Smart grids and telecom

My dishwasher offers a handful of different options for wash cycles, one of which is called “smart wash.” I don’t really know what the differences are between them, but I know that once you deem one option the “smart” one, there’s little point in offering the alternatives.

A similar sense of inevitability is at work in the smart-grid space, where the promise of massive buildouts of transformative new technologies — which Cisco says represents a $100 billion opportunity that ultimately will dwarf the Internet — is attracting everyone from equipment vendors to telecom carriers to Google.

While many utilities will build their own smart grids (and some already have), many others likely will be convinced that this is a job for the telecom industry, having learned in the previous decade that running large data networks is not as easy as it looks. In fact, the prospect of telecom service providers sticking their paws into the smart-grid market is something of an odd juxtaposition with the late ‘90s, when utility companies forayed in large numbers into the telecom space. Many of them ended up retreating from telecom shortly thereafter, taking write-downs on their efforts and cheaply selling the networks they’d built to some of the very telecom companies they hoped to compete against.

In recent months, AT&T and Qwest both have partnered with smart-grid insiders — SmartSynch and Current Communications, respectively — offering to connect utility companies with intelligent energy monitoring devices in the home. In both cases, the telecom companies are serving the utility company in a somewhat passive transport role rather than offering their own home energy management service directly to the consumer — a potentially sticky incremental revenue stream that was a hot topic at last year’s industry trade shows.

But home energy management is an entirely new service for consumers to learn to accept, and as a Qwest exec pointed out this week, consumers probably will be more open to it if it comes from their utility company rather than their telecom provider. Perhaps more importantly, though, smart-grid builders, if they play their cards right, are eligible to receive some of the federal government’s economic stimulus funds, which are aimed at creating jobs as quickly as the government can (and which didn’t exist during last year’s industry trade show discussions). With time such a priority, partnering can help especially large companies move quickly. And it may give them early expertise that, down the road, they might use to launch their own retail offerings.

Also, if telecom companies end up having as much luck in home energy management services as utility companies had in telecom, the decision to partner in and let utilities take the lead may prove to be the smart move after all.

E-mail me at ed.gubbins@penton.com.