My electric company, Potomac Electric Power Co., has announced a joint venture with RCN Corp. of Princeton, N.J., to offer local and long-distance telephone service to callers in Washington, D.C., and nearby areas, plus cable television and high-speed connections to the Internet. With stockholder money, PEPCO would compete head-on against Bell Atlantic, which won approval from the Federal Communications Commission on Aug. 14 for its $25-billion merger with NYNEX.
Reporting the story, The Washington Post quoted PEPCO President John M. Derrick as saying the company was "evolving into an integrated supplier of energy and telecommunications services."
Also "evolving" are utility stockholders. Some see electrics as vulnerable to power marketers, armed with a card table and cell phone.
Will Bell Atlantic prove so easy a target? Sprint says it will back off from efforts to take on the local Bell carriers; it's having difficult cracking the franchise. Some say the Bells are blocking access to the local loop. Others see AT&T, MCI, et al. as fearing Bell entry into long distance. (If long-distance carriers can show foot-dragging by local monopolies, perhaps they can win sympathy for delaying competition in long lines.)
Into this fight jumps PEPCO, like a field-goal kicker coming off the bench to break up a fight between a tackle and a linebacker.
A few months ago, I called officials at Public Service Electric and Gas Co. in New Jersey to ask about progress on efforts to develop a fiber-optic, "smart-home" service to merge energy services with computers and two-way telecommunications. Known as the "Broadband Utility Solution," and announced in 1995, the joint venture matched the utility with AT&T (later Lucent Technologies), Andersen Consulting, General Electric, Honeywell, and Intellon. Possible services included on-demand meter reading, customer-controlled load management, remote turn-on/turn-off and outage detection, meter tampering and energy theft, plus real-time pricing, load profiling and power-quality reporting.
Now it turns out that PSE&G has canceled the project. Said a spokesperson: "With all the restructuring and changes in regulation going on, we felt we had more important things on our plate."
* * *
"Don't worry about the technology. Let the tech companies fight over that. Worry about what services customers want."
That's Michael A. Rucker talking, founder and principal of The Second Opinion, an Atlanta firm that advises clients on marketing and branding. Second Opinion has worked with Honeywell, Otter Tail Power, and Scientific Atlanta. This summer his firm conducted interviews nationwide on what utility customers think of two-way energy and telecommunication services, such as energy management, real-time pricing, on-line billing, monitoring and protection, and various combinations of telephone, cable and information services. Second Opinion compared and then quizzed customers participating in four specific pilot programs:
• Chatelaine Park. Cable, energy management, Internet access, security and electricity for 300 apartment units in an Atlanta suburb, by The Southern Co.;
• Laredo. Energy management, appliance scheduling, time-of-use pricing and on-line billing for 2,500 Texas consumers, by Central and South West Corp.;
• Blacksburg. Local news, weather, sports, community events, e-mail, discussion groups and more, by a consortium of Bell Atlantic, Virginia Tech and city hall; and
• Atlanta. Cable and video on demand added to basic local telephone service, by Bell South.
Rucker's firm studied the length of time the pilot had run, the type of company running the pilot, the charge (if any) and mix of services (for more information, call 404-222-9822). Overall, Rucker found that customers don't view these features as futuristic. They see them as viable right now. In no way, says Rucker, have pilot programs left customers jaded or disappointed. But do they prefer entertainment to energy?
"Customers want control," he explains. "They want the ability to make that decision. We can't sit back here and say that most customers aren't interested in energy management. We found pockets and segments that are very interested in that.
"But of greatest interest was the one-bill concept. It outweighed other options, relative to cable, telecom, energy, information or monitoring and protection."
The Second Opinion has collected quite a lot of data comparing pilot programs, whether offered by energy utilities or telephone carriers or others (see sidebar). Rucker confirms the demise of the PSE&G pilot, along with Entergy's PowerView. (Entergy's tech partner, First Pacific Networks, went out of business.) Rucker warns against too much faith in technology at the expense of market research.
"I had done some work with utility clients and had attended some conferences, including the February DA/DSM conference, out in San Diego, and I thought to myself, 'This can't be right.' I didn't like what I was hearing when the utilities described their pilots.
"It was all hype. I kept going back to the basic question: What are the customers saying? Instead, when the utilities described their projects, nobody mentioned customers. Everybody was talking about energy costs from an engineering point of view. And I know many companies are thinking about whether to go into this without doing any consumer research."
The biggest surprise?
"I was completely amazed by how much the participants knew about what was available, what was possible and who might offer these services. Most utilities are sitting there, watching their neighbor. But customers are thinking outside the industry; they're thinking Microsoft, IBM, Wal-Mart."
I asked Rucker whether he saw energy and associated two-way services as a commodity or a niche product.
"It's all in the packaging. Branding isn't important for a commodity. But for a niche product, if you don't brand it, your customer will turn your 'value-added service' into a commodity. Everything will slip through your fingers and you'll be sitting on some very expensive technology."
Can you give any advice to utilities on branding?
Rucker: "I've gone to my third conference on branding and I swear that's the last one. The only time you own a brand is when you can claim attributes that you alone can earn. When Nike created their 'swoosh' logo, they didn't stop there. Their brand value lies in the minds of their customers.
"Corporate names and logos are not brands."
Energy/Telecom Tech Pilots
AEPCustomer-controlled load mgmt., home automation
C&SWEnergy mgmt., real-time pricing, home network
Detroit Ed.Home automation
Duke Pwr.CCLM, entertainment, interactive shopping
Fla. Pwr.Auto. meter read, RTP, CCLM, auto outage detection, remote connect/disconnect
Glaskow, Ky.Electronic village, Internet access (MCI, T-1 circuit), security, energy mgmt.
Gulf Pwr.AMR, RTP, CCLM, auto outage detection, remote c/d
NashvilleHome automation, remote c/d, remote meter read
PG&EEnergy use (remote monitor), home network, Internet connect to TV box
PSC of Colo.AMR, energy use (remote monitor), auto outage detect., RTP
SoCalEdAMR, bill disaggregation, outage detect., energy mgmt.
Southern Co.RTP, energy mgmt., Internet, security, long-distance tel., interactive TV, one bill
Tamp Elec.AMR, bill disaggregation, entertainment, home automation, Internet, interactive TV, remote c/d, RTP, security
WEPCOAMR, CCLM, outage detect., remote c/d, security
Source: Michael. A. Rucker, The Second Opinion (market research and branding), Atlanta.
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