Canadian utilities seeking telecom stake look to American experience

Utility companies may have several advantages when it comes to entering the telephony market but they have a lot to learn before they can exploit them, an industry conference has been told. Gregory Green, president and CEO of Avista Communications of Spokane WA, was a speaker at a session on CLEC business strategy at the recent United Telecom Council (UTC) meeting in Toronto. To their advantage, he said electric and power companies have rights of way, an existing relationship with customers, and experience in building and operating infrastructure. Combine that with their ability to raise capital and their staying power, and utilities are logical candidates to challenge incumbent telcos and CLECs. The UTC is an American lobby group that represents utility companies in their telephony dealings. The body is considering establishing divisions that would represent eastern and western Canadian firms (NL, Oct. 10/00). Green suggested companies could set up a CLEC by developing an arm’s-length operating unit, by acquiring other firms or by forming partnerships with like-minded businesses. To become an integrated communications provider, a power company should be looking at five areas: telephony, IP, cable, ASP and ATM/Frame. He downplayed the necessity of getting into the long distance market, predicting that the service will eventually become part of a packet just like wireless. Among the challenges faced by emerging CLECs are regulatory issues, provision of last mile services, capital and service provisioning. Working with ILECs to establish an interconnection agreement can be daunting. "You’re saying to those companies ‘you need to help me take your customers’," Green said. Fierce competition for staff among the various telecom providers makes attracting the right talent into an organization an ordeal. It was for that very reason the Canadian CLEC Cannect Communications Inc opted to establish its operations centre in Vancouver rather than Toronto (NL, June 5/00). Green says utilities should use an employment stock ownership plan as a perk, and be willing to hire telecom and HR people from outside their current employee base. Jonathan Sharp, an account manager with Step 9 Software Corp of Fairfax VA, agreed with his fellow panelist. "It’s going to come down to the people you hire and the technology you use," he told delegates. Sharp, using American figures, said non-utility CLECs often have poor performance records when it comes to customer service. Many take between two and four months to complete business orders. Up to one-fifth of orders are never billed. An order may go through 35 or more pairs of hands before the service is finally delivered. If utilities can better that record, they stand a good chance of doing well in the telecom market, Sharp maintained. According to Green, there are enough consumer dollars in the market for another major telecom player. The U.S. market is projected to grow from US$200 billion today to US$465 billion in five years. It’s also expected to generate US$6 trillion in B2B online services by 2005, according to data presented by Green. He used the American experience to show how Canadian utilities can prosper. Most American CLECs are concentrating their efforts on Tier I and II cities like New York, St. Louis and Los Angeles. Avista prefers to work in centres such as Albany NY, Reno NV and Bakersfield CA. Similarly, Canadian CLECs are busy servicing Vancouver, Calgary, Toronto and Montreal, while ignoring Prince Albert SK, Belleville ON and Glace Bay NS. With their universally available network, power companies are the natural alternative to the established telcos in these cities. "There’s no one out there in Tier III cities," Green said. "If you really want to compete, be the first out of the shoot." Utility firms must be willing to move fast and take risks, he added.

Canadian utilities seeking telecom stake look to American experience

News | 10/23/2000 4:00 am EDT

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