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David Williams
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David Williams
Global Director of Sales, Research
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LTE for Utilities: A Spectrum of Challenges & Opportunities
Recent major outages highlight two of the major reasons why utility companies sometimes consider owning and operating a cellular network rather than the more common model of buying service from a mobile operator: availability and reliability. Utilities don't want to have to compete with a public network's other customers for bandwidth in the aftermath of a storm or other major event. And they don't want to find out that the public network is down when they need it most because the mobile operator wasn't diligent about maintenance, such as generator fuel levels.

A host of other factors influence utilities' decisions about network ownership and technology. One example is the communities they serve. Over the past decade, some small-town and rural utilities built WiMax and fiber networks not only for internal use, but also to provide broadband to their customers because incumbent Internet service providers (ISPs) were slow, expensive or non-existent. A few are now considering or deploying LTE for internal use, customer-facing services or both via relationships with mobile operators that own spectrum in those markets but don't want to build networks there because of the low population density.

Another factor is the regulatory environment, which often encourages utilities to make large capital investments because those can be used to help argue for rate increases. Buying service from a mobile operator is an operating expense (opex), which typically is subject to greater regulatory scrutiny and thus a potentially lower rate of return. Regulators also often limit utilities' ability to use ratepayer revenue to fund new business ventures in unregulated sectors.

Many utility companies prefer to own a wireless network in order to ensure availability and reliability. They don't want to have to compete with a public network's other customers for bandwidth, whether that's in the aftermath of a storm or other major event, or during normal conditions.

LTE is a viable option for utility applications. Key benefits include a global cost structure and its youth, which lines up with utilities' preference for technologies that can stay deployed for 15 years or longer. Vendors also are developing LTE modules and other products, such as CDMA and GPRS, that should significantly shrink the price premium over incumbents.

Many utilities have spent the past few years raising rates because consumer and business customers are using less electricity, which means less revenue both to maintain their infrastructure and to fund telecom projects. It's easy to blame lower energy usage on the recession, but U.S. Energy Information Administration research says increased use of energy-efficient products is among the reasons why the longstanding link between electricity sales and economic expansion/contraction is permanently broken. So to make sales, vendors need to convince utilities that spending money on LTE will enable savings through greater efficiency or enable new revenue streams or both.

LTE for Utilities: A Spectrum of Challenges & Opportunities identifies and analyzes key issues driving and inhibiting the utility market's adoption of LTE. It discusses how LTE compares to competitors such as broadband over powerline (BPL), CDMA, fiber and WiMax in terms of cost and capabilities. The report is based on interviews with a representative sample of companies in the ecosystem.

Sample research data from the report is shown in the excerpts below:
Table of Contents (4gltei1014_toc.pdf)
Each utility has unique factors that influence its decision whether to own and operate a cellular network or to buy service from a mobile operator. However, there are several other factors that apply to nearly all utilities. In fall 2013, Black & Veatch, an engineering company that serves both the energy and telecom sectors, surveyed 235 utility companies about their plans for smart grids and other communications projects. The following excerpt highlights how the type of utility affects interest in owning networks versus buying service.
[click on the image above for the full excerpt]
Total pages: 12
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