Among the objectives of the Telecommunication Act of 1996 is to accelerate the entry of public utilities into the telecommunications marketplace. At the same time, deregulation in the utility industry has prompted energy companies to move into other fields to improve overall revenues. Opportunities range from automation services, telephony and cellular to Internet projects. To date, the impact of utility companies in the converging voice-data communications marketplace has been minimal. This could change soon with the introduction of digital power line technology to the U.S., which economically delivers information access services through the existing power distribution infrastructure of electric utility companies.
For many utility companies, leveraging assets is now a critical business objective—especially in the new deregulated environment. Utilities are well positioned for many of the new developments in the telecommunications marketplace, and have numerous strengths and assets that can be brought to bear in the telecom business. Some of these assets can be leased to established telecom service providers or used directly to offer new services to customers.
Utility Company Assets
Among the strengths and assets that utility companies can bring to the telecom business are:
■ Extensive rights-of-way and poles, ducts, conduits, and physical assets for routing cables
■ Substantial space in substations and other properties for new equipment and towers
■ Space on existing towers, masts, and poles for the addition of new antennas and equipment
■ Maintenance operations, including vehicles, personnel, and associated expertise
■ Established customer relationships and a direct link with every potential telecom customer
■ Billing and customer information systems
■ Reputation for reliable service and associated brand name recognition
■ Telecom technology experience for internal purposes
■ Fiber-optic installation, operations, and maintenance experience
In offering new telecom services, either directly or through alliances, utility companies can open new sources of revenue, improve their relationship to customers, increase efficiencies, and discourage electric power business competition by offering value-added service.
Utility companies that lack expertise in data and voice services can acquire companies with that expertise or partner with established service providers. There are even outsourcing firms that cater specifically to the needs of utility companies, providing expertise in such areas as local number portability (LNP), signaling system 7 (SS7), rating systems, commission systems, customer care, service activation, wholesale and retail billing, convergent billing, and network management. Such firms also provide automated mapping/facilities management and geographic information systems.
Transmission Technology
Although the direct impact of utility companies in the converging voice-data communications marketplace has been minimal, the availability of digital power line (DPL) technology will enable utility companies to become major competitors in the telecommunications industry.
Developed in the UK by Nortel in the early 1990s, DPL offers 1 Mbps of bandwidth to support multiple applications. In addition to basic Internet access, it can be used for telephony (IP voice), multimedia, smart applications/remote control, home automation and security, home banking/shopping, data backup, information services, telecommuting, and entertainment.
The technology turns the low-voltage signals going between the customer premises and local electricity substation into a local-area network. Multiple substations are then linked by fiber-optic circuits to Internet switching points. By giving customers access to the Internet through their existing electricity supply system, the technology is available to virtually anybody. It offers permanent online connection with the potential for lower charges for communication services.
Although the technology’s developers—Northern Telecom and British utility Norweb Contracting—have focused their attention in European and Asian markets, they are now turning their attention to building partnerships with utility companies in the U.S. To promote DPL, Nortel and Norweb Contracting have established a company called Nor.Web. The company has already signed up utility companies, mainly in Europe, to deploy DPL service.
System Configuration
The Digital Power Line solution consists of a DPL 1000 mainstation, a basestation, a coupling unit and a communications module. The total solution provides a competitively positioned access network, which integrates seamlessly into today’s WAN networks.
At the customer premises, a stand-alone unit connects to the power supply by standard coaxial cable. The unit is then connected to the computer by a standard Ethernet cable. It supports laptops as well as PCs and Macs and supports a wide variety of platforms. It also supports the Universal Serial Bus (USB), enabling several machines to be connected to a single DPL box simultaneously to create a LAN in the home or office.
The DPL 1000 has the added advantage of allowing advanced network management by the utility company for the purpose of monitoring and maintenance as well as providing additional services to satisfy growing customer requirements. The system also unleashes the future potential for home automation by enabling remote operation of appliances such as lights, oven, and lawn sprinkler system.
Due to the nature of this technology, it can be rolled out in discrete, targeted phases. Utilities not wishing to operate data services themselves have the option of charging a right-to-use fee to an operating company for accessing their plant. The system is managed with Nortel’s Magellan ATM management platform, which allows network operators to monitor and maintain pre-determined service levels and availability.
Regulation
To help utility companies get into the telecom business, per the Telecommunications Act of 1996, the FCC has granted them special status as “Exempt Telecommunication Companies” (ETC), which relieves them from many of the rules that govern incumbent telephone companies (i.e., RBOCs).
The rules require applicants seeking such status to file a brief description of their planned activities together with a sworn statement attesting to any facts or representations to demonstrate ETC status as defined in the 1996 Act. The procedures also provide for public comment on the application, but limits comment to the adequacy or accuracy of the information presented.
CSW Communications was the first company to file an application for ETC status. CSW is a subsidiary of Central and South West Corporation, a registered public utility holding company. Within six months following the enactment of the 1996 Act on February 8, 1996, the FCC received 15 applications for a determination of ETC status and approved them all. Many of these applications included a public utility that had acquired or maintained an interest in an ETC. Since then, many more utility companies have chosen to participate as ETCs.
As noted, many utility companies are starting to offer telecommunications services, mostly in partnership with established service providers. Progress to date has not been significant enough to worry incumbent telephone companies because market entry entails a huge investment of capital. However, this situation could change dramatically if DPL technology proves successful in the US. as it is in Europe. This would mean that utility companies could potentially reach every household and business with new voice and data services simply by leveraging their existing infrastructure, which entails only an incremental capital investment.
Last Word
Enough utility companies now offer or plan to offer telecom services that the trend is irreversible. Collectively, utility companies can make a significant impact in the converging communications marketplace and in the next few years contribute to the further erosion of telco revenues in much the same way as competitive local exchange carriers (CLECs) have done over the same time span. The use of DPL technology enables electric utility companies to fully leverage their extensive infrastructures for power distribution, enabling them to offer customers just about any kind of telecom service for which they see a market.
