We, your friendly neigh-borhood utility, know a lot about you. We know where you live. We know how much electricity you consume. Our research people tell us how much disposable income you have. We know what you like and dislike. Our surveys tell us you trust us. It shouldn't be that difficult for us to sell you a “can't-miss” value-added service.
Look What Your Friendly Utility Brings to the Table
We know infrastructure; we run one of the most advanced transportation systems anywhere. We know communications; we dispatch generation at the click of a button, sending electrons off to the most remote customers. We know just-in-time inventory; our product is consumed the minute it is produced. And we know customer service and billing. We have a lot going for us. So, why can't we provide you, our customers, with new products and services, and maybe bring in a little extra revenue?
Early Residential Offerings
Remember our first energy-conservation initiatives? We helped customers lower their bills by performing energy audits and helping them decide whether to add insulation to attics, put in double-paned windows, insulate hot-water heaters, or install high-efficiency heating and cooling systems. These initiatives were well received, and our customers gained value from our efforts. Our intentions were good, but we also wanted to delay construction of new generation.
Remember early efforts to reach commercial customers? We installed solar collectors to heat water for hotels and businesses. We installed fuel cells. We installed chilled-ice systems. But our motives weren't pure. We never invested the intellectual or financial capital to truly own the process. We were after catchy covers for our annual reports. We were looking for press that would show that we were involved citizens.
Customers Call the Shots
We've come to understand that customers are hard to corral. They refuse to want what we tell them to want. If we ask what they want and offer that service, they then want something else. It is not that customers don't trust us. They do. It's just that they are busy. Just bring them what they want when they want it. Power quality is a good example. It is easy to sell whole-house protection to a customer whose computer or appliance was recently taken out by lightning.
Let's Do Our Homework
Our utilities must invest the necessary up-front time to determine what value-added opportunities make sense. This requires us to evaluate the risks thoroughly. Let's start by asking the right questions. What strengths do we bring? With whom should we partner? What are our weaknesses? How do we overcome them? What competitors will we face? How will they respond to our entry into the marketplace?
Utilities have had success in earlier telecom ventures. Southern Company leveraged its existing 800-MHz radio system to provide telecom services in the Southeast. Its telecom subsidiary, Southern Linc, now offers mobile phone, two-way radio, text messaging and alarm management services to 282,000 customers across 127,000 sq miles (328,928 sq km) in four states.
In 2000, UtiliCorp United (now Aquila) launched Everest Connections to build out an independent broadband fiber-optic network in Kansas City, Missouri. Everest offers cable and high-speed Internet, as well as local and long-distance phone service. This telecom venture achieved 50% market penetration in many of the areas in which it offered packaged services.
Broadband Over Power Line
Today, utilities are looking into delivering broadband services over their power lines. Fifteen or so utilities have launched pilots or demonstration projects. The technology promises speeds of 10 MBps. Of course, innovation does not come without tribulation. Early trials have exposed various problems that utilities are now working through. Amateur radio operators are fighting the technology, as they expect the system will interfere with radio signals. Then there are business issues. Even using existing infrastructure, utilities must build a business case for the investment. Deploying this technology could be well received, particularly in rural areas where broadband is not available. Nothing is guaranteed in our competitive world, but broadband over power line looks like a promising technology for us to pursue.
Our industry will continue to look for opportunities to offer additional services to customers. Our customers are waiting to invite us into their homes and let us deliver the next great thing — they just don't know it yet.