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Where do telcos fit into the smart grid game

Tony Chan | June 25, 2009 | 0 Comments

Cable&Wireless’ £270 million deal to supply the underlying communications infrastructure for National Grid, the UK’s grid operator, provides a pretty good idea of the role of the telecoms industry in the smart grid game, together with what an operator needs to offer in order to be successful.

This deal is arguably the first major deal for the telecoms industry in the smart grid space, but it should not be mistaken for a smart grid. C&W is clearly not supplying a smart grid as an application, it is only supplying the communications infrastructure.

For that network to become a smart grid, software and hardware services will have to be deployed on top to add intelligence and functionality into the UK electricity grid.

Already major operators in the US, such as AT&T and Verizon, have partnered with smart grid solutions providers to offer an one-stop-shop for utilities, thus adopting more or less the same model. The C&W deal differs in that the operator has secured the networking contract directly with the grid operator, instead of as part of a packaged solution like the US model, leaving National Grid with the job of sourcing the smart grid solution on top of the network.

If you look at it this way, the C&W deal is actually no different than any other network deal for the telecoms industry, involving bandwidth, connections, and some management of the network. But is it that simple?

The answer to that is far from simple. While telcos have been known to go out of their way to secure a contract, the technical parameters mentioned in the release show that C&W has had to deliver far and beyond traditional connectivity or network services.

In the words of C&W, it has to “design, deliver and manage a dedicated Next Generation Operational Telecommunications Network (OpTel NGN),” for National Grid. The operator does not say whether the OpTel NGN will be a brand new network, or one that is carved out of C&W’s existing infrastructure, but it is indicated from the press release that it has to be a “dedicated” infrastructure, fiber-based, and support multiple services.

C&W will also build a dedicated Network Management Centre on a National Grid site, including engineering and technical support for all of National Grid’s sites (mostly High Voltage Substations), as well as develop an “exclusive Major Incident management and priority fault restoration process” as part of the deal. In addition, C&W will adopt “an enhanced SLA” for the deal and provide some advanced network and performance management tools, including an automated “Configuration Management Data Base”, to National Grid.

Now, all the above conditions are applicable when telecoms operators deal with major customers, who often will ask for customized SLAs, or access to advanced management tools, but few will go as far as demanding a dedicated NOC for their network – although that has been known to happen.

What it does show is that to compete in the smart grid game, telcos will have to go the extra mile.

Lastly, it is evident that the smart grid game will be a winner-takes-all affair for telcos. Whoever wins the first smart grid network contract will be entrenched for a long time to come. Migration to another network provider will be a highly complex affair even without taking into account the mission-critical nature of the traffic.

And there is unlikely to be a second opportunity since the majority of markets will have only one electricity grid.

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