Futureproofing Houses

Networking (the connecting of different products and systems in a house) is the key to providing home buyers what they need to participate in the rapidly changing and increasingly sophisticated information age. Builders have an opportunity to provide this value-added feature, which will enable them to sell more houses and rent more apartments.

The increasing use of computers in home offices and in other parts of the house is driving the need for networking that will also include other systems in a house, such as lighting, heating and cooling and home entertainment, as well as services like security. Networking, which allows products to communicate electronically with each other and be controlled by one device, is the key to the market growth of the emerging home automation industry. In the case of computers, networking would allow multiple computers to use the same printer and share software. Apartment developers, single-family builders and product manufacturers may get tired of hearing the words networking or connectivity, a Microsoft executive says. "The notion of connectivity will be mentioned ad nauseum. It is the theme for the day and will be throughout the show and beyond that,’’ said Mike Paull, managing director of the Intelligent Homes Systems Group at Microsoft, during his keynote speech at the recent Home Automation Association Show in Orlando, Fla.

The fact that a major company like Microsoft has become more involved recently in the home automation business is an indication that the move toward a mass market is picking up speed. But even Paull said this year is not the turning point, not the year of an explosion of products for the mass market. The industry, he said, is not ready to move from hundreds of units a month to millions in a year.

Even though the industry is not ready, an executive with one of the largest home builders in the United States said the time is getting close. Randy Luther, vice president of research and development for Centex Homes of Dallas, has been following developments for 15 years in the home automation market, ever since the introduction of the NAHB Smart House and other product ideas revealed in the mid-1980s.

The lack of networking and a limited capacity for wiring is what keeps the market from getting any closer. Current wiring in houses just won’t provide the capacity that home buyers need and home builders should provide to prevent their houses from becoming obsolete. Existing telephone lines are not fast enough to meet the increasing data transmission needs of homebuyers. Neither are the power lines, nor is the current cable for additional television stations.

What will provide the capacity is Category 5 wiring and RG6 cable upgraded products. Mark Tipton, a former president of the National Association of Home Builders (NAHB) said that more than 90 percent of new houses built in recent years do not have this type of upgraded wiring and therefore are inadequately wired.

Once home buyers recognize the value of upgraded wiring and other aspects of networking, they want it bad, according to Tipton, currently president of Smart House, a Raleigh, N.C. company working to organize and train installers to put in the upgraded wiring. Tipton said that not one person walked out of Smart House focus groups that did not want to do the upgraded wiring once they realized its value. On a personal note, Tipton said his brother, who is a builder, wouldn’t put upgraded wiring in his houses until customers started asking for it in the last six months. Another gauge of consumer interest in special wiring came from a 1998 survey by the Consumer Electronics Manufacturers Association (CEMA), which is based in Arlington, Va. In a telephone survey of a random national sample of 1000 people, 27 percent of the respondents said they would be very likely to spend $5000 for special wiring to manage parts of a house. Another 28 percent said they would be somewhat likely to do so.

But to network products and systems in a house with upgraded wiring builders must choose one of the various companies which are using or developing different control devices to go along with the wire systems (telephone lines, cable TV, power lines) and wireless systems (radio frequency and infrared products). Builders may choose a combination of several methods. Like a number of people in the home automation industry, Mark Schmidt of IBM said the networking technology would probably be a combination of wire and wireless. But the category 5 upgraded wiring will probably always be better than wireless because wireless devices have some interference problems, Schmidt said. "That does not mean there is not room for radio frequency devices," he said.

A further note on radio frequency (RF) devices came from Paull, who said these products can have noise or interference problems because RF operates at a bandwidth, which is used for microwave ovens. He also downplayed another wireless product category, infrared devices, which he says have limited use. Paull’s company is working on what he calls a universal plug-and-play system, which uses existing power lines to take advantage of existing technologies and standards. Paull says the system will not be based exclusively on the personal computer but the system will take advantage of PC capabilities. Microsoft is working with the Home Application Programming Interfaces (API) Working Group to establish an open industry specification that defines APIs. Other members of the API group include Compaq Computer Corp., Honeywell, Intel Corp., Mitsubishi Electric and Phillips Electronics.

Other types of network standards are under development currently by groups of manufacturers so products can talk to each other. Companies are concerned about having islands of automation where products can’t interact or be controlled by one device. The most noteworthy of networks, according to Parks Associates, are the Home Phoneline Networking Alliance (HomePNA) and the HomeRF Working Group (HomeRF). Both have completed specifications for a technical standard, according to Parks, which is a market research firm based in Dallas. Some companies that are members of HomePNA also belong to HomeRF, such as Compaq, Hewlett-Packard, IBM and Intel. "These companies are making a bet on both phoneline-based and wireless networking solutions," Trisha Parks said. Both consortiums, Parks says, expect to have inexpensive, easy-to-install and standard-compliant networking products available in 1999. Builders will have some help in comparing different manufacturers of control devices. The

Consumer Electronics Manufacturers Association (CEMA) announced on January 29 that its Integrated Home Systems (IHS) Division is developing a rating system to help consumers identify the technology systems and capabilities of a home. Rating considerations are expected to include telephone and cable access, built-in security, lighting and audio/video wiring, and access to data and Internet services. CEMA is seeking industry input and expects to introduce the rating system later in 1999. The organization has introduced a web site www.TechHome.org to provide a resource for home systems information and products.

