Utility companies poised to become carriers’ carriers in telecom market

The rising demand for wireless access – with the arrival of a powerful U.S. ally – could prompt Canada’s utility companies to expand into this market sooner than expected, a conference in Toronto has been told. Utility companies on this side of the border have long talked about getting into the telecommunications market, but unlike their counterparts in the U.S., have been slow to act. That could change with the arrival of the United Telecom Council (UTC), a Washington-based lobby group that helps electric, gas and other utility companies move into what many consider to be a natural extension of their traditional lines of business. A UTC-organized conference, held in Toronto Oct. 3-5, attracted more than 100 delegates interested in learning more about this new market potential. UTC also used the conference to discuss their plans to turn the U.S.-centric association into a North American organization with two new Canadian divisions. Wireless to figure prominently in utilities’ business plans While most of the talk at the conference centred on opportunities in wireline services, one session concentrated on the provision of wireless telephony. One of the speakers, Fred Janosky of GPU Telcom Services, said utilities are well positioned to move into wireless telecom. Consider what a company like Hydro One (formerly Ontario Hydro) owns: 158,000 km of rights of way, 200,000 transmission towers, 98 communications towers and 1,800 km of fibre optic cable. Combine those assets with experience in managing large scale networks and a monopoly customer base, and it’s not difficult to see why utilities are tempted by telecom. Having an installed tower base is a major advantage for any company moving into wireless telecom. Aside from the construction costs, utilities wouldn’t have to worry about zoning and siting issues. Janosky noted that, in general, utility companies also have good relationships with their communities and know their local markets. For utilities that aren’t ready to get into wireless telecom just yet, Janosky suggested they make their facilities available to new wireless carriers. For example, he said utilities can set a fixed price for electric transmission towers, with a lower rate for distribution poles and rooftops. When it comes to raw-land builds, he said utilities should be flexible, recognizing that some carriers want to own the sites, while others are content to lease. He added that there’s real potential for utilities to snag long term contracts with carriers, noting that his company signed one such deal for a 50-year term. Janosky had other telecom tips for utilities. Pricing should be market-based and utilities should be cognizant of what traditional companies charge. He cautioned that the most difficult part of the process will likely be issues associated with rights of way. Since carriers and their contracted agents have different goals, he said flexibility is a must. Carriers want to become operational as soon as possible, while the agents are more concerned with signing deals with the carriers’ carriers, he noted. Why utilities are taking notice of the wireless element It’s easy to see why utilities are taking more than a passing interest in wireless telecom. Janosky noted that a new wireless subscriber is added every two seconds. By 2005, he projected there will be 1.26 billion wireless users worldwide. Among the trends Janosky cited were 3G wireless (which has proven more popular in Japan and Europe than in North America), local multipoint distribution service (LMDS – LMCS in Canada), multichannel multipoint distribution service (MMDS), UNII unlicensed broadband wireless, point-to-point, satellite and ESMR. He presented statistics that predict mobile Internet will overtake the PC in popularity within five years.

Utility companies poised to become carriers’ carriers in telecom market

News | 10/16/2000 4:00 am EDT

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