Telecomms to the people: Glasgow leads the way

19 May 2000

The people of Glasgow, Kentucky, seem to regard their local electric utility as the ultimate in service. But it is not because it provides reliable electricity supply. It is because of the high performance telecommunications offered, such as Internet connection at 7-10 Mb/s, at well below the average market rates. James L Thompson, Electrotek Concepts, Inc, Knoxville, TN, USA and William J Ray, Glasgow Electric Plant Board, Glasgow, KY, USA

Modern telecommunication services are becoming a necessity of life in the same way that electricity achieved that status early this century. The flow of “bits” into the appliances in our homes and businesses should probably have its own name, perhaps “infotricity” would be appropriate.

Today, nearly the same conditions exist with respect to the delivery of “infotricity” that used to exist in the early days of electric power. Cable television and the telephone company mergers mimic the creation of the huge electric utility holding companies of the 1920s. The rate disparities originally a part of the electric utility industry are also back again in the telecommunications industry. The same cable television and high speed Internet access service offered in Glasgow, Kentucky, by the Glasgow Electric Power Board for $27 a month is sold in other areas for over $85 a month. There is consolidation of the forces intent on monopolising “infotricity.” LG&E combines with KU, Microsoft purchases a massive interest in ComCast Cable, AT&T seeks to recombine with its progeny, the Bell Operating Companies. One does not have to be blessed with divine vision to see where all this is leading. One only needs to understand the cyclical path of history to realise that our economic well-being is at issue.

The modern electric power industry has an opportunity to bring about a technological revolution. The electric power industry can bring modern advanced telecommunication services to each home and business it serves at significantly lower rates and in many cases of better quality than the incumbent suppliers. Today’s computers have not fulfilled their promise of improving our daily lives because of, in large part, the limited capacity of the telecommunications facilities in our cities and towns. The telephone companies provide bandwidth roughly akin to a dirt driveway. Cable companies provide bandwidth comparable to a one-way interstate highway. What is needed is the equivalent of a two way interstate highway with on and off ramps at each of our houses! With such a telecommunications system in place, we can all have “infotricity.” We can have the cable television services that we really want at the sort of rates that are available when someone in the marketplace is determined to price their product competitively. We can all have access to the Internet and to each other’s computers at speeds now available only to the rich and powerful. With this sort of infrastructure in place, our lives will be enriched in a fashion comparable only to the way our parents’ and grandparents’ lives were revolutionised by the initial provision of electricity to their homes.

This technological revolution will set in motion the next round of irreversible changes and improvements in our society. Adequate bandwidth to the home will give rise to adequate bandwidth within the home. This will enable true competition in all of the remaining monopoly services. The days of the one electric meter at the home will give way to the ability to monitor the energy uses of discreet appliances. Energy will be sold as a total end-use product. We will probably see the dawn of an era when we will subscribe to hot water, air conditioning and other services from vendors that have particular expertise in these services and can deliver them to the homeowner while purchasing the energy for their services from the new “technology utility.” Telephone service, as we know it today, will become one of the many services riding into our homes on a robust high speed telecommunication path.

Modern electric utilities can draw upon their original mandate and can now do the same in creating their natural descendants, the “technology utilities.” Information technology can be managed just like electric technology. Servers and telecommunication circuits can parallel generators and transmission/distribution lines. The utilities will build the connections to the homes and pay cost based rates for the ultra high speed connectivity provided. In other words, the industry has the opportunity to democratise this technology like they did electricity before, and cause another revolution in the way we live our lives.

The Glasgow experience

A pointer to the way ahead for electric companies is provided by the Glasgow Electric Plant Board (GEPB), a small municipal utility in Kentucky, which as long ago as 1988 embarked on one of the early utility ventures into a fully interactive communication and control system.

Glasgow has only 6000 customers and is an unlikely utility candidate to focus on what turned out to be, relatively speaking, one of the most aggressive telecommunication efforts in the USA.

It was an effort initiated before enabling legislation made it easier. The initial aim was to build a communication network that connected the Plant Board to major control points on its distribution system as well as to every residential, commercial, and industrial meter on the system. The initial goal was to have a state-of-the-art supervisory control and data acquisition system and a load control system for water heaters and air conditioners to help reduce system peaking costs.

