Electric, gas utilities tap into telecom industry
[All,
Williams, and the potential future fiber barons. If they formed a consortium, it would be both immense and ubiquitous. And they've got the caital to pull it off. But no one is mentioning a consortium. Yet.
Frank C.]
August 31, 1998
LOS ANGELES, Reuters [WS] via NewsEdge
Corporation : Electric and gas utilities, faced with losing
their monopoly service territories, are moving into
telecommunications where deregulation has unleashed a
booming market for new services.
''The whole market is growing exponentially,'' said Tina
McMenamin, manager of business development,
information technologies, for Edison International, the
parent of Southern California Edison Co.
Over the past decade, utilities have invested billions in
distribution automation and other advanced information
technology, enabling them to cut costs and improve
efficiency.
Now companies like Edison, Enron Corp. and Williams
Cos. are looking to leverage this investment in
fiber-optic networks and land rights-of-way, to diversify
into industries like telephone and Internet service as
well as data transmission services like cable television.
''Our telecommunications business is key to our growth
strategy,'' said Bob Gannon, chairman of Montana
Power Co.
On Wednesday, Montana Power said it would leave the
''volatile and immature'' business of trading and
marketing commodity electricity, focusing instead on
expanding its fiber-optic network into a national
provider of telecommunications services by the year
2000.
The utility said it also would use the nationwide fiber
network to market and sell energy and energy-related
products.
Southern California Edison Co. filed last week with
California regulators to sell capacity on its fiber-optic
cable system to local and long-distance telephone
companies.
The move was spurred in part by a recent state
regulatory decision allowing the utility to invest
shareholder funds in new ventures, McMenamin said.
California opened its retail electricity industry to
competition on March 31, setting the stage for the
state's investor-owned utilities to explore new sources
of revenue.
Edison already leases nearly half of its excess capacity
to several local phone competitors, but it is now seeking
to supply services like bandwidth along with the lines.
''What we are looking at is providing
telecommunications services that other carriers already
offer,'' McMenamin said.
Depending on the response from potential customers,
Edison plans to invest in expanding its existing
fiber-optic network and in upgrading and installing
communications equipment. The utility expects to begin
providing wholesale service by the middle of next year.
Edison has no plans to extend its network beyond
California, she noted, but there is no shortage of energy
utilities with interstate telecommunications network
projects.
Communications units of three energy companies expect
to complete by the end of this year a 1,620-mile
fiber-optic network linking Portland, Ore., and Los
Angeles.
''It is about 70-75 percent finished,'' said Tracy Smith, a
spokeswoman for Enron Communications, which formed
a joint venture with Montana Power's communications
unit and a division of Williams Cos. to carry out the
project.
Enron Communications, now owned by natural gas and
energy giant Enron Corp., was a unit of Portland General
Electric Co., before the Oregon utility was acquired by
Houston-based Enron last year.
The Enron subsidiary also is looking at constructing
fiber-optic connections between Portland and Seattle as
well as between Houston and Miami, Smith said.
Part of the Houston-Miami route would run along the
rights-of-way set by Enron's natural gas pipelines, she
noted.
The natural gas industry, which is further along the
deregulation process than electric utilities, has been at
the forefront of the trend toward using existing assets
for the telecommunications field.
Williams, a natural gas pipeline company based in
Oklahoma which said it already operates the fifth largest
fiber-network in the country, announced plans earlier
this year to invest $2.7 billion in a 32,000-mile system by
the end of 2001.
Williams said it will have 69 major cities connected to its
network in 1998, growing to 100 as the expansion
proceeds.
Meanwhile, many of the unregulated subsidiaries
formed by utility holding companies in the wake of
electricity deregulation are attempting to market retail
communications service to the utilities' power
customers.
A unit of Sempra Energy, the parent of San Diego Gas &
Electric Co. and Southern California Gas, earlier this year
entered into a partnership to offer discounted
long-distance telephone service in central and southern
California.
Edison Select, an unregulated unit of Edison
International, is marketing retail products like Internet
access and home security systems to residential
customers. |
