In its new report, "Connected Home Services: Service Providers Take on the Home Network," In-Stat MDR (www.instat.com) projects that the number of service-provider-managed home networks will grow from just over 100,000 last year to more than 6 million by the end of 2006. While In-Stat says that figure will account for less than 10% of total home networks, the ability to extend the reach of the service provider beyond the traditional demarcation point will mean more revenue-generating opportunities for them.

The research firm says that home-network management will be a challenge for service providers, citing recent research of 500 Internet-connected homes. "The majority, 74.2%, said they would not be more likely to get a home network if offered to them through their service provider for a fee," the company said. "This is indicative of the uphill battle that service providers have in attempting to sell a home network as a value-added service," said Mike Wolf, director with In-Stat/MDR. He added that consumers need to be educated on the incremental value a service provider brings to the home network. He cites education and proof-of-benefit as keys to service providers' success in this area.

The study also states that digital music sharing will see strong acceptance over time by home-network users. It remains unclear, however, whether or not service providers will be able to take advantage of this growing interest. Additionally, In-Stat/MDR says that most North America telcos and cable MSOs have rolled out their first-generation home-network strategies. Most of them center around a marketing and retail relationship with a networking-hardware vendor.