& cplSiteName &

Critical Infrastructure: Why Telecom Is Taking a Renewed Interest in the Utility Sector

Dan O'Shea

It's an industry that's facing a transition from TDM to IP, along with increasing fears that its networks could be disabled by security breaches. Yet its organizational cultures are lethargic, with philosophies toward infrastructure spending that could best be described as intensely thrifty, and it's highly regulated, so it's not under much competitive pressure to change.

What industry are we talking about?

It's the electric power industry (though don't feel bad if you thought we were talking about the telecom operators...).

Even though telecom's evolution from TDM to IP networking is for the most part a done deal, telecom has been through, and still is dealing with, some of the same factors, such as ever-increasing security threats against its infrastructure. And as we've seen in telecom, many of the issues mentioned above create an environment ripe for network investment.

Those challenges aren't limited to the electric power and telecom sectors, of course. Some of those issues (particularly the security threats) could be applied to a number of other verticals -- think oil and gas, water utilities, transportation infrastructures, public safety, homeland security -- that more broadly constitute the critical infrastructure sector, comprising companies and organizations that can't rely on third party communications infrastructure and need to build and run their own networks.

Put it all together and that sector just might represent the next great market opportunity, worth billions of dollars each year in potential sales, for a wide array of telecom industry vendors that have the communications connectivity and security technology expertise to help critical infrastructure operators modernize and protect their networks. (See A Critical Time for Critical Infrastructure.)

Among that group of verticals, the electric power companies may represent the largest and most immediate target: In North America alone, there are thousands of electric utilities of all sizes. "In the US there are more than 4,500 utilities, some of them quite large, but others small cooperatives or municipal operations" says Amir Barnea, head of RAD Data's Critical Infrastructure Line of Business. "In Europe, where transmission and distribution of power are separated by regulation, there are about 200 distribution companies and 50 transmission companies."

The utilities market is no big secret in the telecom community, and both telecom service providers and vendors have been serving the IT communications needs of such companies for years. What's been generally less understood by telecom types, at least until fairly recently, is the operational technology (OT) units of these companies. The OT frameworks consist of the physical grids, monitoring systems, automated Supervisory Control and Data Acquisition (SCADA) devices and other equipment -- including (and here's the big hook!) communications equipment -- that keep their mission-critical services up and running.

But, during the past few years, a growing number of telecom vendors have intensified their efforts to sell their communications platforms and security solutions into the OT side of utilities. Here's a brief list of just some of the vendors with critical infrastructure strategies:

Those are the most obvious participants and the ones Light Reading has talked to recently, but the list is sure to grow, as other companies tell us they're in the process of sizing up the market for future engagement.

The size of the utilities market in particular, and the overall critical infrastructure sector in general, is one part of the attraction for these vendors, but the vendors also are being driven by their own needs, including increasing pressure to diversify their customer bases and break from their reliance on a few big telcos for most of their revenue.

Some of them have begun to accomplish this diversification by broadening their appeal to cloud service providers and Web 2.0 companies, but critical infrastructure operators may be the next logical step.

Yet, telecom vendors targeting this market aren't stepping into virgin territory, competitively speaking. A long list of incumbent vendors, particularly in the utility segment, are as well entrenched with utility customers as telecom vendors probably consider themselves to be with their own traditional customers. Among the traditional technology suppliers to the utility sector are:

Still, there are several reasons for the heightened interest telecom vendors have in this market and their willingness to challenge the incumbent utility vendors. One reason is the mashup of the sensor-driven smart grid evolution being brought about by Internet of Things connectivity. All of the sensors and other gear that gather information and monitor grid operations need to connect with one another and with the SCADA devices that ultimately control the power grid.

"The world is being filled with automation," Barnea says. "You have SCADA -- all the devices that turn power on and off -- that make autonomous decisions based on information from sensors. You have teleprotection, which is the very important capability to detect a problem and protect the grid by shutting down a particular line if necessary."

The need to connect automated devices, which might sound a lot like the IoT to the rest of us, is what utility vendor giant GE refers to as the Industrial Internet. "We're in the early innings of the Industrial Internet," says Luke Clemente, general manager of Grid Automation at GE Digital Energy. "It's a significant opportunity that we believe from an end point perspective will dwarf what is in most cellular networks now."

Clemente, telling a tale that telecom vendors know well, adds: "Cellular is 6 billion or more end points, and we're looking at something that is going to be significantly larger when you talk about the Industrial Internet. We see more and more the idea that networks will become ubiquitous and the ability to optimize information for better decision making is going to become a very pronounced change."

While the Industrial Internet will present utilities with a dizzying number of potential new applications, using all of the data gathered, Clemente says power grids still have to stick to their traditional technology foundations, in terms of being, above all, "safe, reliable and redundant." Those foundations in many cases, and for many years, have consisted mostly of proprietary TDM-based architectures.

Next page: The IP evolution

(4)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Serge B
Serge B,
User Rank: Light Beer
9/9/2015 | 3:06:51 AM
Re: Topics for future discussion
Just to answer to the point 2)

We can see an increasingly number of utilities buillding there own network because :

- they face the EoL of the Teleco lease line and they want to have in house solution to guarantee the critical latency and Jitter needed for Scada and Teleprotectection application

- They need to guarantee communication between their critical assets ( Substation, SCADA Control Center ) in case of Black out (total collaspse of the energy network ) for at least 96 Hours in order to be able to restore the Energy Network quickly. No Telco can do this, but power utilities have this capacity in their main location ( Battery bank used for their Automation IEDs )

Hope it Helps
User Rank: Blogger
9/2/2015 | 7:56:48 AM
Re: Topics for future discussion
My understanding is there's been a somewhat contentious relationship between utilities and telcos over the years - that telcos keep trying to push into the utility sector, and utility companies keep pushing back because they don't think the telcos understand their needs. At some point, though, I'd think there'd have to be more crossover between the two given converging technologies. The question is, how long will that take?
User Rank: Blogger
8/31/2015 | 2:22:58 PM
Topics for future discussion
Couple of things we hope to get into in future repost on this topic:

1) How much this market is worth--I haven't heard back yet from a couple analysts I contcated for that info, and it's also something we'll get these vendors to discuss in the future.

