There is a lot of talk about CSPs banking on the future growth of M2M services as a hedge against declining voice revenues and stressed data margins. Smart Grid and Smart Meters, in particular, keep cropping up as one such panacea, but it seems the utilities supplying electricity don’t necessarily share the enthusiasm, at least in regard to working together.
It would be wrong to generalize on the current state of play with smart meter rollouts using mobile networks as the sole means of data collection, but it is by no means the preferred route by utilities that are looking at every possible alternative to keep control of their customers and the potential spin-off benefits of smart meter technology.
In many markets, the utilities themselves are building low-cost Wi-Fi type infrastructure to collect meter reads and only need CSPs to provide backhaul capacity and only if they don’t develop that themselves utilizing their own power lines and ducts.
There is no doubt that Smart Grid helps the electricity providers manage their networks more efficiently, create a self-healing grid with reduced outages and provides the ability for consumers to produce their own power and feed that back into the grid. However, customers in some markets don’t seem too excited about the ability to see a running total of their bill or in helping the grid operate more efficiently because they expect nothing less. Nearly three-quarters of respondents in a survey of Texas homeowners with smart meters said that the most compelling benefit was the potential for money-saving pricing plans and the ability to manage their households more efficiently. This alone may be quite a challenge for utilities to deliver the type of device management functionality that CSPs have been perfecting for years.
Like CSPs, utilities are being threatened by their own over-the-top (OTT) players that have already developed home device management tools that can be utilized with or without their involvement. For example, trusted names such as GE have teamed with Brillion Technology to connect to the Nucleus home energy monitor, creating a simple dashboard view of home energy consumption making it easy for customers to determine what steps they can take to maintain a comfortable home that is economically and environmentally efficient.
A number of smartphone, tablet and web apps have come on the market that illustrate smart meter data in easy-to-understand graphs and allow warnings for excessive use and cheap tariff deals. Some have even added social gaming elements to allow friends and neighbors to compete against each other in lowering their energy consumption and bills. Through the use of smart appliances, home energy management systems, apps and other easy-to-understand tools, customers can unlock the potential of their smart meters to make their homes run more efficiently and, hopefully, for them to save money.
For utilities, the main touch point has always been the point of delivery of the service, not necessarily the person paying the bill. Having to move to a customer-centric model and offer their customers the ability to control their own device management is proving to be quite a challenge. The telecom industry has quite a head start but is it able to provide the level of granularity that smart grids will demand?
While utilities may be cautious of CSPs’ motives, they could be well advised to work closely together to stave off OTT activities. That, however, seems unlikely. Ceding the meter reading capacity to CSPs is one thing, allowing them to bill and profile customers and manage home control systems is another. The Insider does not see this changing in the near future, but it does provide traditional telecom vendors such as ORGA Systems, that have adapted their business systems to process meter reads, provide dynamic billing capabilities, customer profiling, etc. an excellent opportunity to share their experience with utility players.
Of course, there is also nothing stopping CSPs from becoming energy resellers in deregulated markets and offering their customers a smart meter bundled with mobile, broadband and internet access plus a home management systems. That would, at least, help protect their own market space and generate new revenue streams. But how many have even thought of doing this, let alone investing in it? Sitting back and hoping to get part of the smart grid value chain may not be a clever strategy, but challenging the energy players head on may be just as risky. Are there any success stories out there?
First published at TM Forum as The Insider, 9 April 2012