Manitoba Hydro to extend fibre network in preparation of becoming telecom carrier

The race for utilities to get into the telecom market is shifting gears as Manitoba Hydro is about to unveil plans to extend its fibre network across the province. The move starts the process that could see the power company become a carrier’s carrier. The firm has no plans to enter the retail market and thus will not seek CLEC status from the CRTC. All joint ventures will be entered into through a telecom subsidiary. Hydro will not sell assets like fibre strands or cable duct but will lease space on surplus capacity. Currently, the major player in provincial telephony is Manitoba Telecom Services Inc. and the communications manager for Manitoba Hydro expects the two companies will be able to coexist."Right at the moment I think that their perception is that we’re a threat to them. And maybe in some ways we would be," Murray Matiowsky tells Network Letter. "But if that happens then we would simply have to agree to compete where we can compete and to cooperate wherever we can. We’ve had a very long and fruitful relationship with each other and so I’m hoping that this does not alienate them. We certainly want them to be our customers in some cases or maybe partners in other cases." Currently, Manitoba Hydro has 600 km of fibre optic lines running from Winnipeg to Brandon in the west, Selkirk to the north and Pine Falls in the east. Matiowsky expects the utility to add a further 1,500 km to the grid, extending to various parts of the province by December 2005. While the utility is building the network to serve its own needs, it recognizes the benefits inherent in reaching out to other clients. Entry costs are small, an internal company document notes, while the advantages are widespread. The benefits include additional revenues, extension of broadband services to rural districts, expansion of services offered by telecom carriers, and enhancement of Manitoba Hydro’s assets and value. Matiowsky believes even a small client base should help the utility pay for the network. A few customers could see the grid pay for itself in a decade or less. That is a benefit when one considers the network is projected to last for 45 to 50 years. The current proposal has Manitoba Hydro offering six products to carriers. They are local access and Internet transit, LAN extension, optical wavelengths offering point-to-point light path connections, local loop access, IP services and private lines. The internal document also suggests other services could be added to this menu including fibre-to-the-home (FTTH), VoIP, audio and video on demand, and video conferencing. New division proposed The proposed prairie business model suggests that the telecom services sector would continue to be run within the utility until revenue from non-core business support a separate subsidiary. At that point, Manitoba Hydro would likely form a telecom unit, similar to what Hydro One in Ontario has done (NL, May 23/00). The company would then seek out other firms to enter into partnership with.The carriers being targeted as possible partners are MTS, GT Group Telecom Inc., Telus Corp., Sprint Canada and AT&T Canada. Manitoba Hydro also suggests broadcasters such as Shaw Communications Inc., Craig Broadcast Systems Inc., CanWest Global Communications Corp., CTV Inc. and the Canadian Broadcasting Corp. could be approached as customers. The federal and Manitoba governments are similarly likely to require MHTS services. Finding these partners is vital for the utility. "Due to the cost of reaching communities, not directly on Manitoba Hydro’s network routes, it will be important to have an anchor tenant commit to purchase a service for a minimum term before an extension is built," the company states. Manitoba Hydro expects a slight increase in staffing to occur as a result of the new grid. "Initially, one sales support position will be required to provide liaison with current and future clients," the company predicts. Eventually the utility will build a network operating centre (NOC). Once the NOC is in place, the company will assess how many, if any, additional workers will be needed to ensure proper maintenance of the facility. Manitoba Hydro’s move comes as an independent study forecasts that this is the best time for utilities to get into the telecom market. The Yankee Group’s Canada’s Electrical Utilities Retool for Telecom report points out that the power companies have extensive rights-of-way, support structures, and telecom networks that they use for internal monitoring and communications. If the firms decide to operate as carrier’s carriers, they will be subject to CRTC jurisdiction. But, as the report notes, the commission has largely forborne from regulation. Operating as CLECs would put the companies under greater CRTC control. "As it stands, there are currently no municipal or provincial utilities in Canada pursuing a CLEC model," the study notes. "Given the general state of the CLEC marketplace in Canada, the Yankee Group believes utilities would be wise to take a wait-and-see approach, while simultaneously building out their networks and increasing their skill sets." The researchers do point out that Bell Canada and Ontario’s Hydro One have signed a deal to light a grid along the corridor from Windsor to Ottawa. Hydro One is also developing a high-speed fibre network in Simcoe County, north of the provincial capital. The region will get access for high-speed Internet and data transmission and 680 km of fibre-optic cable. The report spends some time discussing power line communications (PLC), the transmission of data and possibly voice traffic along existing electrical wires. Supporters of PLC maintain that it can achieve gigabit speeds instead of the megabit speeds currently available. The consultants’ study warns, however, that power networks were not built for such work. Electric power causes interference and the transmission of data through transformers is difficult. These two factors have halted many PLC projects. The Yankee Group refers to several warning signs along the route. A pilot PLC project from Nortel Networks Corp. was dropped by the troubled manufacturer two years ago. Most utilities do not have the same expertise as telcos do, making them less able to handle problems. "The Yankee Group, however, believes that the huge potential of PLC may outweigh the risk, given Canadian utilities’ enormous reach," the report concludes. "The year 2001 may prove to be a critical year for this technology, solidifying the efforts of researcher and utility alike, while bringing the technological vision one step closer to reality." The consultants expect that PLC technology will make some sort of breakthrough in the next 18 months to two years. This would, in turn, give power companies a huge advantage as they move into the telecom market.

Manitoba Hydro to extend fibre network in preparation of becoming telecom carrier

News | 10/22/2001 4:00 am EDT

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