The reasons for the lack of success of the home network are numerous: lack of standards, cost, unclear demand, lack of awareness, power demands, security concerns and lack of interoperability.
Optimistic commentators suggested that 2001 may be the year of the home network. Yet, leading vendor Proxim saw a 50% decline in sales. At its December 2001 financial analyst conference, CEO Jim Chambers stated that wireless home networking had proved a disappointing area.
The two challenges are; do people want home networks and, if yes, do they want wireless home networks?
Drivers for the home network are widely believed to be such factors as broadband access, multiple PCs and shared entertainment. Homeworking could also drive the market. According to IDC, the number of teleworkers in Europe is expected to grow explosively from 10 million in 2000 to more than 28.8 million in 2005.
Vendors from many different segments of the markets are trying to drive the market. Microsoft Windows XP has introduced much enhanced home networking capabilities. Broadband service providers increasingly see home networks as an important distribution platform for new services, a trend particularly prevalent in the US. Hardware vendors are adding networking capabilities – for example, Intel estimates that as many as 80% of all notebook computers will come equipped with Bluetooth by 2005. The use of wireless networking hardware and software for business applications will also drive home applications and awareness.
Threats to wireless
Wireless home networking faces strong competition from wired alternatives. Often, the arguments are unsurprising. Wired alternatives can be cheaper, faster and easier to understand for users. Yet, the wired alternatives can cause the cost, inconvenience and untidiness of extensive re-wiring. Clearly, the wireless solutions can also allow mobility around the house, a benefit particularly relevant for such devices as a web tablet.
Powerline competition comes mainly from the HomePlug standard. It has widespread industry support, and proponents believe it has the potential to be used in areas where telephone density is low. Its two big uncertainties are its unproven nature, and consumers concerns and misunderstandings about powerlines.
The HPNA (Home Phoneline Networking Alliance) is one of the main drivers for home networking through the telephone line. The forthcoming HomePNA 3.0 specification provides up to 100 Mbps. There are also competing solutions which have a wider remit. Echonet in Japan supports security, healthcare, remote diagnostics plus control of appliances and entertainment.
The wireless network offerings
Wireless home networking is really about IEEE 802.11 and Home RF. Bluetooth is optimised for personal area networks and ad-hoc connectivity, despite some earlier predictions that it could evolve into a full home networking offering. According to Merrill Lynch forecasts, 41% of the Bluetooth market will still come from smartphones in 2005.
The 802.11 proponents have wisely come up with a more alluring name, Wi-Fi, short for wireless fidelity. There are increasing numbers of variants of the 802.11 standard of which the most relevant are 802.11a (up to 54Mbit/s at 5 GHz), 802.11b (up to 11Mbit/s at 2.4GHz) and 802.11g (up to 54Mbit/s at 2.4GHz). The 802.11a products are just coming onto the market. The usage of 802.11 in 'public hotspots' and enterprises has driven support for the technology, and also driven efforts to overcome some of its limitations.
Home RF was set up to be optimised for wireless home networking at 2.4GHz. It tends to be cheaper than 802.11b, easier to install, and has dedicated timeslots for voice based on DECT technology. Its proponents claim that it does not face the scalability, security and interference problems of 802.11. Its two big worries are lack of vendor support and the lack of bandwidth with the 2.0 specification only offering up to 10Mbit/s.
There are a number of other technologies that are also being promoted for wireless networking. In Europe, HiperLan2 in Europe offers up to 54 Mbit/s in the 5GHz range although the IEEE is developing interworking with 802.11a (the 802.11j specification). UWB (Ultra Wide Band) is a low power, spread spectrum technology that uses coded pulse modulation for data transmission.
Three issues that still dominate the discussion of wireless networking are interference, security and interoperability. Much has been written about interference issues, particularly given that most wireless networks still operate in the unlicensed 2.4 GHz band, which is famously also used by microwave ovens.
Security concerns are less of an issue for home users, and the 802.11i committee are working on WEP (wired equivalent privacy) to match the security requirements of a wired LAN. Interoperability has been a problem that the wireless networking industry has rather created for itself. The industry seems to be 'shooting itself in the foot' on this issue, and absolutely needs to overcome the interoperability challenge by strict adherence to standards.
New spirit of cooperation
The media likes to present battles in the mobile market such as HomeRF versus 802.11, and 3G versus wireless LANs. In reality, these technologies will often prove to be complementary.
One of the main reasons is that the same companies are involved in the different standards. For example, 3Com, Agere, Intel, Microsoft and Nokia sit both on the WECA (Wireless Ethernet Compatibility Alliance) board supporting 802.11 and the Bluetooth SIG. Bluetooth (802.15) and the 802.11 groups are now working together within the IEEE and sharing documents/findings The HomeRF membership are also typically involved in IEEE discussions. Although there has been no clear statement, it seems likely that the HomeRF specification will move towards that of 802.11. The HomeRF 3.0 specification, which is around 18 months away, is likely to offer some interworking with 802.11a.
According to Cahners In-Stat Group, the connected home market will grow from $1.4 billion in 2001 to $9.2 billion worldwide by 2006. They believe that four million WLAN nodes worldwide went into home in 2001, with approximately 70% of these being 802.11b.
Allied Business Intelligence forecast the home networking and residential gateway market to be worth about $7.1 billion by 2005. By 2006, wireless networking will account for 48% of all home networking.
The forecasters believe that home networking growth will really start to take off in around two years time.
The US ahead?
There is no doubt that the US is ahead in the use of home networking, probably by around 18 months. HomeRF figures suggest that 67% of multi-PC broadband US homes already have some sort of home network.
Cahners In-Stat Group believe that new home building in the US is one of the drivers. They predict the number of networked greenfield homes growing from 11% in 2002 to 61% in 2006. The idea of a home network is also far better established in the US. For example, the home PBX was a reasonably large market while it never developed in Europe.
Interestingly, several home networking specialists believe that there is more interest in intelligent appliances in Europe than in the US.
The wireless home networking market will benefit strongly from the demand for 802.11 which will drive down prices. The 802.11 access point gateway devices are around $150-$200, and PC cards are falling to the sub-$100 range. Increasing demand for Bluetooth will also drive user education in terms of connecting devices.
In Europe, the path will still be slow for the next couple of years. Penetration will vary widely by country. Leading European countries will be those that have pushed the idea of higher speed access to the home, such as the Netherlands and Germany.
The key driver for the next few years will be sharing computing devices and Internet access but this will move to entertainment as the key driver.
The wireless providers need to be very aware of the intense competition they face from the wired alternatives, and ensure that they properly overcome issues such as security, interoperability and interference.
Steve Wallage works and writes for the451. Steve has more than 13 years of experience as a technology analyst specializing in telecommunications.