Utility telecoms eye BPL and Wi-Fi for revenue growth opportunities

Utility telecoms (utelcos) have found themselves at a crossroad: expand into the highly competitive consumer market, or stay the course and remain in relative obscurity. At this point, taking on the big players in the consumer space is going to most likely happen with either wireless access or broadband over powerline. The UTC Canada 2006 conference in Vancouver at the end of March explored this topic in a session called "New Revenue Streams for Utelcos." Troy Hare, GM of Blink Communications, the telecom subsidiary of Oakville Hydro, talked about opportunities afforded utelcos by rolling out broadband over powerline (BPL). Dave Dobbin, president of Toronto Hydro Telecom, spoke mainly about the company’s decision to blanket the country’s largest city with a Wi-Fi network. Dobbin highlighted the dilemma facing utility telecoms, noting that some want to get out of the communications business altogether, while others are looking to expand and generate more revenue for their electric utility parent companies. "Our strategy in Toronto not the time to sell. No Canadian utelco has really gone for yet," he said during his presentation. Dobbin added the company has yet to really compete in the market, even for enterprise customers where there is tremendous opportunity, but where Toronto Hydro Telecom has two staff dedicated to enterprise sales compared to the 500-strong sales force at Bell Canada. Toronto’s utelco isn’t taking to the slow approach, said Dobbin. "We’re introducing new products and services. We’re introducing new access methodologies and we are doing geographic expansion…expanding outside of our traditional service territory," he stated, adding the company is going to pursue mergers and acquisitions "on an opportunistic basis." Dobbin said utelcos have to look to their competitive advantage as a key piece of the puzzle. "We need to leverage that fibre asset…and by leveraging that asset this is where the real value in these businesses will come from. What more can you do with it than dark fibre?" he asked. Another key element will be to offer a differentiated service, rather than mirroring services provided by Bell and Telus. "You can’t do ‘me too’ services," Dobbin said. In addition to the massive revenue opportunity that Wi-Fi presents, he added that there are a number of revenue-generating opportunities arising out of the network’s rollout. (For more information on Toronto Hydro Telecom’s Wi-Fi network rollout, refer to the April 6 issue of Report on Wireless, Network Letter’s affiliate publication.) While Toronto Hydro Telecom is opting for the wireless route, Blink Communications is testing broadband over powerline technology. Hare noted as a consumer or residential product, BPL has to be positioned differently from DSL or cable modem services. As well, the technology is still unproven so it would be prudent to stay away from the enterprise segment for the time being, he added. There are advantages to BPL that are sometimes overlooked and could serve utility telecoms well in the market. Simplicity is one such advantage, Hare noted. As an example, he highlighted the fact that neighbourhoods are enabled for BPL, not locations. This makes it easier to market in that users only require a modem unlike cable modem and DSL, which require additional pipes to come into the home. Hare also stated that BPL should be used in conjunction with other technologies. "BPL, in and of itself, is just an access technology. You need to maximize the value of it," Hare said. "You do that in conjunction with other technologies not in a vaccum. You mix them altogether and come up with the optimum solution." Not only do utelcos have to position BPL as a differentiated option to cable modem and DSL, utility telecoms have to take advantage of this. "You need to lever those differentiating points to show that this is truly a valuable product to make people want to buy into it," Hare said. But, he cautions, BPL can’t cannibalize utelco’s other services. "It should complement your existing service and not cannibalize it. The last thing you want to do is roll out a BPL initiative that takes on your fibre customers, for example, that are paying a lot more money and have them all to BPL," Hare said. Regulatory issues could still affect adoption of BPLDespite the promise that utelcos are bestowing on BPL, there are still some hurdles to widespread rollout and acceptance. Some have suggested there could be a battle for regulatory control of the utelcos. The Ontario Energy Board, for example, says since signals travel over electrical lines, utelcos should fall under its purview. On the other hand, the CRTC says this is a telecommunications service and therefore is under its control. This has yet to play out and it’s unclear at this point whether a battle between the two parties in Ontario will actually take place. Regulatory battles aside, Hare said success should breed success. "To be quite honest, someone needs to show a win in BPL in Canada. I think once with a successful BPL deployment making money, I think there will be a lot of other people following suit," he concluded.

Utility telecoms eye BPL and Wi-Fi for revenue growth opportunities

News | April 27, 2006

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