Echelon and the Home Automation Standard (B)

Echelon and the Home Automation Standard (B)

By
David Baron, Michael Ting, Keith Krehbiel, Erik Johnson, Daniel P. Kessler
1996|Case No.P20B

This case focuses on non-market strategy formulation by a high technology company to obtain a congressional directive requiring the Federal Communications Commission (FCC) to establish an open architecture standard that would allow its control network technology to be used in home automation systems. Echelon Corporation is a small, privately-held company located in Palo Alto, California that produces open architecture control networks - communications systems that integrate disparate pieces of electronic hardware over some distance. These systems have applications ranging from automated assembly lines, patient monitoring in hospitals, and fly-by-wire systems. An important and growing market for control systems is home automation. Consumer complaints in the early 1990s led Congress to direct the FCC to develop regulations to ensure compatibility between TV sets, VCRs, and cable set-top boxes. A committee comprised of representatives of the TV set manufacturers and cable companies proposed a decoder interface standard that would produce the desired compatibility yet would foreclose the use of Echelon’s control networks in homes. The FCC made a preliminary decision to adopt the decoder interface standard. Echelon opposed the FCC’s decision, but it was too late to influence the decision. After failing with the FCC, Echelon turned to Congress with the objective of requiring the FCC to set an open architecture standard that would allow Echelon’s and other companies’ technologies to be used in the home. The (A) case asks the question of what non-market strategy Echelon should choose to achieve its objective in Congress.

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