Communications Technologies Critical to Competitive Marketplace Survival

Communications Technologies Critical to Competitive Marketplace Survival

By Teresa Hansen, Senior Editor

As deregulation looms closer, utilities must reassess and plan for the competitive future. Communication with customers is key not only to coming out ahead, but to survival in a competitive marketplace. During the opening plenary session at the recent 1997 DistribuTECH(TM) Conference held in San Diego, Calif., Stephen Baum, Enova Corp.`s president and CEO, predicted that in a deregulated environment, the player having the closest relationship with the customer will be successful. Competition is allowing once-captive customers to choose any energy provider they like, hence making it necessary for utilities to take some extreme measures to preserve their most valuable asset–their customer base. According to Jack King, Scientific Atlanta`s Control Systems division president and former Entergy executive, transformation from a commodity provider to a lifestyle enhancing partner in energy management is utilities` key to building the brand loyalty needed to fight off competitors. Two-way communication and information provides the basic platform for obtaining close customer relationships.

Besides playing a major role in preserving customer base, communications technology can be instrumental in generating new services and revenue. The passage of the 1996 Telecommunications Act has given the nation`s utilities an opportunity to take a bigger role in providing telecommunications systems and services to customers in their service territory. Electric utilities now have the option of providing customers with everything from energy management and home security services to Internet access and home entertainment. “Telecommunications and information technologies may become core competencies of a competitive utility,” Sean Stokes, UTC`s (formerly the Utilities Telecommunications Council) associate general counsel, recently said.

Utilities have long been using various forms of two-way communications (SCADA, DA and AMR) for their own business purposes and therefore have the technical expertise necessary to support the technology. In addition to technical expertise, there are other advantages that uniquely position electric utilities for successfully providing communications services. Their power lines pass almost every home and business in the country, giving them valuable right-of-way access that other possible service providers don`t have. Utilities also have an established relationship with these customers. Furthermore, many electric utilities already own modern communications networks that rival those of any other industry. According to Edison Electric Institute, in 1995 alone, more than $4 billion was spent on telecommunications by American electric utilities and projections for future spending range upwards from 25 percent per year. Choosing the correct communications technology plays a major role in maintaining and growing the customer base and adding new services and revenue. Since utilities` options are vast, determining which technology to use is not an easy task. Many factors must be considered. It is crucial for utilities to consider customer behaviors, location, current infrastructure and most importantly, their own business objectives before investing in new technology. Failure to do so could result in millions of dollars being lost on technologies and services in which customers see little or no value–or worse yet, technologies that do not meet the utility`s or the customer`s expectations.


Broadband, such as coaxial cable and fiber optics, is the most robust communications system available (Figure 1). Essentially, broadband is the delivery of information across a shared network. It is capable of transmitting large quantities of information simultaneously in two directions: downstream (from the headend to the subscriber) and upstream (from the subscriber to the headend). Fiber-optic, coaxial cable or a combination of the two, known as hybrid fiber-coax, are all viable means of implementing broadband systems. Because of its two-way capability, broadband can carry a variety of communications, including analog television channels, digital video, data, telephony and interactive services. It can also support applications such as energy management and AMR.

Some utilities are building fiber-optic projects that match or even exceed the size, scope and capabilities of networks installed by telecommunications firms and cable television companies. Current fiber-optic system deployments range from hundreds or thousands of route miles installed or planned by large utilities to networks of just a few route miles envisioned by many smaller municipalities. Deployment within the utility industry is growing at a tremendous pace (Figure 2). Projects now under way indicate a trend in utility fiber network implementation substantially higher than only a few years ago. A group of 35 utilities surveyed by UTC in 1996 projected more than a 50 percent average increase in the size of fiber-optic networks.

Utilities planning to offer various value-added services that can be packaged or bundled to meet each customer`s specific needs, may want to consider broadband technology. As Black & Veatch`s Jeffrey Steele pointed out in his paper, “Using hybrid fiber-coax networks to support utility telecommunications strategies,” presented at the 1997 DistribuTECH(TM) Conference, broadband networks can rarely be cost-justified based solely on increased operational efficiencies. However, the additional revenue streams from customer-focused, bundled services can in many cases justify the expense. Many utilities have third-party leasing arrangements to make use of any reserve transmission capacity or excess capacity installed specifically for third-party use. In addition to leasing arrangements, some utilities are entering into joint ventures or alliances with telecommunications firms, sharing broadband networks installed along utility rights-of-way.

Radio-Based Networks

The use of wireless technology to send and receive voice and data is increasing. The technology uses data collection terminals to transmit data in one of two modes, batch or real time. Using radio-based technology to wirelessly transmit and receive data in real time provides enormous benefits in terms of speed, accuracy and productivity. Radio-based systems eliminate the need for wires and cables and the costs associated with them. Equipment is portable and well suited for settings where utilities need immediate data or where physical distances prohibit hard-wired systems.

