Is the Utility Industry Ready for Dot-Com?

In the past few months, thousands upon thousands of new dot-com companies have been created. It seems that these companies’ ads are everywhere-they can’t be escaped. Often, their ads are so vague it is difficult to tell what these companies are all about and exactly what it is they do. However, I think it is safe to say that these new companies are springing up in just about every industry.

Dot-com companies have definitely made their debut in the utility industry. One of the most notable is Essential.com. This company portrays itself as the Web’s first energy and communications superstore. It sells a variety of services including Internet access, electricity, local, long-distance and wireless telephone service, and satellite television access. The Web site, which opened June 14, 1999 (the company was incorporated in 1995), is now one of the top 500 visited sites of all the World Wide Web sites. P.C. Data of Reston, Va., reported that the site had 1.34 million unique visits in January 2000. That is phenomenal after only six months of operation. These statistics should startle some utility executives because they clearly indicate that Essential.com has a good chance of not only reaching utility’s customers, but of developing a relationship with those customers that could cause them to sever ties with their utility.

However, based on some recent information that came across my desk, it looks like Essential.com still has a few kinks to work out. Such phenomenal growth seems to have had a downside for the dot-com company.

According to an article that appeared in the Boston Globe in March, Essential.com has had some real problems serving its customers. It seems that the company hasn’t been able to keep up with the growing number of customer inquiries. Its customer service and many internal systems failed to keep pace, the article said. Minor requests piled up and created major bottlenecks. According to the article, the situation came to a head in January, when Essential.com’s 20-person customer service staff was overwhelmed by e-mail and phone calls. At one point, a third of the callers were hanging up, unwilling to wait 45 minutes to get through, the article said.

Company officials recently acknowledged the problems and promised that they are being addressed. Essential.com announced that it received $75 million in venture capital funding that is being used to fix technology and equipment problems and improve the way inquiries are handled.

This funding comes after venture capital receipts of $17 million last August and $5 million last September. These investments indicate that Essential.com means business and is not some fly-by-night company. It also indicates how much money some companies are willing to invest in order to gain utility customers’ business. They obviously think providing bundled services has the potential to create some big benefits. Time will tell whether that is the case. However, utilities should probably start looking long and hard at such endeavors, just in case they do pan out.

I encourage you to log on to the company’s Web site, www.essential.com and take a look at the competition. It looks like dot-com companies are here to stay, and some of them could have a major impact on the utility industry.

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