Ontario Hydro roars into telecom market with comparison shopping for clients

Ontario Hydro has no immediate plans to become a CLEC, but its pending launch of new billing software could trigger an unexpected price war among telecom service providers. It's a first for North America that will see the provincial utility become a bundled service provider, offering customers a diverse menu of basic home services, including telephony, satellite TV and home security. "In the U.S., there are some Internet-related utilities that are doing this and there are some phone companies that have partnered with some energy companies," president and CEO Mike Miller told Network Letter. "But there is nobody that has provided one consolidated bill with three-way rating or competitive rating that doesn't charge a fee. Our service is free." Ontario Hydro has developed a new billing software - called Onsource - that makes it possible to up-sell electricity customers on other home services. In addition to energy and telephony services, subscribers will be able to order window and door installation, air conditioning, water purification service, and home insulation. The telephony package will include LD and cellular, with no immediate plans to go into local service. Miller says local telephony fits within the firm's strategic approach, but it is not on the short-term schedule. Ontario Hydro will launch the service next week with a mailing to 80,000 homes throughout the province. Each month, Onsource customers will receive notice on their bill of the prices of the three competitors. Ontario Hydro will match the lowest rate set by the trio. Miller says the new bills are designed to simplify buying decisions for customers, and save them money in the process. "We saw that with deregulation that lots of bills were getting split apart, like local from long distance," he explains. "All the customers kept saying to us, ‘can you make life simpler for us?'" Ontario Hydro's response was to bundle all relevant home utilities on to one bill - with one added feature. "We found that, a lot of time, bundling doesn't work because customers out there felt they could get a better deal on that one piece of the bundle," he notes. "They really didn't want to take the bundle so what we decided to do was to write the competition, the top three competitors, in each of the services provided and offer the same price as the low price provider of those top three competitors." Miller concedes his company's move could lead to a price war among the three leaders in each sector serviced. But he asserts Ontario Hydro is just following the market, not dictating to it. He says the new service relieves customers of the need to monitor price changes in the industries. It also frees clients from trying to comprehend all the competing claims made by telemarketers in an increasingly cluttered marketplace. Ontario Hydro developed the concept for Onsource in-house, then began seeking partners to help implement the system. One of the first to sign on was Toronto-based Mosaic Group. It developed the comparative billing software and will assist in purchasing LD minutes and other telephony services. Moving beyond electricity Ontario Hydro's move into telecommunications has been predicted for some time. But most analysts assumed the utility's primary strategy would focus on using its rights of ways to become a facilities-based competitor. Last year, for example, the utility announced plans to move into the dark fibre market in 2000 as a carrier's carrier providing voice, Internet and data transmission for other firms. Ontario Hydro suggests it could use its facilities to interconnect cities that have local fibre networks. The OH Telecom division of Ontario Hydro is in the process of upgrading its facilities, primarily for its own ‘tele-protection', but also to accommodate new business. Surplus is added to the fibre build so the utility can sell dark fibre access to other companies.

Ontario Hydro roars into telecom market with comparison shopping for clients

News | May 23, 2000

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