Gigabit Cities

Are Utilities Really Gigabit Players?

Utility companies are inextricably linked to the concept of gigabit-speed fiber-to-the-home (FTTH) networks, if for no other reason than the first such network to be introduced in the US was deployed by a utility. That was in Chattanooga, where EPB Fiber Optics -- a division of the municipally-owned utility EPB -- christened the concept of residential gigabit services in 2010.

Many entities have since followed suit -- some of them telecommunications service providers, some of them cable operators, some of them municipalities in some form of public/private partnership with commercial network operators, some of them Google and some of them utilities. The US is in the early phases of the Gigabit Cities era, of which many utilities are becoming integral parts.

The affiliation of utilities and gigabit networks makes sense in many ways. Utilities are, after all, providers of essential services. Furthermore, there is a nationwide regulatory debate raging right now about whether or not broadband services should be classified as a utility. And, in most communities, the local utility's facilities are critical to the deployment of FTTH networks. (In some places, utilities and their permitting processes are frequently blamed for deployment delays.)

In other ways, the affiliation isn't so logical. For one thing, despite the fact that most utilities rely on advanced communications technologies to deliver many of the services they provide, some of them aren't all that tech-savvy. Many of them have yet to upgrade and modernize those communications networks, either because they don't have the budgets, or in some cases because they may not have the technology know-how. In other words, they're not all as advanced as EPB and other utilities that have become entrenched in the gigabit services sector.

With all that in mind, a new Heavy Reading Insider, "Utilities and Gigabit Cities: A Market Sizing Report," explores the opportunity for utilities and the short- and long-term roles they might ultimately play in the Gigabit Cities ecosystem. The report assesses the size of the US utility sector by providing a state-by-state list of US utilities spanning all categories (public, co-op and municipally owned) and, in doing so, identifies market opportunities for technology vendors in the utility communications sector.

The report also provides several examples of utilities that are already participating in the gigabit network sector -- examples that serve to demonstrate not only models for success, but also the extraordinary service delivery, technology infrastructure, regulatory and marketing hurdles that could prevent many from realizing similar successes.

The Gigabit Cities ecosystem -- and indeed the overall US broadband economy -- is becoming increasingly complex, characterized by regulatory issues, cost constraints, technological complexity and intense competition. All of those factors will affect what role utilities play in the gigabit game, how that role could evolve over time, and ultimately how successful they will be.

— Jason Meyers, Contributing Analyst, Heavy Reading Insider

Utilities and Gigabit Cities: A Market Sizing Report, a 12-page report, is available as part of an annual subscription (12 monthly issues) to Heavy Reading Insider, priced at $1,995. This report is available for $900. To subscribe, please visit: www.heavyreading.com/insider.

KBode 12/12/2014 | 8:37:20 AM
Re: Utility mindset That's a good point. Also remember all of the state laws passed by incumbent ISPs like AT&T, CenturyLink, Comcast and Time Warner Cable, which prohibit towns and cities from not only building their own networks -- but in some instances from working with private utilities to disrupt the broadband sector. I feel like whether the move is attractive could very well differ state by state...
davidhoffman5 12/12/2014 | 4:40:28 AM
Re: Utility mindset My electric power supplier might have a georgraphic potioning problem in becoming an ISP. Their service area only partially covers the city I live in. They have a large rural service area between two metropolitan areas. The other part of the city is covered by another provider. Coordinating two electric utilities to reach a goal of a Gigabit city would be difficult as one is a rural cooperative and the other is private investor owned. Some of the the old rural areas turned into the city due to annexations. What seems to be a easy logical decision to make can be complicated by the actual relationships among the electric power companies coverage areas, population density, and legal boundaries. I would like to see the electric utilities get into FTTH, but for some it will be difficult to get all the financial peices to work. 
KBode 12/11/2014 | 12:16:51 PM
Re: Utility mindset The smart networks and core municipal operations seem like a no-brainer, but I'm still curious if many utilities see value in pursuing the residential broadband market?
Duh! 12/11/2014 | 10:33:47 AM
Re: Utility mindset Lots of moving parts here, most of which I'd anticipate would be addressed by the report (sorry, HR, but $900 just isn't in the budget).

Municipal and coop utilities tend to be more forward-looking than investor owned utilities, and seem to be more interested in leveraging the numerous synergies  between electric power and broadband.  Chatanooga is the poster child for that these days. 

The driver is going to be Smart Grid, which is a response to a bunch of issues that are organic to the power industry: distributed generation integration, plug-in vehicles, environmental regulations, dynamic wholesale pricing, aging plant, aging workforce, reliability and resiliency.  Ultimately, the system is going to have to evolve from open loop to closed loop control.  That means bringing communications support deeper into the distribution network, including consumer metering. 

The question is whether utilities are going to build out parallel, isolated smart grid networks, or whether they will use multi-function broadband networks for smart grid communications.  As a matter of ecomomics, sharing is a good thing.  It's also countercultural, especially for IOUs. 
DHagar 12/10/2014 | 7:46:23 PM
Re: Utility mindset danielcawrey, you are right.  Also, it is a natural fit for them in that many of them are being driven (due to costs, etc.) to use of smart meters anway - sometimes they are building the inhouse capabilities and other times they are outsourcing.  But information is increasingly going to become a part of their business model.   They really should embrace it and work with cities and municipalities to work together.
danielcawrey 12/10/2014 | 7:03:35 PM
Re: Utility mindset It's true, many utilities still need to be modernized. Acutally, most of them. They are stuck with older infrastruture, especially power generation, that is going to cost many of them hundreds of millions of dollars in order to upgrade. There's no way around that.

And I think utilities will have to become gigabit players, just because they have no choice. 
KBode 12/10/2014 | 3:28:56 PM
Utility mindset I'd wonder how much has changed in the executive mindset at utilities since the days of broadband over powerline (BPL). That was going to be the great savior of broadband, but aside from the fact that it caused interference with local radio, many utilities weren't thrilled to be jumping into a segment dominated by the likes of Comcast, AT&T and Verizon. There's not only the build and marketing costs, but it's expensive to battle companies that tend to enjoy regulatory capture in many markets.
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