Utilities plug into fiber networks
Electric utility companies and vendors of synchronous optical network, or Sonet, fiber-optic communications products are forming strong business relationships based on their mutual vision about future growth and development. To illustrate how this union is working out, Richard T. Yee, department manager for telecommunications at the Houston Lighting & Power Co. in Houston, TX, notes that electric utility companies are becoming more aggressive in implementing energy information services to optimize customer access and minimize market-base erosion.
He says that fiber-optic backbone networks are increasing his company`s service to customers and help use leftover electric capacity. Yee was a speaker at the 18th Annual Newport Conference on Fiber-optics Markets sponsored by Newport, RI-based Kessler Marketing Intelligence Corp. His discussion about strategic opportunities for utilities outlines some of the measures his company has taken in fiber-optic communications to increase growth.
Yee`s positive business philosophy was supported by Jack Kessler, KMI president, in his opening remarks at the October conference. Kessler forecasted that electric utilities may install 100,000 cable fiber-kilometers of optical power ground wire and all-dielectric self-supporting cable fiber by 1998. This deployment is expected to be a major growth area for fiber-optic communications in the electric utility industry.
Larry Johnson, president of The Light Brigade Inc., an educational and fiber-optic training organization in Kent, WA, confirms Kessler`s optimistic outlook. Johnson spoke at the recent Photonics East Conference held in Philadelphia in October. He says electric utilities are using fiber optics for transmission lines, distribution lines in electric substations and in their internal local area networks.
However, Johnson cautions, "Electric utilities have not ventured far into the multimedia battleground other than selling bandwidth or rights-of-way to other organizations providing services." He notes that electric utilities are well-positioned to provide services and create a cost benefit for themselves.
Also supportive of these bullish outlooks for fiber optics and the electric utilities industries is Morristown, NJ-based AT&T Network Systems, a major Sonet communications vendor, which is optimistic about the future of the electric utilities industry.
Mark Newton, the company`s national sales manager for the electric utility industry, says Houston Lighting & Power is one of 18 electric utility customers deploying AT&T Sonet systems in their networks. He says that AT&T sales to industry may hit $45 million this year, and the future is bright.
Rob Koslowsky, director of transport marketing at Northern Telecom Inc., Toronto, also discusses the impact that electric utilities are having on the growth of Sonet fiber-optic communications. He notes that the company is providing Sonet communications to approximately 60 utilities, resulting in sales estimated at $100 million in 1995.
"We are providing power grid management for alarm and monitoring functions and unmanned video surveys with our OC-1 and OC-3 systems [that run at 51.84 and 155.52 Mbits/sec, respectively]," Koslowsky says. "Another application is administrative traffic for data and telephony reselling." He also says that Northern Telecom is getting into the resale of network design systems for electric utilities.
Several Northern Telecom electric utility customers confirm Koslowsky`s statement. John Snoddy, vice president for engineering and operations at Dukenet, a wholly owned telecommunications subsidiary of Duke Power, says that his company has deployed its own fiber-optic network based on the Sonet standard. The company selected Northern Telecom`s OC-48 transport node and OC-12 transmission equipment, which run at 2.5 gigabits per second and 622 Mbits/sec, respectively.
However positive these utility industry and Sonet vendor outlooks may be, business conditions can change and strategic opportunities for electric utilities in communications may not reach fruition. For example, Yee says Houston Lighting & Power recently divested its ownership of a cable-TV company but is retaining its stock investment in Time-Warner Inc. "The price for the cable company was right, and this certainly wasn`t a fire sale," Yee said.
Nevertheless, Yee says his company has deep financial pockets, with almost $3.7 billion in revenue last year. Houston Lighting & Power has approximately 1.5 million subscribers in a 5000-square-mile area, and as a competitive service provider, leases dark fiber in downtown Houston. Yee emphasizes that his company is not a common carrier and does not sell communications services to end users.
"I see this activity as leveraging our telecommunications assets," Yee says. The company is also the largest single landowner in Houston`s Harris County and serves approximately 98% of the area`s population.
In its subscriber service, Yee explains that his company operates an Energy Partners` program to help customers avoid peak-demand charges, which are more expensive than those for off-peak hours. For example, through this program, air-conditioning units can be shut off remotely. In another program known as Energy Manager, the company lets customers control their electric power consumption. "This is a quantum leap in technology over the Energy Partners` program," Yee explains. Houston Lighting & Power sends variable price information to its customers, who then use the home network to pre-program cost and comfort preferences for major appliances. q