The Next Generation Electric Utility
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- Aug 26, 2020 4:00 pm GMTAug 20, 2020 11:16 pm GMT
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This item is part of the Special Issue - 2020-08 - LTE Networks, click here for more
Broadband-based internet services are critical for some aspects of service that utilities are required to provide. As utilities build out this communications infrastructure to meet their own needs, they may find opportunities to meet the needs of customers who may lack adequate broadband service. Instead of creating new regulations, existing utilities can enter this market to provide this communications infrastructure.
During the ongoing pandemic, many studies have shown that a majority of U.S. households now regard ultrafast broadband internet service as a basic necessity — no different than electricity or water.
However, there is still a fundamental problem. According to a recent study by Microsoft, if broadband access were to be counted more precisely, the number of people in the U.S. that still lack internet access at broadband speeds would be close to 163 million, or nearly half of the U.S. population.
In recent times, broadband technology has become the backbone of everyday life as well as the economy. Recent data from the Internet Association, a group that includes Amazon, Facebook, Twitter, Uber and more, shows that Internet-driven commerce now accounts for $2.1 trillion in U.S. GDP, or approximately 10% of the economy.
As such, digital infrastructure is now becoming the connective tissue for numerous essential services. These include daily necessities include paying bills, buying groceries and receiving vital health information. With schools struggling to cope with the realities of an unprecedented pandemic, distance learning has become another necessity.
In today’s society, access to broadband internet services should be on an equal plane with other core utilities such as water, gas and electricity; thus, the costs of building the infrastructure should be borne by only one market player with a requirement to serve by connecting every user.
Private Long-Term Evolution (PLTE) for Utilities
With the modernization of the electric power grid, utilities themselves are much more reliant on broadband communications platforms. With increasingly bidirectional power flows due to distributed generation, electric vehicle charging and other new demands, power utilities must communicate with the distribution grid and its customers in an increasing number of locations. This rapid growth in device density creates the need for more flexible broadband access beyond what fiber can provide. This growth joins evolving technologies and new spectrum availability as the main drivers behind development of private long-term evolution (PLTE) networks within the utility sector.
The recent action by the Federal Communications Commission (FCC) to make parts of the 900 MHz spectrum available for the development of critical wireless broadband technologies is a landmark change for the utility industry. Along with the Citizens Broadband Radio Service, this order is a primary enabler for utilities to begin building out their own private LTE communications networks, unlocking next-generation, mission critical applications not available via current narrowband systems. The capabilities of PLTE are vast and solve a whole host of use cases. But, one large use case that is being overlooked by many utilities today is how their communications infrastructure could provide internet services to rural America.
Existing Infrastructure Provides Starting Point
The utilities that supply the nation’s power already have infrastructure deployed throughout their service territories. With these connections, they have relationships with every customer. Many rural areas are served by municipal or cooperative power providers who entered these markets because the citizens desired a service the open market had not stepped in to provide. These utilities have been offering internet access over fiber for many years and more are beginning the process. Having all power delivery utilities, both large and small, working in partnership to provide these much-needed services can provide better power grid management and a larger customer benefit.
As utilities deploy PLTE networks, the cost to build the backhaul network (to provide connectivity from the cell site to the LTE network core), towers, shelters and power infrastructure to serve the needs of the grid are the same as for expanding to serve the needs of the public for internet access. This should be strongly considered for not only PLTE projects, but for the massive fiber builds already underway at many utilities.
Funding the Rural Broadband Initiative
The U.S. Department of Agriculture (USDA) has been investing in rural telecommunications infrastructure for decades, and its current programs offer more than $700 million per year for modern broadband connectivity in rural communities. Soon, the USDA will almost double these longstanding programs with at least $600 million of additional funds for expanding rural broadband infrastructure in unserved rural areas and tribal lands.
Recently, the FCC also put its stamp of approval on this effort with its new Digital Opportunity Data Collection plan, aimed at closing the digital divide by improving data collection and mapping for rural broadband. This plan builds on the FCC's approach, first adopted in August 2019, to map where broadband exists and not does exist. With billions of federal dollars at stake, the FCC has been tasked by Congress with improving the accuracy of its broadband maps. Next, Congress must fully fund this data-driven mapping project. It is essential that future federal broadband spending be based on the most accurate and granular maps available.
The amount of government funding in the initiative for rural America is substantial and offers up a great opportunity for the electric utilities to help to achieve the rural broadband goals.
