INDUSTRIES IN FLUX

In industries with monopoly rule, "deregulation" is a word that stops traffic. It forces everyone to look around, assess their direction and determine what the people in front, in back and to either side of them will do next. When traffic gets moving again, there is sure to be some conflict-people moving in different directions, cutting each other off, backing up to head down a street they've already passed up.

Call it an environment of crossed wires, which is a perfect segue into discussing how deregulation has affected two particular, once-distinct industries.

The telecom and electric industries are simultaneously undergoing exciting and nerve-wracking periods of deregulation. Service providers and technology developers in both industries are assessing new opportunities on some fronts while taking defensive postures on others.

In some ways, it could be called an environment of crossed influences. Service providers in each industry are pursuing the markets of the other, sometimes through technology strategies more influenced by their would-be competitors than their own traditional infrastructures.

For instance, electric utilities have long represented a support industry to telecom, working behind the scenes to supply AC power to telco central offices, network equipment power plants or conversion devices that changed AC power into DC power to be distributed throughout networks.

Now, with deregulation in both industries-perhaps further along in the telecom industry than the electric industry-some power providers have bought or begun building telecom networks to deliver new services. Portland, Ore.-based Enron Corp., Texas Utilities and Washington Water & Power are among the most obvious examples of this trend.

Meanwhile, telecom companies seem to be borrowing some customer service clues from electric utilities. Billing and customer care have taken center stage for carriers. Also, the idea of "owning" the customer has become a central, strategic point for telcos-electric companies have owned their customers all along.

While service providers from each industry begin to adapt to the other's processes, vendors are in a position to benefit universally. In particular, vendors that understand both industries or have technology approaches that can easily adapt to both types of service providers are best positioned for the new opportunities.

Smallworld Systems, a software company based in Englewood, Colo., has a strong legacy in both industries. As a developer of graphical information sharing and spatial resource planning programs, Smallworld has clients in both industries. Its tools allow companies with far-flung facilities to model and share assets and programs that can improve the design and management of these facilities.

Telecom companies, for instance, can use Smallworld's Model.it application to plan and manage distributed power supply configurations across broad and complex network architectures. Equally, electric companies can use the application to administer their regionally dispersed power plants and distribution mechanisms.

In each case, service providers are able to use modeling and management capabilities in similar ways to cope with the increasing complexity of their operations and demand for better reliability.

Reliability has become an increasingly sensitive issue and has forced service providers in both deregulating industries to rethink their traditional modes of operation. Particularly internationally, utilities and telcos are grappling with fast but manageable expansion plans.

Vendors such as Smallworld or MCI Systemhouse in Ottawa may be the exception rather than the rule. While they have served multiple industries with their products for some time, most have never strayed into other utility industries to offer products. The recent entrance of utilities into the telecom business has not escaped the notice of these vendors, however.

While even the largest vendors have been slow to respond to the emerging utility opportunity, several have begun to address this new market segment by establishing new marketing divisions and product lines targeted especially at the utilities. Siemens' Information and Communications Networks subsidiary was one of the earliest examples of this trend. More recently, Cisco Systems has announced a home networking strategic initiative that will result in products designed to invite utilities and other types of service providers to deliver multiple services, including telecom, electricity and other utilities, as well as alarm systems and environmental controls for the residential market.