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Home networking: is it the value prop or the business model?

When my little old dad moved to CA in the beginning of December, I joined the ranks of the tech support generation. This is not a post about how my dad, who spends prob 8 hours a day on the internet, installs a Chinese Yahoo! toolbar that keeps him from yahoo.com or how he keeps trying to print things out at a higher magnification (thinking “view bigger” translates into “print bigger”). Now it’s all very cute and comical, and is really helping my patience quotient, but that’s not what I want to ponder here.

This post is about a most curious piece on the saturation of the home networking market I just saw at TechDirt this afternoon. Well, in my adventures in getting my dad situated in his new home touched on home networking this weekend in a way that offers a flash of glaring insight into the question of what it is and if people want it.

So here’s the story: My dad wanted a cellphone only, so that he could have it with him whereever he goes and have only one phone number (and one bill). That ruled out the easy choice of connectivity , which in my experience has been our idiotproof SBC DSL line. Ever so reluctantly I called Comcast to get details on cable internet. It’s like $50/month, which is just surreal (Comcast’s services — at least here in NoCal — are fabulously expensive). Fortunately my dad does enough browsing to go some way towards justifying that cost.

The rub really came when my dad wanted to move his desk away from the wall with the cable jack. He wanted it on the other side of the room. The obvious answer was to get him wireless. So we got a new router (the one benefit of tech support is the ability to upgrade and foist older-but-still-working kit off on the less savvy) and I ebayed a dongley thing for his pc. I planned to get this working over New Years.

Well, it didn’t work - and there was no how-to on the Comcast site. Nothing meaningful in their message boards or forums. Nothing I found while searching. I call up Comcast and am told that what I’m looking for is their “home networking solution”. This package required a special combined modem/router and an extra monthly charge (like $12/month on top of their exorbitant normal charges). As if I would give them more money for the god-given right to take their box and put other boxes behind theirs to add value to my network. I was inches from calling SBC.

There are important questions that Comcast just glossed over as they metaphorically just closed their eyes and held out their hand for more money. Did I want home networking? What does it mean? Why would it be worth spending extra money to get? Is it home networking when a dad wants to move his computer across the room without rewiring, when he still just has one pc? If you are going to compare systems, most homes have more phone jacks than cable drops — we have to question if it makes any sense that the least flexible service - cable, with its more complicated installation and heavy cording - would actually charge customers more to be rid of the cables.

The fascinating answer to that last question is that, economically, the answer is yes. In the abstract, cable wires are more of a pain and therefore customers might be more willing to pay extra to be free of them. They’re just capturing consumer surplus. But if you take a step back and say, well, it’s not just optimizing for cable — DSL is most of the time cheaper. It’s cheaper and the cording is less of an issue. So DSL attracts more price sensitive customers, and DSL providers (might, this is trying to make sense of Comcast’s craven profit-motive) would not feel as confident as Comcast in slapping on an extra charge. Therefore, we see the world where it is very easy to add a wireless network under (at least SBC) DSL and where I was unable to get an answer to simple questions like what configuration do I need to set up to get my router talking to your box.

But take that one “yes” and look again at the other questions, and you see it’s not so simple. I was determined to get this to work as-is, with no special router or additonal charge, or I was going to move him to SBC DSL.

When I was first thwarted, Mike, our third tier tech support (I’ll give the net 2nd tier status) was at his parents, and it was only this weekend that I got him to give it a go. He spent about 20 min on it, hitting some of the same walls I hit. Finally he changed the MAC address on the outgoing side of the wireless router to be the same as the PC MAC address. And yay! It worked.

This is especially interesting to me since a couple years back I worked with a company that was trying to get in Comcast as a value-add service in support of this program, so I was familiar with how keenly Comcast viewed the home networking market. They were most interested in enrolling value-added services to amplify the value of this home networking service (which speaks directly to Mike Masnick’s TechDirt frontmanpoint, that it’s not what a home network is, but what it enables that is important).

So yeah, it’s really easy to get to a “fully saturated market” when your prices are too rich. That market is, very simply, inherently smaller.