How Smart Grids Can Become a Strong Revenue Opportunity for CSPs
Established relationships with customers and businesses put operators in an excellent position to reap the benefits of services and other opportunities in the utilities space.
Smart grids remain relatively undisrupted by communication service providers (CSPs), although they offer opportunities that could be of interest in the telecom space. For example, smart meters might only generate $3 per year for a CSP, but if there are over 50 million smart meters nationwide, then the revenue numbers look more significant, making this an area of increased interest to operators. Telefónica UK is one CSP that saw the opportunity, and created a partnership with Netcracker to deploy revenue management through a hosted managed services model to provide rating, billing and mediation capabilities for its smart metering program across 53 million devices in the UK.
There have been some other interesting case studies of mobile network operators (MNOs) working with electricity companies to produce respectable margins by working with distribution network operators (DNOs) in the smart meter space. DNOs own and operate the system of cables and towers that connect electricity from the national transmission network to homes and businesses. DNOs are the third stage in a four stage value chain:
1. Generation: power plant ownership and operation
2. Transmission: these companies operate the high voltage transmission networks
3. Distribution (DNOs): operating local distribution via towers, cables and meters
4. Suppliers: electricity sellers with the customer-facing role
The DNO section is the main target market for the CSP as it requires connectivity to end point sites and, from a business perspective, it shares several similarities with running a telco network.
Utilities are Undergoing Similar Digital Transformations
Like the telecom industry, the power industry is also experiencing large scale transformation projects to digitalize operations and business processes and are deploying systems to automate processes in their network management, performance monitoring and more. However, it appears that in their digitalization, CSPs are not the first port of call as a service provider to enable this transformation. The energy companies often build their own networks, believing that to be the only way to have access to a resilient enough network to address their very specific needs, and to have the exact geographical requirements overlaying their power network. So what is the potential play for CSPs going forward?
Wireless Connectivity Enables Digital Service Operations
The changing face of power distribution means that new opportunities are appearing that may make a CSP partnership more attractive to DNOs. Smart meters are very much in the NB-IoT/LTE-M device vein, and as such can be served by MNOs with an aggressive IoT strategy. These entities will need a distributed, enterprise-grade connectivity solution like SD-WAN but with added mobility. They will also likely need cloud services on which to run their applications and could even need OSS-style network inventory and network management, all of which can be addressed in a package by a CSP.
The Larger B2C Opportunity
Convergence of smart building or smart home services could be linked by partnerships with the forth group in the energy value chain, the energy suppliers themselves. As CSPs already have an existing channel to customers, with existing billing relationships and the access to implant native applications for smart building services into an existing multi-play screen, CSPs have a solid opportunity here. Both on the consumer side with smart home applications such as heating and lighting and on the commercial building management side.
CSPs as the Cybersecurity Partner
As a large system of distributed and interconnected systems, a grid of smart meters offers a large attack surface. Each smart grid subsystem, its associated assets and the data derived from those cybersecurity technologies and best practices necessary to protect the smart grid include: anti-virus, firewalls, intrusion prevention systems, network security design, defense-in-depth and system hardening. CSPs are proven experts in creating robust security measures on their networks, with an equally large attack surface. Thus a CSP offering connectivity and various cloud services could also be a trusted security partner to the emerging parts of the energy industry.