It's not so much the protocol since most of the devices are either z-wave or zigbee (BTLE is growing). All of those can operate without a network connection - it's just the companies that decided that the hub needs to store everything in the cloud. I believe the new smarthings hub can operate offline.

I've been slowly upgrading stuff in my house but steering clear of wifi only devices. They just don't work that well to begin with. Only exception being my nest thermostat - but that can even work offline, just with limited functionality.