A federal court blocks FCC's "TELRIC" cost rule, but some states endorse it anyway.
With the Federal Communications Commission (FCC) having lost a major court battle last fall, the state...
diversification attempts of others, it may seem prudent to ignore telecommunications. In reality, the strategic importance of telecommunications goes far beyond a single opportunity to boost earnings.
In anticipation of competition, the entire industry seems to be focusing on cost control. But cost control will never be the source of strategic advantage. Electric utilities that add telecommunications to their core energy business can establish an intimate learning relationship with each customer. This degree of customer-specific knowledge will preempt the competition and seize strategic advantage.
I am not suggesting that each utility build a private network connecting every customer. Nor am I recommending which technology platform should be used. These and other operational decisions should be determined by myriad factors unique to each electric utility's competitive, regulatory, and public policy environment. But, irrespective of the "how" and "when," if a utility does not currently have a vision that includes telecommunications in the core-energy business, it soon must. t
Robert Picchi is a principal with Hoskins Davis, where
he specializes in strategic and business planning and performance management. He has a BA in economics from
the University of Michigan and an MBA from Duke University's Fuqua School of Business.
1. National Association of Regulatory Utility Commissioners, Utilities and the National Information Highway, Finding the Best Route, Sept. 1994.
2. Marn, Michael V. and Rosiello Robert L., "Managing Price, Gaining Profit," Harvard Business Review, Sept. 1992.
3. Federal Communications Commission, Industry Analysis Division, Rates, Price Indexes, and Household Expenditures, July 1994.
4. Federal Communications Commission, Industry Analysis Division, Fiber Deployment Update, May 1994.
5. Federal Communications Commission, Industry Analysis Division, Fiber Deployment Update, May 1994.
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