Even before the CEMA system is available, developers and builders are aligning themselves with different product suppliers of control devices and networking services: Land Tejas in Houston with IBM (see January issue of PB), Lakewood Ranch in Sarasota, Fla. with GTE and Stonehouse in Williamsburg, Va. with Cox Communications (see March issue of PB). Also, a number of builders in the Washington, D.C. market chose Bell Atlantic, a regional telephone company, to install an upgraded wiring package (see January issue of PB) after the telecommunications company conducted a consumer and builder advertising campaign about every other new house being obsolete, except ones with Bell Atlantic Ready wiring.

Developers of other planned communities in additional locations throughout the Southwest and Southeast have agreements to install the HomeStar Wiring System from Lucent Technologies. The company’s system which supports voice, video and data technologies in the home, is scheduled to be installed in as many as 55,000 new homes being built at Summerlin in Las Vegas, Power Ranch in Gilbert, Ariz. and Sunset Lakes in Miramar, Fla. over the next several years, according to Lucent. The company has also agreed to provide its system to new homeowners at DC Ranch in Scottsdale, Ariz.

It is not only single-family builders that are networking individual houses. Multi-family builders are networking apartment complexes to provide value-added services. Post Properties, an apartment builder based in Atlanta, has 60 to 80 sites of Smart Apartments, which use upgraded wiring to provide a number of services to renters, according to Richard Holtz of RRH Associates in Ormond Beach, Fla., a consultant and installer of wiring networks. Holtz is also working with JPI, a Dallas-based apartment builder, to install an upgraded wiring network in housing for college students. He says five properties have been completed and more are expected. Generally, Holtz said the average payback for apartment developers for the additional wiring cost is two years.

"The business challenge is not to sell technology but to create revenue through technology by selling lifestyle and services, such as better Internet access, HDTV, home theater and energy savings." In a sense, Holtz said, apartment developers obtain ancillary income from network efforts by charging fees for electronic toll roads and bridges.

The growing use of multiple personal computers in the home is driving upgraded networks, according to Paull. "Without the proper wiring, it is difficult to get multiple PC’s networked in a home," Paull said.

Statistics indicate that there are nine million households with more than one computer, but only one million are networked. While there are off-the shelf programs to network computers, Paull believes most homeowners don’t want to bother. "There is a huge opportunity for manufacturers to make networking easier, but the solution must be affordable and convenient.’’ In the future, networking will become increasingly important. As computer prices continue to drop more and more homes will have multiple workstations. According to Schmidt the day is coming when a computer will be much like today’s telephone -- there will be outlets in each room to plug a unit into. The networked home will provide the flexibility needed by people in the future.

While all these factors point to a growing home automation market, builders, manufacturers and installers must exercise caution about moving too quickly into the future. The former president of the HAA and a home systems installer, Bill Maronet, said, "I have been on the bleeding edge of home automation, and I still am.’’

Issuing more words of caution, Herman Cardenes of Smart Corp. in Las Cruses, N.M. warned industry participants to be careful of the hype. He warned about some companies who embrace the "you fake it until you make it’’ philosophy. Cardenes, who was a custom builder and is now a manufacturer, noted that there is a lot of smoke and mirrors employed by some home automation companies. Most builders, he said, are not interested in using technology in a house unless the products offer more value in the form of energy savings, increased comfort or other benefits. There is another reason for caution by home builders, according to consultant Martin McClancy. He cited a recent class action suit by homeowners against Lennar Corp., a Florida-based home builder. The company installed a voice-activated home control system which had a number of malfunctions that resulted in the lawsuit.

Holtz sounded another note of caution. He urged builders to thoroughly investigate their wiring suppliers as well as the installation contractor. An inexperienced installer can cause problems with the upgraded wiring (Category 5 wiring and RG6 cable) if he does not keep the data wiring one stud bay away from the power wiring.

Who the builder chooses as the installer can be another problem, since there are several types of subcontractors doing wiring work. A home builder can choose an electrician, a security system dealer, a telephone installer, or an entirely new type of subcontractor, such as the ones being developed by the Smart House Corp. in Raleigh, N.C. This new breed of contractor serves as the home automation dealer and installer.

Looking for this new type of subcontractor is Schmidt, who said no existing trade (security system installers or high- or low-voltage electricians) is fully equipped to install the wiring needed for networking in the house. A new trade, he says, needs to emerge. IBM has started to authorize an integrator network. "Where this takes us is not certain," said Schmidt.