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Electric Utilities: Steering Clear on the Information HighwayJames H. McGrew

Fortnightly Magazine - May 15 1995

However, the SEC is not as aggressive or consumer-oriented in setting rates as the FERC and PUCs. PUHCA reform also raises a major issue of potential cross-subsidization. A telecommunications associate could use its utility associate to subsidize its telecommunications business.

The 104th Congress is now considering telecommunications legislation. Both the majority and minority draft bills in the Senate would permit utilities to provide telecommunications services. The Senate majority draft and the House draft also expressly provide for registered holding company affiliates to engage in telecommunications services with appropriate safeguards. Electric utilities must become more involved in this legislative process than they have been in the past. The major "players" in the 103rd Congress were cable companies, telephone service companies, and various public and private interest organizations (em but not electric utilities.

Passenger Comfort

Universal service is a priority under the Federal Communications Act, and electric utilities are well acquainted with this type of requirement. However, the unique technology of the information highway raises a number of questions as to the exact nature of that "service." Does every customer have a right to log onto the Internet? If so, how much basic "lifeline" Internet service does each require? Does every customer have a right to video-on-demand? If so, how much video-on-demand constitutes a minimum entitlement? Should every customer be plugged into local schools and libraries by online services? If so, how much online time should be guaranteed? PUCs will have to make difficult decisions regarding the rationing and cross-subsidizing of these new services if they want to apply the concept of universal service to the new technology.

As telecommunications services expand, providers of those services will have a larger body of data about their customers. They may have access to information about appliance use; when people are home; whether they have dogs; what videos they order; whom they call; how often they call; when they call; what items they buy from home shopping networks; what types of online services they use. The unscrupulous could sell such information to entrepreneurs who wish to solicit or even blackmail individual consumers. The information could also be used by criminals to rob houses or businesses or to make unauthorized charges to a credit card.

The technical issue revolves around whether the technology exists to protect the data, or whether a skilled hacker can penetrate the system and acquire the data at will. The legal issue here concerns rights of privacy and access to the data. The privacy issue is particularly sensitive if medical services are provided by two-way interactive television. Information providers will be forced to insure themselves against possible suits for breach of privacy or confidentiality.

A related issue involves electronic commerce. Since data will be available in real time, people will naturally want to conduct business in real time. For centuries, contracts have been evidenced by a written signature on paper, which can be verified by the signer's own testimony, the testimony of those who know the signer, or handwriting experts. Will there be an equivalent "electronic" signature? If so, who will verify it, and