What does the future hold for utelcos? Well, while we polish our crystal balls, let’s take a quick look into the past.
Traditionally, a utelco’s path would entail leveraging its internal communication infrastructure to become a carrier-of-carriers, and then a full telecoms operator, which, as we mentioned in a previous post
, would result in the highest potential financial benefit.
This model worked particularly well for transmission system operators, which had in place electricity networks with national reach. But with the advent of ‘smart grids
’ and ‘smart metering
,’ there may now be similar opportunities for utelco services on a regional level.
Electric utilities are currently undergoing the greatest transformation yet. Environmental considerations mean that these utilities must be concerned with much more than providing electricity alone. They must contribute to the reduction of CO2 emissions, improve energy efficiency through the network and increase the amount (percentage-wise) of renewable energy. The roll-out of smart metering platforms and the subsequent establishment of smart grids – which were originally being pushed by governments to provide efficiency-promoting, ‘near’ real-time measurement of customer demand – have actually created significant opportunity.
How? Well, for one, these ‘smart’ initiatives will only work if information and communications technology (ICT) systems are deployed deeper in the utility network, all the way to the end user. This will create a communications platform that’s ready to serve as the basis for operating a full-service telecoms network. In other words, this last-mile communications connectivity to every premise/customer within their region may turn out to be a means to a fairly lucrative end.
Of course, once these operators have their networks in place, the work has only just begun, especially considering how competitive the telecoms market is. But the utelcos have a unique set of attributes that may provide a significant differentiator and ease their entry into the market.
For starters, the utility’s geographic footprint is one of its main competitive advantages. Because the utility has to deliver electricity to even the most remote geographical areas, the main infrastructure to support communications services already exists. This means the utelco has the capability to deliver a wide portfolio of communications services (for a relatively small level of investment) into physical locations where it may not be commercially viable for other telecoms operators.
In particular, opportunities exist for utelcos to deliver services including broadband and fixed and mobile services to residential and business users in rural communities. If the utelco does not wish to sell services directly to end users, the spare space and capacity at its various sites and towers in association with last mile connectivity can be a revenue-generator as well, based on existing telcos leasing the space.
Finally, there’s an opportunity to deliver new ‘back office’ services. Smart metering, and in particular the introduction of differential tariffs, will create a requirement for real-time billing systems to be deployed. The data processing engines within these systems could be used to provide managed billing systems for third parties.
Make no mistake about it: while utelcos have been around for a while, the advent of smart grid and smart metering is sure to take things to a completely different level – no crystal ball required!
Marcelo Blatt, Ph.D.
Director, Portfolio Management and Vertical Applications
Network Solutions Division