects may be greatly impacted by the influence of government and inter-governmental bodies.
…the fragmented structure of the market is a barrier to growth…
France is a prime example. The country’s newly introduced NFC 15-100 electrical code recommends that new homes have a telecom point in each major room and a minimum of three TV sockets in homes of 100 sq. m. and above. The code calls for a minimum of Category 5e FTP cable. This can be a boost to the French market.
At inter-government level, the electrical standards body CENELEC is working to facilitate convergence and interoperability of systems in the European »Smart House« by developing a common Code of Practice applying to all those active in the business. The code is due to be published in August 2005 and forms part of the eEurope initiative launched in June 2002. The development of norms and standards through organizations such as CENELEC is necessary to achieve a real penetration of home networks with wide-ranging functionality, i.e. the networks that are most likely to benefit the cable industry.
Market Fragmentation
The rate of structured wiring installation growth will partly depend on how well the product is marketed. At present, the fragmented structure of the market is a barrier to growth, with a split between the large house builder, small contractor, owner builder and retrofit. The channels to market are very different and most of the companies involved have insufficient market presence to tackle more than their own chosen niche. Marketing is somewhat easier where (as in the United Kingdom) new house building is dominated
by a handful of large companies rather than (as for example in Germany) owner/ builder exerting a major influence.
Construction Market
Beyond this, the structure and performance of the construction market will have a major impact on the growth in residential structured wiring. In Western Europe, the rate of new residential construction is chronically low in relation to the existing housing stock.
Structured wiring has not done particularly well in capturing its potential mark
In making our forecast for 2008, we assume a fairly modest 15% increase in the rate of new construction compared to the average of the past few years. Our forecast market of €190 million in 2008 equates to a penetration rate of around 30% in new dwellings (which at €200 per dwelling would give a market of €120-125 million) plus a penetration rate in existing dwellings of around 0.2% (giving a market of 65-70 million). For this forecast to be realized there will have to be a rapid take up of data networking and a reasonable performance of cable against wireless technologies. The potential is much greater if, for example, structured wiring came to claim a 50% share in
new dwellings and just 1% of existing dwellings annually. The total market could be worth well over €550 million by 2008. This potential suggests that there is some merit in a proactive approach to residential structured wiring market development by the cable industry.
Audio/Visual
Audio-visual link-ups could increase dramatically quite soon. In recent months very cheap media adapters have become available; some are being sold by the large PC companies such as Dell and Hewlett Packard packaged in with subscriptions to online music services. The likely explosion in online music (and video) content, should greatly increase the attraction of networking digital content between computer and AV equipment. As far as music is concerned, sharing of content can easily be achieved using a wireless device. On the consumer electronics front, most companies will very soon be incorporating (inexpensive) network interfaces into their AV equipment, allowing content to be shared between platforms. If the networking capabilities on offer are actually utilised, the potential need for structured wiring rather than wire-less solutions is quite high. A home networking environment with two-way links between computers, audio, visual and gaming equipment may well prove to be beyond the technical reach of wireless technology.
Security/Surveillance/Home automation
Home automation – as it stands – is still well down the list of reasons why homeowners consider they need a home network. Security and surveillance systems are growing in importance in most European countries, but the need to link them into a network is rarely perceived. There is still little interest in the automation of lighting, air conditioning and the mechanical functioning of gates, doors, windows, watering systems etc. Even further down the line is the inclusion within the network of electrical appliances, such as refrigerators that tell the homeowner what needs to be replenished, although companies such as LG Electronics are working very hard at changing this. At present, home automation is hampered by a lack of perceived need for a home to think for itself and be controlled remotely. High cost and the lack of a universal protocol for linking equipment are serious barriers.
In time, however, the integration of home automation within or alongside a combined infotainment network is likely; it will almost inevitably require a cabled solution.