There are four general radio-based data communications technologies currently available. They are traditional private radio and three cellular-based systems: circuit-switched cellular, packet radio and Cellemetry service (Figure 3). Utilities must consider specific requirements, especially the specific information to be transmitted, when determining which system best suits their needs.

Private radio provides a customized radio network constructed in a specific Federal Communications Commission (FCC)-licensed radio spectrum. Private radio is the most expensive but also allows the most system control and usually provides better availability than other radio-based technologies. Cost is the biggest drawback to private radio, and utilities must decide if the network is really worth the investment. The entire system construction cost is borne by the owner. The infrastructure cost for private radio implementation is high, therefore system coverage is limited. To make it economically feasible, users typically must be concentrated in a central area. Private radio is best suited for localized communications where real-time reporting is important. Circuit-switched systems can transmit a continuous stream of data using the standard analog voice cellular channels. Modems are used to convert data so it can be transmitted over the voice channel.

Circuit-switched systems provide greater capacity than other existing cellular systems because data coverage is the same as standard cellular telephone service (99 percent of the U.S. population). Again, cost is the primary drawback. Since data is transmitted over the analog voice channels, cellular carriers usually charge voice service rates. Circuit-switched systems are best used for large file transfers, faxes and Internet access.

Packet radio systems break the data stream into smaller packets for transmission. Systems such as Ardis and RAM transmit data across dedicated data channels using FCC-licensed spectrum. Other systems, such as cellular digital packet data (CDPD), transmit packets across public channels. CDPD packets are transmitted during idle time on dedicated cellular channels. Packet radio systems are generally more expensive than circuit-switched or Cellemetry radios. Implementation costs are high because packet radio requires existing cellular system modification or new infrastructure construction. Typically, packet radio is best used for frequent person-to-person data communication such as e-mail or mobile dispatch and data transmission.

Cellemetry data service transmits small messages over the analog cellular network`s cellular control channel. It is a patented technology of BellSouth Wireless Inc. and is licensed to cellular carriers, application developers and equipment manufacturers for integration into a variety of data applications. The service is designed to serve as an economical data link between remote equipment and a central monitoring or control facility. It is less expensive than circuit-switched and packet radio because data is not transmitted across the cellular voice channel. Implementation costs are lower because extensive modification or infrastructure construction is not required. Cellemetry service is also broadcast page capable. In other words, it allows one message to reach multiple devices, driving message transmission costs down. It is best suited for small, less frequent messages between a remote device and a controlling station. It is currently being used in a variety of monitoring applications including business and home security alarms and utility meter reading.


Two-way communications technology may be in for dramatic changes during the next two years as a whole constellation of new low earth orbiting (LEO) satellites is launched. Satellite communication technology takes off where the more conventional technologies such as broadband and radio-based end. Satellite services offer the ultimate in two-way communication–connectivity to and from any place in the world. Satellite promises to be especially valuable in service areas where it is not economically feasible to install radio-based or broadband equipment. Besides providing coverage to geographically dispersed and remote areas, LEO systems users do not have to obtain FCC licensing. However, as with any communication system, there are some drawbacks. LEO systems have limited bandwidth and therefore cannot transmit large amounts of data. Also, these satellites move in relation to fixed stations on earth, therefore, data transmission is not continuous. However, data can be transmitted on a pre-scheduled basis. LEO systems may experience short, infrequent communications outages, resulting in small delays in message delivery. These delays can have serious impact on interactive communications unless message buffers are installed at each satellite terminal.

Other Communications Technologies

Although the technologies previously discussed offer the highest capability for utilities, other technologies are also enabling utilities to improve their operations and provide customers with value-added services. One such technology is power line carrier. It uses utilities` distribution systems to bring meter readings back to the substation. Another communication method is then used to send the information to the utilities` master computer.

Another technology that uses existing lines (telephone) to transmit data is dial inbound/dial outbound. This technology is primarily used for meter reading. Dial outbound technology allows utilities to initiate the meter read when needed, while with inbound technology, software is set up to take the readings at certain intervals. Dial inbound/dial outbound systems can also be used for outage notification and tamper detection. One major drawback is that if phone service is disconnected, the utility`s link to the customer is lost.

Utilities have numerous technology options, and it is important that they explore all of them before committing to a communications network. Careful planning, attention to design and implementation details and a deep understanding of customer needs are keys to successful communications technology and associated services deployment. It is likely that many utilities will opt for a network constructed of several technologies to meet their needs.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at

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