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In-Stat: Home Media Phones May Become The “Fourth Screen”

Scottsdale, Ariz. — North American shipments of broadband-connected residential media phones could hit almost 14.3 million units in 2013, up from zero in 2008 and up from a forecast 700,000 to 1.4 million in 2009, according to research company InStat. 

The forecast is based on a highly subsidized business model in which phone, cable and broadband operators price the devices anywhere from $0 to $100 depending on network-subscription commitments. 

Shipments will hit only 7.5 million in 2013 if operators partially subsidize the product to bring the price down to price to $200/unit. To date, AT&T and Verizon “appear to be pursuing a partial subsidization strategy,” In-Stat said.

“The media phone represents a new category of broadband multimedia device that has the potential to become the fourth screen in the home, complementing the PC, TV and mobile handset,” In-Stat contended. In-Stat defines media phones as a “new class of broadband devices for the home that combine the power of an Internet-connected PC with the functionality of a home telephone.” The phones offer always-on access to Internet-based media content, information services and new communication services such as integrated fixed/mobile calling features, visual voice mail and unified messaging.

“Always-on access to news updates and weather reports will be a strong driver of consumer adoption,” In-Stat said. “Neither TV nor Internet sites can offer one-touch, instant access to information.”

The devices feature a large 6-inch to 10-inch color touchscreen and speakerphone, and they’re usually designed to work with one or more cordless DECT voice handsets located in other rooms.

Today, two companies — Verizon Wireless and AT&T — offer home media phones to U.S. consumers, and more are on the way. In September 2008, AT&T introduced the AT&T HomeManager, marketed with AT&T U-verse broadband/TV/landline-phone service bundles. It’s built by Samsung to AT&T specifications and is available in a handful of U.S. metro areas at $299 with two-year AT&T high-speed Internet service. Verizon began selling its Hub on Feb. 1. Made by Boca Raton startup Open Peak, the Hub is available through Verizon Wireless stores at $199 with a two-year VoIP service contract and after a $50 rebate. Verizon’s virtual VoIP service is priced at $35/month and runs over any broadband service.

To become a home’s fourth screen, “media phones must be viewed as separate and distinct from traditional home telephones, personal computers and mobile handsets,” In-Stat said. “Media phones will complement the other three screens, not compete with them.”

To succeed, operators must ensure the products and services have a broad appeal, In-Stat said. “For younger adults that may never have owned a fixed-line phone, media phones must offer access to innovative and compelling new broadband applications.”

For older adults, the company said, “the media phone will be a phone-like alternative to computers for accessing online information. Simpler to use, greater convenience and always-on operation will be important selling points for adults that traditionally have used a home telephone.”

In countries with a long tradition of wireline circuit-switched voice services, the success of the media phone “will hinge largely on delivering a new generation of converged communications services to the home,” the company continued. “The integration of the broadband, wireline voice, mobile voice and TV networks will deliver services of higher value than today’s separate services.”

In-Stat based its forecasts on such assumptions as tier-one cellular operators marketing media phones nationally in conjunction with virtual home VoIP services, nationwide media phone marketing forcing cable operators and virtual VoIP operators into the market in possibly late 2009 and 2010 with similar subsidized device promotions. Another assumption is that AT&T will adjust its media phone strategy to be “mobile-centric” like Verizon Wireless.