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2 November 2018

Calix launches super SHaaS hub, hopes CSPs take note

Networking specialist Calix has unveiled its new line of GigaSpire WiFi hubs, packing low-power smart home wireless radios. It hopes that the units will form the basis of CSP smart home as a service (SHaaS) offerings, but admits that CSPs are slow boats that take a long time to right the course.

Calix is already working with 60 CSPs in early adopter programs, with the first customer for the new platform being ALLO Communications a US fiber provider. More announcements are due this month, and we were briefed on an MNO customer that appears not to have gone live with the rest of Calix’s announcements. If the platform is as powerful as the company claims, it could provide the basis for a good deal of SHaaS deployments – a market that CSPs have failed to tackle independently.

Calix provides software and equipment to CSPs, covering a number of distinct applications. It is primarily concerned with the network access infrastructure between a CSP’s subscribers and the cloud, meaning that it has a foothold in both homes and data centers. It is especially interested in NG-PON (fiber broadband), (gigabit copper), and also claims to be the first company to bring mesh WiFi to CSPs.

According to the Michael Weening, EVP Field Operations, Calix serves around 1,500 CSPs globally, ranging from telcos, cablecos, to MNOs. Weening explained that the company was now becoming more of a software platform for its customers, which ties in with the wider industry trend of generic off-the-shelf hardware and software-defining everything else.

Weening said that CSPs were no taking advantage of the opportunity in the smart home, in a similar way to how they were too late to embrace video when it exploded into the mobile realm. They are also large and slow, meaning that once a company like Calix has convinced the CSP to pick something and try to sell it, they often find that the market has moved on without them.

Another complicating factor is the ‘invisible brand’ that the CSPs seem to have. Weening talked about how many customers are only aware of the brand when they are having a negative experience, such as happily browsing the web without paying heed to the company piping those packets, but then becoming enraged if there is an outage.

On the hardware side of things, the WiFi router or set-top box is also usually rather invisible, tucked away and out of sight. However, Weening likened the likes of Amazon’s Echo and Google’s Home devices to home invaders, saying that there was a war going on from a branding point of view. Weening said these two have huge momentum, and that the CSPs struggle to have that same kind of visibility and interaction.

In addition, there’s the damage that poorly performing CPE (Customer Premises Equipment) can do to the brand, compounded by the lost revenue if a subscriber gets so frustrated with the performance of a shoddy WiFi router that they go to a consumer electronics retailer and drop $200 to $500 on a better router. Once you factor in the likely preceding calls to customer service, and then the risk of the customer churning to a rival, the CPE becomes a real liability, if it is performing poorly.

In terms of lost revenue, that purchase was an up-sell opportunity, of sorts, and WiFi complaints and problems are typically responsible for a large part of the customer service team’s workload. What’s more, the likes of Amazon and Google are getting access to data that could be valuable to the CSP.

In the face of this problem, Calix found that it needed to force CSPs to make significant shifts, to make their brands more visible. Weening outlined how the company had three main lessons: that retail is hard and simplicity in the offering is key; that partnerships were key to winning; and that software is key to victory, as it lets you get to market quickest.

This then led to the current strategy. The Calix Smart Home and Business offering has four fundamental components. First is the Experience OS (EXOS), the software for the end-devices. Second are the GigaFamily devices themselves. Third is the Calix Cloud, and fourth are the Calix Services.

To rattle through the components; EXOS is a Linux-based containerized operating system that Calix is using to kill off the practice of integrating functions into hardware. The goal is to be able to quickly spin-up and application you need, in its own little container, rather than have to wait for a silicon vendor like Broadcom to add the desired feature into its next chip design.

The OS also helps CSP support centers, by providing full remote management, which allows for the customer support workers to interact directly with the device, or use it to diagnose a problem. There’s also a machine-learning-enabled feature that will optimize the allocation of WiFi channels, which should help avoid many of those poor experience calls.

The hardware involved, the GigaSpire Max and Blast, as well as the GigaMesh node, can be white-labeled to carry the CSP’s brand. The Blast variant is focused on WiFi, but the Max variant has an Amazon Alexa integration. Weening said that Calix plans to add other voice integrations, so expect to see Google Assistant added at some point.

Perhaps most importantly, the GigaSpire units house Bluetooth, Zigbee, and Z-Wave, as well as the powerful WiFi radios. Multiple units can be used in the same home or office, using the WiFi meshing features to ensure good coverage. Weening said this would enable the CSPs to be the cool ones, for once, and if Calix’s claims that these are the most powerful WiFi routers on the market, then subscribers won’t have much of a reason to head to Best Buy or Newegg.

The low-power radios enable a CSP to pick from nearly every smart home device available commercial, to incorporate them into its smart home ecosystem. Calix designed the devices to have long lifecycles, and to support a modular approach to adding more devices to a network. With the Alexa integration, the CSP can still see how its subscribers are using voice, and thusly how they could better serve or upsell them.

Weening called this the ‘Services Trojan Horse,’ letting the CSP capture and then add value inside the home, using the advanced features and simply not being an add-on retailer. In theory, he said, it’s just a matter of deploying another containerized app on the Calix hardware, and once an application is developed for one group or market, it can be used elsewhere. This supports off-the-shelf consumer devices, as well as the more walled-garden channel approach, and Calix envisions a CSP getting six years out of its hardware.

However, Weening added that Calix is coaching the CSPs to let users interact with third-party devices and services, like the Alexa ecosystem. He stressed that you will lose out on the innovations in those ecosystems, if they put up walls or heavily customize a walled garden. That’s a sensible view to take, but we’re not sure how many CSPs will take it to heart – such is the drive to wholly control the experience.

In those ecosystems, where hundreds or thousands of devices have tens or hundreds of thousands of integrations, the ecosystem is always going to outpace a single vendor. To return to the ‘invisible brand’ outlined above, it seems that CSPs will soon enter a realm where they have to field calls from customers asking why their shiny new WiFi routers don’t work with their existing off-the-shelf smart home devices.

Weening outlined a few add-ons that could be useful for CSPs. In terms of being proactive, the CSP could be able to deduce that when a customer is running an internet speed test, they are most likely doing so out of frustration – and wanting to know if there’s a problem. That could help the CSP identify a potential problem in the home that might not have been picked up by the network analytics, but it could also be a chance to sell a customer a faster internet package, if they are reaching the upper limits of what they are paying for.

As for the business model, there’s a per-home license and then a charge for the services, as well as the conventional maintenance fees and cloud-based services. Calix is hoping to ‘de-risk’ the offering by removing as many upfront costs as possible. Weening said that the high price of the new 802.11ax WiFi systems could be tricky to pitch. The consumer equivalents are expected to cost in the $450 range, when sold off-the-shelf, and Calix is confident that it can offer these to CSPs very competitively.

We asked what the most pressing risks were, to which Weening said that the biggest problem was convincing the CSPs to move from being slow followers to being fast innovators. He said that, generally, they are usually years behind the curve, and that this is something they have to learn. The other big concern regards how you go about selling these additional services to customers, with Weening saying that the CSPs had to consider selling the relatively expensive hardware, rather than giving it away for free – because if they give it away for free, they may be skimping on quality.