Telecommunications plus utilities: A new business case
Telecommunications and utility companies have been forced to consolidate or cooperate for a long time. These cooperative energies between these real or semi syndications have been evident over the past two decades. The utilities, telcos, and cellcos (“cellcos”) have all experimented with joining forces in various forms within a typically limited framework. The inside and out blend or partnership model is more common in a small but growing number of cases.
The regulators hold up the development of a more comprehensive, all-inclusive method for bringing together these viable, advantageous companies. A change is needed in that regard.
Telecommunications + utilities = Energy savings and modernized infrastructure
Telecommunications companies‘ energy costs are one of the most noticeable and fastest-growing expenses; rising power costs can result in multimillion-dollar increases in operating costs.
There is no question that telecom accounts for 2-3 percent of world energy consumption, and further increases in internet speeds and data throughput will increase the power requirements of network hardware. Adding new sites and cooling existing equipment to accommodate 5G wireless networks will increase energy costs.
To ensure that their networks operate smoothly, telecommunications companies need reliable power sources as well. An inability to access a network can have long-term effects and can often be obvious. Furthermore, 5G networks are expected to increase telecom energy consumption by tenfold worldwide.
Therefore, many telcos are investing in environmentally friendly energy sources, like solar and wind energy, as well as backup generators and storage systems. NTT DoCoMo, a Japanese telecommunications provider, reportedly reduced grid-power consumption by up to 40% by utilizing solar panels and high-performance batteries.
Besides being able to produce more energy at a lower price, telcos can also sell excess energy to grid operators, enabling them to turn an unprofitable cost center into a revenue generator. Further, telcos can demonstrate the commitment to the environment, social responsibility, and administrative excellence of their daily operations, accumulating trust and loyalty with their customers.
As a result, their previous utility provider experienced a drop in demand, which may increase energy prices for the remaining ratepayers.
In place of waiting for local or regional telcos to bypass incumbent utilities, power providers can work proactively with their telecom cousins to provide environmentally friendly power energy in the form of service.
This new revenue stream allows the utility to regain business it might have lost, and the telecommunications company to show that both are environmentally conscious. This means that telcos do not have to spend money on their private networks to service these vast territories since the new sustainable resources get integrated into a telco’s communications network.
Utility specialists will manage the virtual private network, or network slicing, to ensure the utility’s communications will remain secure. As a result, the utility isn’t required to hire large, complex (excessive) telecom teams. Artificial intelligence will contribute to increased productivity and decreased energy consumption as the network is expanded.
To reduce energy costs, AI can calibrate chillers, pumps, and fans to continuously operate at optimal settings, for instance, allowing central workplaces to decrease energy costs by 3-5 percent. Google has reported energy savings of 30% in its data centers using artificial intelligence.
Telecom + utility = Reduced disintermediation and marginalization risk
Many tech companies have an interest in the energy and communications industries, which is noteworthy when discussing Google. Several companies have taken significant steps, such as Google’s acquisition of Motorola’s cell phone business in 2012 and its purchase of smart thermostat provider Nest in 2014.
The Google Fiber project was an early attempt to capture share in the broadband access market, and although it hasn’t been developed nationwide (yet), the service is still available in about ten U.S. cities.
Because of this, technology companies, like Google, Netflix, and Amazon, are entering internet and entertainment businesses that were traditionally owned by telcos to maintain growth in a saturated and sometimes declining market. Smart thermostats and home energy management are areas that technology giants like these are embracing – an area that leading utilities once regarded as a future growth engine.
In addition, despite recent developments, the U.S. continued to dominate. Tech companies are less regulated than their power utility and telecommunications counterparts according to Justice Department data.
With Tesla recently acquiring SolarCity, launching its solar rooftop initiatives, and developing wall batteries, it’s no wonder that unregulated technology companies are taking on legacy utilities.
Beyond that, legacy telecom and utilities cannot compete with Amazon and Google, which discover profound and undeniable information about their customers through their searches, clicks, and purchases.
