AT&T set to sell Digital Life, highlighting operators’ IoT challenges

Operators from Telefonica to Telstra have outlined grand plans to expand into digital services, but have found the challenge of playing the over-the-top suppliers at their own game is far harder than anticipated.

The latest operator which seems to have bitten off more than it could chew is AT&T, which Reuters reports is looking to sell its Digital Life business. This was set up to serve the consumer IoT market with smart and automated home offerings. These could be bundled with AT&T devices and connectivity, and it was even speculated they could be offered over-the-top. But companies with a stronger brand relationship with consumers, such as Google and Amazon, are also highly active in the home market.

According to the news agency, AT&T is now “exploring its options” for Digital Life, and hoping a sale will help reduce some of its debt should its planned merger with Time Warner be approved. AT&T recently said talks to gain the regulatory green light were at an “advanced stage”. Digital Life’s value is estimated by some analysts to be as high as $1bn, but even that sum – which seems high for a business with limited sales and in a crowded market – would only make a small dent in AT&T’s debt mountain post-merger, so other sales might follow.

AT&T had worked to offer Digital Life in other markets, including in the UK through a deal with Telefonica O2, but it epitomizes the dilemma for telcos which try to move into consumer IoT services. Unlike industrial IoT offerings, these services will carry little premium and threaten to fragment the operator’s sales and marketing efforts with too many different applications to support; while creating conflicts of interest with other partners.

Comcast followed AT&T into the smart home market and now offers a similar Xfinity Home offering, and last week even extended this to the provision of solar panels, saying that the two moves complemented it. If AT&T finds it hard to keep its eye on the ball in this market, Comcast could easily follow suit at some point, and spin this out, but recent enthusiasm for digital home moves there, seem more likely that it will invade AT&T’s turf. It claims that it has 1 million customers for its home automation service.

And this week Comcast began a pilot program where it is bundling security cameras with internet service for $10 a month. Its initial home automation service included a security service which relied on cameras and it has now sourced its own device for a retail price of $99.