Utilities and telecoms-not that different

Telcos are proving relevancy in a highly competitive energy market and utilities should pay attention.
Published: Wed 04 Jan 2017

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Ten years ago, German telecommunications giant Deutsche Telekom made plans to expand  its offerings driven mostly by a highly competitive telecommunications industry. Competition and the growing popularity of internet and wireless telephony chipped away at the company’s main wireless and fixed-line businesses, leaving them with a 4% drop in revenue back then.

Forced to find new sources of revenue, Deutsche Telekom moved quickly and aggressively into the business of operating smart meters. The plan was to sell a fixed-price service that includes installation and operation of a communications box that transmits the smart meter data to a secure data centre every 15 minutes, computes it and then forwards it to the utilities. The intention was to give utility customers the ability to view their power usage via a secure internet site.

European regulators have declared that 80% of European households be equipped with smart meters by 2020 as part of a broader plan to reduce carbon emissions by 20%. Deutsche Telekom, which was already present in nearly every home in Germany through its phone and broadband services, was betting that utilities will need its know-how in transmitting large amounts of data over network lines. The company has secured a number of smar metering projects in Germany over the years.

The German company wasn’t alone in its search for new businesses. Across Europe, telecom companies looked for growth elsewhere. France Telecom expanded into cloud computing and communication services. Spain's Telefonica moved into e-health services such as telemedicine and financial services that offer mobile banking services to customers.

Telcos continue to grab opportunities in energy sector

Ten years later and telcos continue to snap up opportunities in the utility sector. For instance, the smart metering team of mobile operator Telekom Austria Group M2M and the Austrian subsidiary of the Telekom Austria Group, A1, have won yet another success with the rollout of smart electricity meters in the city of Graz. Within the next four years, the A1 Field Service Team will replace 187,000 electricity meters in the city of Graz with smart meters on behalf of Stromnetz Graz GmbH & Co KG, a wholly-owned subsidiary of Energie Graz. 

As well as the actual replacement of the current electricity meters, A1 will also organise the entire manpower planning, some of the material logistics and the customer project management. The switch to smart meters involves installing three-phase and alternating current meters, plug-in terminals and small terminal boxes. The project began last month and the actual rollout is to take place mid-2017 to the end of 2020. 

This trend has also been picked up on by Australian telecommunications company Telstra which announced plans to roll out home solar-plus-storage solutions to the millions of consumers it has around Australia. [Australian Telco Seizes Opportunities in the Energy Market.]

Proving relevancy in a competitive market

The telecoms market was the first to feel the effects of digital change. For many decades telcos refused to accept these changes, fighting any form of transformation in order to protect their vested interests. This is much like many utility businesses today.

In fact, telecoms providers continue to be kept on their toes by the emergence of new technologies, from cloud to IoT. In addition, blockchain, and a secure, distributed ledger, is causing ripples in industries outside of the traditional financial services hotbed.

There is no one size fits all solution for the electricity industry  but one thing is certain – if utilities are to remain relevant and affordable in this changing market it will have to be open to change and quickly come up with positive developments just like the telecoms market has.[Will telcos become the OTT players in smart energy?]

"To present themselves as a compelling long-term business, they need to show they are relevant in the market and that the revenues are going to increase as well," says Clare McCarthy, lead analyst for telecom operations at Ovum, a technology-research arm of Datamonitor. In short, she adds, "They need to find new markets." Utilities would be wise to take heed of the self same advice.