On the surface there is nothing unique about this, even for a small public power system in rural Kentucky. But what makes Glasgow’s case significant is that the Plant Board today is the primary provider of cable television, Internet, and high-speed data service to its consumers and is considering ventures into local dial tone and long distance. These services are being provided at better quality than most of us receive in our own service areas and at prices far below average market rates. Internet service is delivered at a maximum shared speed of 10 Mb/s with average speeds being around 7 Mb/s compared with the typical 56 kb/s for dial-up modems.

A 4 Mb/s high-speed data service is available to residential and commercial customers for $11.95 and $19.95, respectively. These levels of service and prices are significantly better than any other incumbent operator in the service area. Glasgow received and continues to receive national attention for its technical capability and service to consumers.

But beyond its technical accomplishments, what the Plant Board has learned about its consumers, levels of service, and operating in a competitive marketplace has lessons for all utilities, large and small, that will carry the successful ones forward into the future.

The Glasgow Electric Plant Board is constantly experimenting with new ways to improve the life of its consumers through new and better services with quality and price in mind.

For example, at the risk of sounding melodramatic, with advancing telecommunication technology, something as unique as the Internet could literally be the difference between success and failure for utilities as they move into a deregulated market place. Utilities will rise and fall and be absorbed by neighbouring utilities based on their response to these changing times. Glasgow has been on journey of discovery. It is a discovery that is as old as the electric power industry itself, yet seems to have been discovered afresh with the advances in telecommunications.

The people of Glasgow seem to look upon their utility as the last word in service. They put the Plant Board on a pedestal when it comes to delivering service. Is it because they deliver electricity? Absolutely not! It is because of their telecommunication services. The customer expects reliable power to be available at their service entrance and outlet just like they expect the sun to rise in the morning. That is the utility’s job; it is supposed to happen that way. Now, if for some reason power is not supplied the way it is supposed to be, then the customer will start thinking about you, no longer taking you for granted. There is no customer recognition for doing what is expected.

However, if you can give the customer faster data speeds, a reduced cable television bill, improved level of television service, this new feature called the Internet at faster speeds and reduced cost, then you may just be put on a pedestal that is very difficult to knock over. The Glasgow, Kentucky, community is not a high technology market. Far from it. Yet everyone wants these services. They hear about it from their neighbour and they want it. It makes their life simpler, and that is all that matters to them. There are those in Glasgow that think that the Plant Board invented the Internet. They see commercials on television that talk about certain web sites, and their comment is that “they’re doing that Plant Board Internet thing.” Recognition and product differentiation like that by consumers is very powerful, and it is very difficult to take that away.

Who does the consumer revere when it comes to service and customer loyalty, and who holds the high ground in a deregulated utility environment? The other more main stream telecommunication providers outside the utility business would have you believe the utility’s business is to supply reliable power to the consumer and the new, advancing telecommunication services are better suited to someone else. What is wrong with this picture, and who holds the high ground under this scenario in a competitive market place? This is not a technology issue; it is a social issue, and it is going to change the way we live and do business beyond our wildest dreams. We have only scratched the surface of the potential impact of the new, advancing telecommunication technologies on the utility industry and their end consumers. The consumer does not know what they want, because they cannot always imagine it. All they know is that they want their lives to be simpler and easier. As an example, if you had conducted a survey about a consumer’s need for television when it was first invented, the results would be very different from a similar survey performed today. People could not imagine then how television would impact their lives today. No one knew they needed television until they had it. It is the same with the advancing telecommunication services of today, especially the Internet. All the consumer wants is for their lives to be simpler at competitive cost-based rates instead of market driven rates. And the consumer deserves it at competitive cost-based rates like every other utility service.

What does it mean when the Glasgow consumer likes their Internet service, their high-speed data service, or even their cable television service? It means that they have come to regard these services as a necessity of life just like electricity. Those of us in the electric power industry know that we do not sell energy. We have known this since the beginning of the industry. People do not want energy, they want a warm (or cool) house, cooked food, and commercial and industrial efficiency. It is exactly the same with telecommunication services.

