Changing market dynamics across the power industry are creating a shift in the way that utilities operate. As more people leave rural America in search of high-tech lifestyles in urban centers, electric cooperatives and public power companies alike are dealing with the realities of customer erosion and an ever-increasing demand from their members to provide broadband. This situation is compounded by flat revenues due to lack of growth, as well as adoption of renewable energy and energy-efficient appliances. As a result, utilities are striving to develop new, more lucrative revenue streams. Furthermore, utilities are facing increasing pressure from customers to offer high-speed Internet, since many incumbent carriers are not expected to update their networks anytime soon.
At Fujitsu, with our long information and communications technology industry heritage, we can easily see a parallel with the rise of the mobile phone roughly 25 years ago. As telecom subscribers began ‘cutting the cord’ in favor of wireless service, and reduced subsidies, established telcos were faced with the challenge of developing a revenue replacement strategy. Fortunately, established players in the telecom industry had existing capital and operational investments — in the form of infrastructure, unused capacity, systems and support and most importantly, people — that they could leverage to offer new broadband services to their existing customer base.
Likewise, utility companies also have significant assets at their disposal that can be monetized for new revenue opportunities. The key is knowing where to look and how to make the most efficient use of existing investments to improve profit margins.
Many utilities have existing fiber buildouts that they are upgrading to the latest technologies to take advantage of digital transformation to operate their electrical service. As a result, these utilities are realizing they will soon have surplus network capacity on their hands. For savvy public power utilities and rural electric cooperatives, the best way to monetize their fiber assets is to deploy a below-the-line, or unregulated, service over their own broadband network.
For example, many utilities have invested in advanced metering infrastructure (AMI) in parts of their service areas, with fiber networks capable of speeds up to 100 Gbps supporting electrical substations. A utility with this infrastructure could offer broadband service to customers in the vicinity of each substation.
Beyond fiber infrastructure, utilities have other assets that can be leveraged to offer fixed broadband services, Wi-Fi or fixed wireless access:
- Knowledgeable workforce with service delivery expertise
- Current fleet of vehicles
- Vertical assets, such as light poles and towers
- Data centers for electronics and colocation services
- Back-office administrative and billing support systems.
Now more than ever, utilities have options available for using existing infrastructure to replace lost revenue sources with minimal additional capital investments. This strategy not only improves the bottom line, it also, more importantly, brings 21st century services to rural America at a much lower cost since they have existing assets/foundation to launch a new service. And as more consumers, businesses and cities embrace advanced broadband technologies, like smart applications and the Internet of Things (IoT), the opportunities will only grow stronger, particularly with the addition of data analytics, cybersecurity and artificial intelligence.
Where to Start?
While the promise of profitable broadband services is certainly enticing, some utility companies are reluctant to consider a new business model. How do they choose the right strategy? What can they do to minimize costs and alleviate risks? What assets can they combine and how do they put them together?
To ensure a successful transition to digital transformation, an important first step is choosing the right partner to make the journey with you. Becoming a broadband service provider is more than just building a network. The right partner will offer expertise in how to finance the network build-out, the best approach to implementing deployment, and what sort of services and “smart” applications you can offer to maximize monetization. In many cases, the right partner will even handle rollout and manage the network for you, until you are ready to take over.
As a full-service integration company, Fujitsu works closely with utilities to help them design, deploy and manage broadband networks, bringing all the pieces together in an end-to-end solution that fits their unique business case. We can analyze your existing assets to determine what capital investments and support systems can be leveraged, and develop a strategy to speed services to market so you can begin to realize below-the-line or unregulated revenue as quickly as possible. And with our years of experience and networking skills, we can manage network operations for you.
Lighting Up a Bright Future
A convergence of trends is creating new challenges for utilities, from the shifting demographics of rural America to increasing adoption of renewable energy. At the same time, the advancement of broadband technology, along with the IoT, smart applications and “always-on” connectivity, opens up vast potential for new revenue models and business opportunities across the utility market. To learn more about how you can put advanced technologies to work within your existing electrical utility, and grow “below-the-line” revenue, call Fujitsu to arrange for a complimentary assessment of your opportunity.