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

Fortnightly Magazine - May 15 1995
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One of the most exciting challenges facing electric utilities is the opportunity to participate on the so-called "information highway." Not only is the technology evolving at a dazzling pace, but the opportunities to make or lose money will be staggering. The growth in sales of electricity has been and will be relatively slow compared to the dynamic growth in sales of cable television, information, online, cellular telephone, and other telecommunications services. Most electric utilities have already been traveling on the information highway because they have fiber-optic networks as well as microwave radio and other wireless communications.

Naturally, utilities will want to recover their investment in the communications infrastructure to the extent possible. But cost recovery will depend in part on the scope of communications activity and the manner in which it is undertaken. Any serious entry into telecommunications will probably devolve upon a separate subsidiary for several reasons:

s to establish a wall between the telecommunications business and the utility business

s to avoid allegations of cross-subsidization

s to maximize profits

s to facilitate accounting.

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