The large integrated utility

The electric utility industry is no different from any other industry trying to position itself for the future in that it is integrating the powerful forces of the digital world into its business objectives. What differentiates the electric power industry from others is that it is embracing this new technology at the same time as it is going through fundamental changes in a deregulated market place. It is inevitable that the structure of the electric utility business will be transformed in the way it provides energy services and other new as yet undetermined services. “Information technologies and communication-based services can provide utilities with important tools for shaping the market place by securing, maintaining, and retaining customers.”(B K McIntyre, UTC Journal, January 1998). Competition mixed with new and advancing telecommunication technologies and high expectations on the part of the consumer are the driving forces behind these dynamics. These forces have already started to and will continue to cultivate new services and improve existing services that will be very dependent upon telecommunication technologies.

Customer contact is an important issue in itself and one that will rely heavily on advanced telecommunication capabilities. Customer service is an important way for a utility to differentiate itself from its competitors. “To succeed in the competitive world customer contact must meet and exceed customer expectations.”(Lori Bocklund, UTC Journal, January 1998). In larger utilities the customer call centre is a way for the utility to foster this customer contact, and advanced telecommunication technologies play an integral part of such an initiative. There are certain operational practices that characterise the successful customer contact centre and help the utility achieve service differentiation. They are: Customer choice and control. Customers demand a choice and control over how they communicate with their utility. Telecommunication technology plays a roll in how this is implemented.

Personalised, relationship-based service. Consumers have, in general, become accustomed to personalised service from suppliers, and it is no different with the utility.

Customer segmentation and call segmentation. The utility of the future will realise that all consumers are not created equal and direct their response to the customer accordingly.

Proactive contact. Utilities in a competitive marketplace will find that they have to anticipate customer needs, taking a very proactive approach to customer relations.

Advanced automatic call distribution (ACD) features and functions. Modern telecommunications technologies help utilities maintain ACD capabilities such as conditional routing, skills-based routing and sophisticated reporting tools for tracking performance and resource utilisation.

Interactive voice response (IVR). Turning service on or off, payment notification, checking account status, and checking outage status are a few of the ways utilities use these automated, self-service features.

Computer telephony integration (CTI). CTI supports integration of the voice call with the business applications and information stored in customer databases.

Internet and the World Wide Web. The Internet and World Wide Web can help utilities foster good customer contact and will become more important as their use grows exponentially.

Customer contact tools. Customer contact tools include databases to track customers and products, contact history of customer calls and events, scripts for selling or servicing to ensure uniform and optimum interactions, and workflow tools to ensure problem escalation/resolution/follow-on fulfilment systems to send information through the medium of choice to customers when they need it.

All of these technologies and tools are essential to supporting customer needs and maintaining a successful customer call centre capability.

An example of customer contact through on-line bill payment can be found in Los Angeles where Princeton Telecomm Corporation was selected to provide web-based bill-paying services for two Southern California utilities; the Los Angeles Department of Water & Power (LADWP) and Edison International’s Southern California Edison. According to Princeton Telecomm, “customers receive accurate, timely and secure payment transactions through electronic debits to their bank accounts over the web.” As an example of utilities maximising value and return from their existing under utilised infrastructure, excess capacity on transmission towers and microwave towers is ideal for third party communication equipment. The cellular telephone industry built approximately 20 000 cellular sites during a thirteen year period from 1983 to 1996, and personal communications services are expected to raise the number to about 100 000 in half that time. In a deregulated, competitive utility market place, looking for ways to diversify and generate new revenue streams, this is an excellent use of existing resources, requiring very little capital investment.

The importance of branding

As mentioned earlier in the Glasgow case, the electric utility industry has been around for a while and is very mature. There is very little growth expected in the coming years and, in some cases, the industry may experience some shrinkage.

While the advancing telecommunication markets are showing high growth rates with significant returns, utilities are searching for increased revenues and improved customer satisfaction. How does a utility differentiate itself and brand its service offering in a competitive business climate? There are clearly synergies between these competitive forces and the availability of new telecommunication and information technologies.

For those utilities that do not have immediate capital resources to meet the demand, strategic alliances are being sought. Entergy and Central and South West Corporation have been pioneers in the effort to integrate telecommunication services with their core business, but there are many others doing the same thing.

Such services as energy efficiency programmes, electricity pricing programmes, purchased power capabilities, and remote metering capabilities all rely on advanced telecommunication solutions.

The successful utility of the future will migrate away from the vertically integrated structure of the past and opt for an unregulated retail service market that provides a host of services such as high speed data, voice, video, entertainment, and other as yet undetermined services all bundled with energy services.

Services must be branded and differentiated in the market place in order to attain, maintain, and retain customers.

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