WASHINGTON-Electric power deregulation is forcing monopoly utilities to look at wireless telecommunications as a revenue-generating means to capitalize on existing infrastructure and to diversify in a new competitive environment.
Though none of the various bills to deregulate the $200 billion electric power industry are expected to pass Congress this year-the latest sponsored by Rep. Edward Markey (D-Mass.)-companies already are beginning to prepare for the future. The Clinton administration is expected to unveil its electricity deregulation proposal shortly.
“The introduction of competition into the electric power industry is making utilities look at ways to position themselves to be competitive,” said Sean Stokes of UTC, a Washington, D.C.-based trade group formerly known as the Utilities Telecommunications Council.
Doing so, according to Stokes, involves adding value to existing services, leveraging physical infrastructure and differentiating services. Electric utilities have valuable rights-of-way, ubiquitous presence via connections to residents and businesses, brand recognition, consumer loyalty and lots of money.
For many of the same reasons, Congress-by passing the 1996 telecom act- believed landline telephone companies would offer competition to cable TV and long-distance telephone firms. So far, local telecom competition has not materialized. Some observers, however, say it is still too early to judge the effectiveness of the new law.
As such, policymakers may discover that unlocking the bottle-neck monopoly electric utilities enjoy is every bit as difficult as creating competition for the Baby Bell telephone companies.
One change the 1996 telecom act did make was to free electric utilities to enter the telecommunications industry without overhauling major laws such as the Public Utility Holding Company Act or the Public Utility Regulatory Policies Act. But both could be repealed if electric utility deregulation passes Congress next year.
Given the new changes and coming changes, wireless telecommunications appear to offer electric utilities some synergies.
The new personal communications services industry already has begun to attract power utilities like Duke Power of North Carolina, Philadelphia Electric Co., McCloud Communications, a unit of IES Midwestern Utilities, South Carolina Electric and Gas (PowerTel) and others in the Texas, Ohio and Oregon.
Southern Communications, meanwhile, has been a significant player in the specialized mobile radio industry.
“One way of differentiating service is bundling information services with energy services,” Stokes said.
Today, utilities are employing wireless technologies for remote meter reading and monitoring and employing advanced telecom/information systems to support core utility services.
In addition, not all microwave relocation negotiations between PCS carriers, responsible for financing the move of 2 GHz microwave utility users to higher bands, and microwave licensees, have been acrimonious. Some have led to businesses dealings between the parties.
“It has actually worked well in a number of areas,” Stokes observed.