2) Lease vs. own--trying to get some further info how what percentage of utilities my build their own networks with TDM being retired. Networking might not be the strong suit of teh utilities, but I was told some want to build their own.
User Rank: Lightning
8/30/2015 | 11:53:08 PM
I second you
I second you, becaue Taiwan based Communicaiton Equipment vendor Loop Telecom (http://www.looptelecom.com/) VP told me recently, they are still getting  good business for TDM equipments along with MPLS-TP based PTN Network Equipments.
From The Founder
Following a recent board meeting, the New IP Agency (NIA) has a new strategy to help accelerate the adoption of NFV capabilities, explains the Agency's Founder and Secretary, Steve Saunders.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Interviews
BT's McRae Sheds Light on 4K Strategy

5|25|17   |   4:45   |   (0) comments

At Light Reading's Big Communications Event 2017 in Austin, Texas, BT Group's Chief Network Architect Neil McRae talks about what it took for BT to broadcast live sports in 4K. Catch up with all our BCE coverage at http://www.lightreading.com/bce.asp.
From the Founder
How the NIA Aims to Advance NFV

5|25|17   |   08:07   |   (0) comments

Following a recent board meeting, the New IP Agency (NIA) has a new strategy to help accelerate the adoption of NFV capabilities, explains the Agency's Founder and Secretary, Steve Saunders.
LRTV Custom TV
Better Solutions That Address Growing Scale

5|25|17   |     |   (0) comments

For Comcast, the X1 rollout and 17-fold increases in broadband speeds in the past 16 years are among factors driving the need for Energy 2020 solutions that reduce cost and consumption, says Mark Hess.
LRTV Custom TV
Ethernity Network Delivers Instant Offloading of Network Functions With All-Programmable Intelligent NIC

5|25|17   |     |   (0) comments

David Levi, CEO of Ethernity Networks, explains that programmability of the hardware makes the company's All-Programmable Intelligent NIC uniquely beneficial for communications service providers that need advanced data appliances with agile support of virtualization. Utilizing the company's patented network processing technology, Ethernity offers data path ...
LRTV Documentaries
BCE 2017: Vodafone Gets Obsessed With Cloud-Native

5|25|17   |     |   (0) comments

Vodafone's Matt Beal updates us on Project Ocean and explains why simple virtualization isn't enough of a goal for network transformation. Catch up with other BCE 2017 keynotes and news at http://www.lightreading.com/bce.asp.
LRTV Documentaries
BCE 2017: Intel's Take on Network Transformation

5|24|17   |     |   (0) comments

In this BCE 2017 keynote, Lynn Comp discusses Intel's vision for areas such as analytics, automation and service assurance. For more videos and BCE coverage, see http://www.lightreading.com/bce.asp.
LRTV Documentaries
Order From Chaos: The Steve Saunders BCE Keynote

5|24|17   |   17:27   |   (0) comments

Kicking off BCE 2017, Light Reading founder Steve Saunders lays blame for NFV's slow ramp-up and urges telecom to return to old-fashioned standards building and interoperability testing.
Think of this as the video sequel to the recent columns he's written about NFV and the prospect of a telecom app store. (See

LRTV Documentaries
Service Provider Panel: Partnering in the Digital Era

5|22|17   |     |   (0) comments

Coopetition has always been part of telecom, but the ecosphere now includes data centers, vendors, apps developers, cloud service providers and Internet content providers. This BCE 2017 panel explores the new attitudes among network operators as to the value and variety of ...
LRTV Interviews
Site Demo: AT&T's IoT Flow Platform

5|19|17   |   04:25   |   (0) comments

At AT&T's R&D center in Tel Aviv, Israel, project leader Eyal Segev talks about the operator's Flow platform and how it helps to prototype IoT applications.
LRTV Documentaries
Agent of Change: A Q&A With AT&T's John Donovan

5|18|17   |     |   (0) comments

Carol Wilson talks with the man leading AT&T's transformation efforts about the challenge of change.
LRTV Documentaries
BCE Service Provider Panel: The New Business Realities

5|18|17   |     |   (0) comments

For virtualization to happen, the telecom industry first has to grapple with key functional aspects of SDN and NFV that need to be universal, such as onboarding of virtualized network functions and federation of software-defined networks.
LRTV Interviews
BCE Service Provider Keynote: CenturyLink

5|16|17   |   22:32   |   (0) comments

Aamir Hussain leads the Product Development and Technology organization at CenturyLink, which includes the company's information technology function. He is an experienced senior technology executive with more than 25 years of proven success in the implementation of global technology operations, operationalization of complex technology, infrastructures and business ...
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Cities Clamor for More Clout at FCC
Mari Silbey, Senior Editor, Cable/Video, 5/23/2017
What's Blocking 4K TV Today
Alan Breznick, Cable/Video Practice Leader, Light Reading, 5/22/2017
Sonus & Genband Finally Combine to Form $745M Company
Dan Jones, Mobile Editor, 5/23/2017
Fright Wigs & Cocktails: BCE 2017 in Pics
Mitch Wagner, Editor, Enterprise Cloud, 5/19/2017
Apple Looking to Cook 5G Test Devices
Dan Jones, Mobile Editor, 5/24/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
Animals with Phones
What Brogrammers Look Like to the Rest of Us Click Here
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.