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The April 16, 2003 Issue Provided by System Dynamics Inc.
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SercoNet's NetHome -- Making Customers More Sticky

We have covered SercoNet, a startup company with a novel approach to home networking, for several years, and have talked with its founders several times. SercoNet has now launched its NetHome system and is working to convince broadband service providers to install it in customer homes. We recently interviewed Amir Eldad, CEO, and Jim Gayton, Director of Marketing.

SercoNet NetHome Smart Outlet --> Click for larger pictureThe NetHome system provides standard Ethernet and Wi-Fi networking over existing home telephone wiring, while simultaneously carrying two analog phone lines. The system is based on replacing two or more existing telephone outlets with NetHome Smart Outlets. These have front connectors for standard 10BT Ethernet and two phone lines, and rear connectors to the existing phone wiring.

What makes SercoNet's approach different from other phoneline systems (such as HomePNA) is that the Smart Outlet regenerates the data signals at each outlet. Since North American homes have telephone outlets in many rooms, SercoNet's approach makes it possible to add Ethernet outlets wherever they're needed and claims to preserve signal quality and guarantee system performance.

Unlike HomePNA, NetHome does not require adding special-purpose network interface cards to existing PCs. The SercoNet system provides an independent networking infrastructure and works with standard Ethernet interfaces included with most PCs today.

SercoNet NetHome 802.11b Wireless Access Point --> Click for larger pictureFor homes with wireless notebook computers and PDAs, SercoNet offers a Wi-Fi access point as an add-on module to the Smart Outlet. This permits locating one or more access points wherever there are telephone outlets, using existing phone wiring to distribute both Ethernet and Wi-Fi throughout the house.

A power supply is the other major component of the NetHome system. It is designed so that phones can connect to the outside line in the event of a power failure.

We asked Amir and Jim what the system costs, and were told that a "basic system" with a power supply, two Smart Outlets and a Wi-Fi access point has a list price of $275. SercoNet has not published prices for the individual components.

SercoNet would like to sell the system to service providers offering data and voice services. The system architecture makes it easy to connect a single analog line and data networking in an initial installation, and then move a few wires to connect through an MTA for VoIP telephony.

Many cable operators are planning to offer VoIP in the near future, and installing the SercoNet system would seem like a natural progression: first equip the home with home networking over the phone wiring, then offer multi-line phone service through the networking system. SercoNet argues that putting their brand name on the networking face plates would make it easier for MSOs to transition data subscribers to telephony and make customers more "sticky".

Frankly, we're a little skeptical about MSOs' willingness to touch the existing telephone wiring. Their natural medium is coaxial cable, and they are all working with Wi-Fi networking because of its popularity. But they'll all be in the telephone business soon and most are focused on the existing analog phones. So they might be willing to deal with the phone wiring once the SercoNet system is proven.

The system is currently installed in about 200 "beta" homes, split between Europe and North America, and is now going to "general availability". We'd like to see the system proven in a much larger base of real-world customer homes.

Our final concern is the speed of the current system. It has a 10BT Ethernet interface and we were told that the measured throughput is almost 9 Mbps. That's somewhat faster than networking technologies such as 802.11b Wi-Fi and HomePlug -- but much slower than 100BT Ethernet over structured cabling, or 802.11g, the newest version of Wi-Fi now moving rapidly into the consumer market.

Jim says the next version will have a 10/100 Ethernet interface and early lab tests show speeds of about 25 Mbps. At that speed it would be very competitive with 802.11g.

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