Utili-Telcos are Real

According to Greentech Media in their article titled, Green Tech at Midyear: What’s Hot, What’s Not, the union of utilities and service providers is happening and possibly even inevitable. They’ve coined the term “utili-telcos” for the entity that will provide combined services of voice, video, Internet, mobile, electricity and gas. Here is the excerpt from their #8 list of items.

For the past few years, communications giants like Comcast and AT&T have begun to build internal units that will one day manage energy in homes or offices. Some of the early efforts have begun to trickle out. Central Indiana Power merged with a local telco to provide communications services and power and gas. Verizon, meanwhile, unfurled an initiative in February to provide cloud computing to utilities.

At the other end of the spectrum, utilities are going to start to recruit more heavily from telcos and retailers in an effort to build customer-friendly faces and support desks, sources tell us.

I wonder who those “sources” are. Nevertheless, this is an area to keep a close eye on as it has very disruptive possibilities.

Utilities + Telecom = The Really Smart Grid

Last November 2010 I wrote about whether utilities and telecom operators where friends or foes. I opined that there are more things going for them to be friends than otherwise. Recently there was an article in Greentech Media titled The Merger of Telecom and Utilities: Is It the Future? According to the article,

“It’s already happening in Australia, where one utility, ActewAGL, is bundling up to seven services to save customers money. It’s also starting to happen here in the U.S.

Central Indiana Power, a small co-operative in the suburbs of Indianapolis, has merged with a local telecom, Hancock, to offer electricity, phone, broadband and home security services through one company now called NineStar Connect.”

Will utilities of the future sell TV, phone, mobile, electricity and gas? Is this possible given the incredibly slow to move behemoth monopolies that exist in the utility industry today? Does it make sense from a consumer perspective? Is it taking a current monopoly and making it the multi-headed Hydra of a monopoly where they control so much? Or it is just the right recipe to promote competition whereby the distribution infrastructure is managed in a wholesale model whereby multiple Mega Service Providers offer the quintuple play of services competing within a market against other Mega Service Providers?

Another Greentech Media article titled Who Are The Utilities of the Future? makes a few good points, one specifically that can provide the catalyst to these new futuristic utilities.

“The general public perception of utilities is that they are staid, almost immobile, organizations that act more like government agencies than businesses. The power and water business, however, is currently undergoing perhaps the largest transformation it has seen since the dawn of utility commissions.

Consumers and corporations have begun to install solar panels and fuel cells that effectively let them ease off the grid. Native American tribes, real estate investment trusts and others sell power generated from real estate — desert acreage, industrial rooftops, landfills — that once had little market value. Soon, microgrids could lead to autonomous communities. Power to charge your electric car will come from a parking lot.”

Microgrids may very well spawn the age of these new Mega Service Providers where there is more of a market driven approach than just simple peak load management according to demand-response. Microgrids will generate and store energy, as well as consume it. But they may also communicate intelligently among themselves to a services broker or “green exchange” that will facilitate the trading of knowledge and possibly the energy itself of when certain loads will be required as well as when certain lulls will be available. As the Internet did for social networking, it may also do for the ultimate grassroots effort of all mankind, to disrupt the current utility model and create totally new business and operating models.

Is this the future? How else might it look? Do you agree or disagree?

Smart Grid and Telecom Carriers…Friends or Foes?

I’m attending the OpenSG conference in Ft Lauderdale this week hosted by Florida Power and Light. The event is chock full of smart people, smart discussion and debate (as industry consortia go, there appears to be sparce rhetoric among the participants…although this is my first OpenSG event). I’ve had several sidebar conversations with utilities, consultants, vendors, and standards bodies or industry forum coordinators thus far. The conversations have ranged from smart grid security to OpenADR conformity and verification to more general smart grid topics and trends. It’s relatively impressive the pace at which the various working groups and committees are developing their specifications and recommendations that may ultimately become standards through more formal standards development organizations (SDOs) like IETF, IEEE, and so forth.

One category of participants which I’m not surprised is not in attendance though have high hopes this will change soon are the telecom operators or network operators in general. At least I’ve not noticed them in attendance. So the likes of AT&T, Sprint (and I know they have a Smart Grid initiative) or Verizon are persona non grata. I’m not surprised because I believe the evolution of the smart grid is such that it’s pretty early in the business model critical mass curves of the telecom operators. Simply put, I don’t believe they know how to make money on the smart grid at this point. This is fine but will need to be reconciled soon. There are many many parallels between the smart grid and telecom as far as how each will or has evolved to the Internet model, as well as their opportunities to collaborate. I had this exact discussion with a colleague from EnerNex. And not surprisingly both he and I had significant telecom backgrounds both from service provider and vendor perspectives (he was at Verizon and I was at Cisco and Motorola). That also appears to be a big gap in terms of smart grid/utility industry engaging the telecom players…if you don’t know who and how, it’s a harrowing experience just showing up on the lobby and saying “who do I talk to about your smart grid business?” An example I derived from the Smart Grid Security bootcamp I attended on Monday proved this point or at least just provided a useful datapoint. When the speaker took an adhoc poll of the years in the power industry among all the audience participants, the average was roughly 10-15 years! This ranged from 2 years (myself and another participant) to as high as 25 years.

Some of the parallels among smart grid and telecom that the EnerNex gentleman and I briefly discussed were:

  • both had to overcome major legacy from business models to operations to adoption of new radically different technologies (e.g., IP)
  • both suffered from extremely vertically integrated businesses and operations infrastructures
  • both see themselves as service providers with unique offerings
  • both are beholden to the whims of regulators and regulatory pressures
  • both are actually VERY good at customer service from the perspective of customer care and billing relationships are core to their businesses
  • both look at industry and standards for making decisions on adoption of new technologies and practices
  • IMPORTANT: both certainly can benefit from the guidance of people who’ve “done it before” for softening their respective migration to the New World

This last point is a key one. For example (and a gratuitous infomercial of my company) at People Power we have a significant presence of engineering, sales and executives that came from the computing and mobile industries. In other words we have experience dealing in complex value chains and ecosystems, embedded technologies, lengthy certification cycles, painful standards processes, and migration from legacy to new connected technologies. Hmm, looks like the same script being played out with a new stage and cast! What do you think? Should smart grid and telecom become BFFs or hate each other?