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

Fortnightly Magazine - May 15 1995

how will it be verified? How will we ensure that the electronic evidence of the contract cannot be altered electronically?

Similarly, material that is reduced to print, compact disc, or video disc can be protected by copyright under Federal law. However, as commerce compresses to real-time electronic transactions, people will be providing information and proposals that they do not have time to copyright. Will a common law of copyright develop?

Road Map

The New Deal legislation that produced the Federal Power Act, the Public Utility Holding Company Act, and the Communications Act evolved from a "top-down" philosophy. Congress in the 1930s assumed that the federal government should shape the development of electric and telecommunications utilities. But technology rather than government is driving the changes in the 1990s. As technology evolves, consumers demand it. Government and service providers, including utilities, will have to adapt. The new technology will revolutionize the way businesses are structured.

For example, a single company can effectively "wire" a household or a business for most services. The broadband coaxial cable, coupled with the traditional copper electric wire, will be able to supply all necessary electric and telecommunications services. The Municipal Light Board of Glasgow, KY, currently provides electric and cable service and is prepared to offer telephone service. This is potentially good news for electric utilities. Consumers have no reason to care which company wires their households as long as the cost is reasonable. In fact, the consumer would prefer to pay one bill a month than to pay separately for cable, electric, and telephone services.

But the fact that one company can provide electric, telephone, and cable service is also bad news for electric utilities. Telephone or cable companies can simply buy out electric utilities and provide all services themselves. Consumers have no interest in who owns the wires coming into their houses or businesses; they are only interested in the package of services transmitted: electric service, home shopping, video-on-demand, interactive video, cable television, online services, information services, educational programs, telephone service. Each of these products may be purchased from separate suppliers, even if only one company owns the wires. There is potentially no limit to the number of suppliers available to consumers if they have nondiscriminatory access to the transmission wires into the consumer's premises.

If the service providers are separate companies (em that is, if supply service is unbundled from distribution service (em consumers can pay one monthly rate for the wire distribution service. This distribution company may be called Bell Atlantic Telecablelectric or Viacom Telectric or some other name. If electric utilities can get into telecommunications, telecommunications companies can get into electric service. In an unbundled world, the suppliers of services would all have access to consumers and would all compete for their business. To the consumer, this new world is eminently exciting. From the electric utility's perspective, it is both a problem and an opportunity. If the electric utility adapts to provide the unbundled services demanded by the consumer, the outcome can be happy. On the other hand, telephone and cable companies have been