Objective. Estimate market impacts of "1+" dialing parity plus eliminating traditional LATA boundary.
Model. Measure shifts in market dominance between major competitors, by assuming...
may bear watching. It may not be the "how many" but the "what" that electric utilities should target in their intelligence gathering. If managers target a traditional, full-service electric utility, they miss understanding a new (em and perhaps more potent (em long-term threat, such as a cogenerator, an independent power producer (IPP), or an energy service company. At the same time, the expected increase in mergers and acquisitions (see Figure 2), may create mega-utilities with considerable market power and economies of scale.
MCI offers an example of a powerful company that could not even have existed before deregulation of telecommunications. At first AT&T did not know how to compete against this new competitor and had no idea how aggressive MCI could be: "It was lean and mean. It gave employees the chance to grow along with it, and rewarded those who made the company money. . . . It broke a lot of corporate rules along the way, and took a lot of flak for it."2
New, lean competitors that break all the rules are exactly what the long-quiet electric utility industry will face in the decades ahead. We will see many MCI-types entering the generation and distribution side of the business, and they will play by a very different, very aggressive and very clever set of rules (em rules that they will help shape. Are traditional utilities prepared for this onslaught?
Despite the widespread belief that competition will intensify over the next 10 years, fewer than 10 percent of the participating utilities have set up business intelligence systems to monitor and analyze their competitors.3 You could argue that a strategic paralysis has set in. This malady will cause utilities to look at everyone and at no one, all at the same time (see Figure 3). The outcome: A large number of utilities, unsure of whom to watch, will likely encounter numerous competitive surprises over the next decade. It won't be enough for an electric utility to "stay close to the customers" if it cannot also track the competition.
Regulatory Intelligence (em
Control or Be Controlled
No doubt that regulatory departments hold a great deal of market intelligence. How much of that intelligence is realized or applied to utility strategy is the real question.
Although virtually all of the survey participants expressed similar views about the importance of monitoring regulatory developments, few, if any, have set new goals for a regulatory staff that cut its teeth on rate case strategy. Most managers we spoke with described their regulatory staff as extremely competent in dealing with state or federal agencies, but expressed doubts about the staff's customer focus. Only two of the surveyed managers described any kind of process for analyzing and communicating regulatory trends and then considering that information in customer or competitor assessments.
Nevertheless, some utilities see new roles for their regulatory experts. Those utilities have begun using the regulatory process to secure new revenue opportunities, rather than as a means to recover previously incurred costs and investments. Central Maine Power Co., for instance, recently negotiated a sweeping rate decrease with