The government has already invested billions of dollars in this market. Requiring an open access model improves the odds of success for multiple reasons. It fundamentally improves the economics of deployment because the same dollar invested in construction to access the customer now serves multiple service providers. The penetration rates of customers utilizing the same infrastructure are two to three those of customers using dedicated service providers.
An open access market also increases competition; this is the very reason existing providers lobby so hard to prevent them. With competition comes market pressure on the cost of service and thus lowers the internet service price as well, or results in a higher level of service at the same cost.
Common Assets and Goals
Utilities and broadband service providers have common assets and goals. Given the scope and complexity of providing these broadband networks, electric utilities have natural competitive advantages in executing projects of this scale. They own poles, towers and both transmission and communication infrastructure — assets that are ideally suited to broadband deployments. They also understand how to manage the assets and have the equipment and a skilled workforce for repair and maintenance. Another benefit is that they are already a trusted brand in the communities they serve.
It must be noted there are other potential parties who could conceivably have interest in participating in a broadband buildout. These may include local landline telecommunications providers, cable television companies, municipalities or other local government entities, and even new entrants to the internet service provider market such as nonregulated affiliates of other utilities.
There are two approaches that utilities across the country are contemplating: the first being the infrastructure provider under an “open broadband” concept, and the second being the infrastructure and service provider. In both scenarios, the electric utilities are in a prime position to provide the physical infrastructure that these broadband services operate over. It must be noted, however, that broadband and internet access are not synonymous. Broadband is the infrastructure connecting end users to the nearest interexchange point, often located in large metros, while internet access is the actual service running on the infrastructure.
The “open broadband” concept is generally considered novel to the U.S., but the model has worked well across many European countries like the United Kingdom, Ireland, Germany and Italy. In this open and neutral model, the electric utility provides the infrastructure and the customer access under its regulated monopoly, while the broadband internet service provider (ISP) competes for the customer as a “broadband retailer.” Ratepayers and shareholders share equally in the risk and reward and end customers get the benefit of low marginal infrastructure cost built to utility standards, with an open price competitive market landscape for their ISP. This lends itself to having all market participants playing to their strengths, keeping costs low for consumers, all while extending broadband to rural America.
Some utilities are already working with their local governments and utility commissions to achieve a similar but more traditional approach. Broadband laws enacted during the last legislative session in Alabama, for example, allow electric providers to install, operate and maintain broadband systems within their easements and the areas of property used by utility companies.
C Spire, a communications company based in Jackson, Mississippi, is working with Alabama Power to bring gigabit-speed (1,000 Mbps) internet services to areas around Birmingham, Alabama, in 2020. Though Alabama Power is not directly providing broadband services to customers, the net effect is the same by working in partnership with C Spire. Alabama Power can deploy the fiber assets it requires while C Spire provides the end user service.
Maybe the best example of what is possible is in Ammon, Idaho, where the city treats broadband access the same as public streets and water. Residents pay for fiber to be installed to their homes ($20 per month for 20 years) and the residents own that fiber access. They are able to choose any internet service provider they want. It is a truly unique approach.
These innovative approaches can serve as models for the industry. Once the government decides that internet infrastructure is essential, these unique examples will become commonplace. The electric utilities are simply best positioned to accomplish the challenge of providing the “open broadband” access.
Leveraging Utility Telecom Infrastructure
Another advantage that the electric utility holds when building out a PLTE network is in the backhaul designed for that network. Most often, this is fiber to the cell site due to the large amounts of data that need to travel across that medium.
Most utilities have been building large and sophisticated data and fiber networks for many years, so the deployment of a PLTE network would likely include extending these fiber deployments to reach the new cell sites. By extending the reach of these fiber networks, the electric utility will be in a prime position to extend that connection point farther into nearby neighborhoods and populated areas where the utility can monetize the fiber infrastructure for use in broadband deployments.
Utilities could also extend a slice of their PLTE system to provide fixed wireless access service at each customer end location. AT&T is doing this today in remote areas using 2.3 GHz spectrum for fixed wireless access. This wireless model could replicate fiber models with the ISP simply riding across the spectrum. This is just another opportunity that should be explored for benefits to multiple stakeholders.
The Electric Utility for the Future
There’s a growing consensus that broadband is part and parcel to the critical electric infrastructure. Every community, whether rural or urban, needs broadband infrastructure for survival.
The electric utilities may hold the keys to providing a solution today, just as they did nearly a century ago. In rural areas, there are only a few entities that are truly able to provide this access, and electric utilities have a compelling reason to be that infrastructure provider. By building out the infrastructure required for PLTE deployment, utilities are placing themselves in even stronger position to deliver on the promise of rural broadband.