PHOENIX, Ariz. -- The general consensus among the technology vendors exhibiting at the Utilities Telecom Council's Telecom 2014 conference here is that when it comes to their communications needs, utilities are not unlike telecom network operators -- except that they are very, very different.
Utilities are indeed grappling with issues and surveying opportunities reminiscent of the mid-1990s telco era: They operate aging, outdated communications networks in need of modernization, and they realize that through network investment they can provide more advanced and automated services that will improve the customer experience and save costs.
They also share a modern-day challenge with today's telecom networks operators. As they implement services such as smart metering, they are flooded with data that can give them insight into customer experience and performance, which makes network management more complicated.
"The more complex their networks get, the more need they have to manage all the devices getting pulled onto their networks," says Steve Curcio, vice president of industry and society for Ericsson AB (Nasdaq: ERIC).
But while the technology considerations in question may be similar to the telecom world, the attitudes of utilities toward change are not.
"These aren't telecom carriers," says Mark Madden, regional vice president for North American utilities at Alcatel-Lucent (NYSE: ALU). "They are very dependent on things being very reliable -- the tried and true. Any time you suggest something new to them, they get nervous."
Despite that nervousness, technology vendors are attracted to this potentially multi-billion-dollar market sector because most utility companies operate multiple internal communications networks that are in desperate need of modernization. Utilities' traditionally TDM-based systems are increasingly bandwidth-constrained as they add more applications such as smart meters and substation automation to provide real-time information monitoring and control, boost electric systems reliability and give them faster service restoration capabilities.
"Old analog technologies don't support these applications," Madden says. What's more, he adds, many telecom operators are shutting down the TDM-based services, such as frame relay and fractional T-1s, that many utilities use, prompting them to migrate to IP-MPLS or Carrier Ethernet connections.
All these factors combine to make the utilities’ communications network transformation seem like something of a forced march, though telecom professionals within utility organizations do seem to recognize the need for change.
"Doing nothing is not an option -- the transformation has to be made," says Doug McGinnis, senior manager and networking engineer for Exelon, during a conference session on TDM-to-IP migration. Exelon is a holding company that owns utilities in Maryland, Illinois, and Pennsylvania. "I'm happy to see TDM go away, because it's going to drive implementation of these new technologies. We're going to save a lot of money -- we're going to spend a lot, but then we're going to save a lot."
RAD Data Communications Ltd. recognizes that selling network technology to utilities is not the same as selling to telecom operators. The company adapted its network offerings to appeal to utility people responsible for different functions, says Mati Epstein, RAD's line of business manager for utility and transportation. "When you come to a utility, you must know who you are talking to," he says. "The packaging should be different."
Ciena Corp. (NYSE: CIEN), for its part, also recognizes the opportunity to adapt to meet the needs of the utility sector. "They're very concerned about modernization, and packet optical is proving to be a good transition from their legacy core," says Malcolm Loro, director of industry marketing for Ciena. "As they implement things like smart grid and need end-to-end solutions -- that's when you see the telecom vendors getting involved. We're working with these guys to bring carrier-class capability to these new networks."
— Jason Meyers, Contributing Editor, Light Reading