Juiced-up telecom Electric utilities rev up for new markets with a little help

As the cable and telephone industries watch each other warily and wait for each to make the first move into the other's market, a third entity may well prove to be the real threat: the utility industry.

Utilities have some help in the form of UtiliCom Networks, a Foxborough, Mass.-based company founded in 1995 to help electric utilities get into new markets. "We were formed to provide telecommunications, cable and marketing expertise that utilities would need to get into new businesses," said Bruce Clark, president of joint venture operations at UtiliCom.

Electric utilities tend to have a prominent position in local communities, good reputations for customer service, and rights of way and poles already in place—all assets that can only help their entry into new markets. And with the Telecommunications Reform Act of 1996 opening the way for telcos and cable operators to get into the electricity business, gearing up to enter those markets becomes more of a necessity than a luxury, Clark said.

"By building, managing and marketing their networks, we're helping [utilities] gain additional revenue streams, as well as keeping customers loyal to the utility for their electric service as deregulation takes place," he said.

UtiliCom's two utility partners—Bangor Hydroelectric in Bangor, Maine, and Clay Electric Cooperative in Clay County, Fla.—agree that it's unwise to stay focused solely on their core businesses.

"About two years ago, we began to think about what the industry would look like down the road with the Telecommunications Act," said Bill Cohen, public affairs director at Bangor Hydroelectric. The company realized that it needed to expand its horizons but didn't want to go it alone, he said. "We knew just enough about telecommunications to be dangerous."

Clay Electric was similarly reluctant to jump into untested waters without a partner to hold its hand. "Frankly, [telecommunications] is not our core business," said Herman Dyal, director of engineering. "Right now we're better served by partnering with people who are experienced and trained in that area. Trying to reinvent the wheel may not best serve our customers."

By joining forcing with UtiliCom, however, both utilities expect to provide their customers with enhanced services far more quickly and economically than if they had tried to tackle the job alone.

In both cases, UtiliCom will design, choose vendors and build a hybrid fiber/coax network for the utility, as well as a Sonet ring for business customers. The company will manage the networks and the utilities will handle customer care and billing.

UtiliCom will also decide which services the utility will offer and how they will be bundled. While telephony, video and data are obvious choices, applications such as security monitoring, telemedicine and advanced energy management are also alternatives.

"We're looking at everything we can, and we're encouraging [UtiliCom] to bring everything they can bring," Dyal said.

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