Broadband communications-based services offer utilities huge competitive potential; New Andersen Consulting study outlines major opportunities and options for utilities.

CHICAGO--(BUSINESS WIRE)--Jan. 23, 1995--While their use of two-way communications services to improve operations is expanding, only one quarter of the utilities participating in an Andersen Consulting study are piloting the kinds of customer-focused services that could offer a key differentiator in a highly competitive marketplace.

Communications-based services, both operational and customer-focused, can help reduce costs, improve operating efficiency, retain and attract customers and create new sources of revenues, according to "The Role of Broadband Communications in the Utility of the Future" study, which Andersen Consulting conducted for Cable Utility Communications Services group (CableUCS), a consortium of four of the five largest U.S. cable operators.

Andersen Consulting's analysis reveals that communications-enabled services could bring utilities potentially huge financial benefits -- up to $700 million annually for the largest utilities in a full retail wheeling marketplace. "Direct communications links between utilities and their customers will become increasingly important as utility industry competition intensifies," concludes Tony Fakonas, the Andersen Consulting associate partner who headed the study.

Services for both commercial and retail customers that Fakonas says offer the greatest opportunities include:

o Customer usage management -- one- or two-way communication that permits the customer or utility to manage electricity consumption via time of use pricing, real-time pricing or direct load control.

o Interactive services -- which allow utility customers to communicate directly with service providers.

o Energy usage information -- one-way provision of energy usage data to customers

o Service bundling -- provide energy, telephony, entertainment and data services in a package tailored to customer needs.

o Market pricing and availability -- provision of competitive energy market options

Similarly, operations-focused services that have the greatest potential value include:

o Automated meter reading -- remote connect/disconnect and meter reading

o Data collection and management -- use of network and customer operations data to improve products and services as well as reduce cost of data collection.

o Document handling -- electronic archival and distribution of utility documents.

o Field data transfer -- data exchange with utility field personnel and vendors.

o Network control -- automation of distribution network, including SCADA, dynamic load control and Volt/Var control.

o Outage handling -- reduction of outages through fault detection, fault isolation, and predictive maintenance 

"Broadband technologies offer utilities the greatest flexibility for meeting current and future communications demands," notes Fakonas. "In fact, the richness of broadband communications, which can carry large volumes of voice, video and data information, provides utilities with a major opportunity to improve their competitive positions as well as to expand into new areas."

Tapping into these potential benefits will require utilities to consider two options: building their own communications network or teaming with third-party providers, points out Fakonas, who is part of Andersen Consulting's utilities industry's strategic services practice. "Those utilities that we surveyed want to keep their options open, but most are clearly leaning toward forming alliances with communications providers."

Cable operators, local exchange carriers, long-distance phone companies and others are all viable future alternatives for supplying utilities with broadband communications, Fakonas says. "Because of their deployment of broadband networks to the majority of homes and many businesses, and because of their ongoing system upgrades, cable companies have the opportunity to develop Full-Service Networks sooner and with lower investment costs than other companies."

Growing competition among broadband network providers will enable utilities to benefit substantially from the widespread availability of low-cost, reliable, high-speed communications. In this environment, "service options and pricing will become the primary drivers of communications decisions by utilities," notes Fakonas.

For the study, Andersen Consulting conducted research at about 30 U.S. electric utilities, including investor-owned, public power entities, municipals and cooperatives, as well as interviewed senior executives from numerous communications providers, technology vendors and government agencies.

Andersen Consulting's utilities industry practice has 2,500 professionals serving more than 300 utility customers worldwide.

Andersen Consulting is an international management and technology consulting organization whose mission is to help its clients change to be more successful. The organization works with clients from a range of industries to integrate their people, processes, strategies and technologies. Andersen Consulting has more than 29,000 people in 150 offices and 46 countries.

EDITORS NOTE: Andersen Consulting is not a division of accounting organization Arthur Andersen.

CONTACT: Andersen Consulting, Chicago

David Moon, 312/507-2375