Telecom + utilities should join forces, says the presence of mind
The U.S. energy sector operates under a public system and is regulated by the Federal Energy Regulatory Commission. The Department of Energy and the United States. Utilities, telecommunications, and the Federal Communications Commission (FCC) are all regulated at the state level in the United States. Public utility commissions generally support or reject efforts at these utilities to reduce service rates and invest in infrastructure to provide utility consumers with vital services at the lowest possible cost.
In the past, programs such as the Universal Service Fund (USF), administered by the FCC, ensured that essential services like electricity and telephone service were provided by utility companies, even when a private, profit-driven corporation could not afford them. Since wireless communications providers emerged in the 1990s, cellcos took advantage of USF funds to build affordable infrastructure in areas of the country that were already underserved, such as Native American reservations.
The internet, a platform that was widely used during the 1990s, was another. Because of its decentralized architecture, and the FCC’s belief that it was not a fundamental need on the same level as electricity or communication, the FCC didn’t put many restrictions on providers. Thirty years later, Google is a multi-trillion-dollar company, and Washington, D.C., is still trying to figure out how to guarantee broadband access for low-income communities.
It is difficult to participate in the booming cutting-edge economy without adequate Internet access, which is a significant factor in the growing polarization of American society. Similar negative developments may be approaching legacy telecommunications companies and utilities. The regulators need to get ahead of technology advances moving dangerously fast if they are to prevent the Googles of the world from claiming the future of energy and communications.
The government should establish regulatory needs so that telecommunications and utilities can effectively compete against their unregulated counterparts as well as guarantee equal access to essential services.
We should not allow renewables to be inherently unregulated subsidiaries – they should be the source of future electricity generation. Telecommunications companies and utilities should not deploy multiple, overbuilt communications networks at the same time. As well as ensuring critical infrastructure’s physical security, regulations should ensure its cybersecurity. A telecom specialist’s job is to tend to telecommunications, and a power generation specialist’s job is to handle power generation. To let the telecom and utility industries compete, they should be allowed to merge.
It has been implemented on a small scale successfully. One of Indiana’s largest telecommunications and power distribution companies, Central Indiana Power, merged with Hancock Telecom in 2011, becoming one cooperative contribution.
Using broadband networks and more sophisticated energy management capabilities, regional telecommunications, and electric cooperatives can better serve rural clients because of the consolidation. With grid capabilities and triple-play media functionality, NineStar Connect is the first country cooperative offering that.
A business function that includes billing, customer service, and other business functions has been combined to increase operational efficiency. In a rural area, fiber deployment was reduced by combining the companies, and the overall deployment time was shortened. In the United States, several people groups – not just those in rural markets – would benefit from the merger of their communication and power utilities.
Regulators should anticipate technology shifts rather than react years later
A new generation of business models emerges when new technology is introduced. There has been a delay from regulators in realizing how legacy businesses (such as landlines) can suffer a rapid decline following technological disruptions.
Critical infrastructure is exactly what it sounds like: critical. It is also crucial that regulators prepare legacy utilities and telecommunications companies for competition on an equal playing field in Silicon Valley against their less-regulated competitors.
Anyhow, allowing scalability, efficiency, and operational efficiency to even the largest of the telcos and utilities will help bridge the digital divide, improve energy efficiency, and increase revenue.
As well as making sure essential needs are met, telecom regulators can also pay more attention to arising threats, such as cybersecurity in critical systems (like the ransomware attack on Colonial Pipeline that shut down gas delivery to 45 percent of the U.S. east coast in May). As well as promoting green, sustainable energy and communication solutions, the government has an important role to play. It’s a win-win situation for everyone – except for Google.
Multiple frequency base stations will be a common configuration in the 5G era. The proportion of sites with more than five frequency bands is predicted to increase from 3 percent in 2016 to 45 percent by 2023. The maximum power consumption of the whole mobile tower will be greater than 10 kW at a site with multiple frequencies. Whenever there are 10 or more frequency bands, site power consumption exceeds 20 kW. The power consumption of a site multiplied in scenarios where multiple companies use it.