June 21, 2010
The telecom and utility industries haven't always agreed on how to work together -- which is why utility companies have traditionally built their own communications networks. But with the major opportunity called "smart grid" looming, there is a new study afoot aimed at bringing the two sides together, or at least finding common ground.
The effort is being led by Verizon Communications Inc. (NYSE: VZ) and the Utilities Telecom Council Inc. , a trade association representing the communications networking efforts of about 700 utility companies. (See Verizon Talks Smart Grid.)
Longtime telecom and cable analyst Cynthia Brumfield, now director of research for the UTC, says the study will try to separate fact from some long-held assumptions that telecom companies couldn’t provide communications services that meet the need of the utility industry.
"There has been a lot of talk about a big gap between what utility companies need and what telecom companies can provide," Brumfield says. "In the past, there were a lot of controversies, around the aftermath of Hurricane Katrina, for example. But there haven't always been a lot of facts, in my opinion. Hopefully, we will produce a lot of facts."
The study will look at exactly what is needed to design and deliver services to support a smart grid, and make recommendations on how utilities and telecom companies should approach building the infrastructure needed.
"The idea is to produce the criteria on which people can make a business decision," Brumfield says. "We want to get right down to, for example, the ultimate latency requirement for a specific service. They we can look at how much it will cost for us to do that and make a calculated business decision."
Given the scope of the smart grid opportunity, it might make sense for utility companies to work with telecom network operators, rather than build their own facilities, Brumfield points out.
"Some futurists have said the smart grid will be bigger than the Internet," she notes. In terms of end points, and machine-to-machine communications, the network will be much larger, since appliances and other devices will be connected to the grid to enable power management.
If the Verizon-UTC study is able to lay out a path of cooperation between the telecom and utility segments, it will represent a major shift from the traditional path. Utility companies have traditionally built their own communications networks, and at the height of the Internet boom of the late 90s, many either got into the communications business themselves on a wholesale or retail basis, or considered doing that. The telecom bust took the wind out of those sails, but utility companies have continued to build out their own communications networks.
Telecom operators stand to either win big helping build out the smart grid or see themselves left on the sidelines or relegated to the dreaded "dumb pipe" status.
— Carol Wilson, Chief Editor, Events, Light Reading
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