Some Good News: Spending on Utility Communications Is Up

It's good to see spending on something going up. The Utilities Telecom Council released a report this week that said spending on telecommunications equipment and services related to utilities will hit $3.2 billion this year. That is 21 percent more than 2009 and 3 percent more than last year.

The numbers, contained in a report entitled "Utilities Telecom Spending Market Forecast," said that two-way metering represents 32 percent-about $1 billion-of that spending. Transport networks, including fiber, microwave and other platforms, is the second biggest category at $813 million. The biggest percentage gainer going forward, the report says, is wireless: It will rise from 28 percent this year to as much as 50 percent of all spending in 2016.

Utilities are big users of machine-to-machine (M2M) communications. The nature of this type of communications is significantly different than consumer telecommunications. M2M messages are shorter and often don't require real-time delivery. For this reason, utilities' M2M traffic doesn't have to flow on 4G or even 3G networks: A residential meter reporting on how much electricity a home used can easily be accommodated by a legacy 2G network.

The utility communications segment also differs on the business side. Committing to a carrier is a big deal. Once a utility becomes a particular carrier's customer, they tend to stay put.

All of these are good for carriers. The cloud on that otherwise sunny sky is that the carrier may not get the business at all. Utilities, ever sensitive to the unique, vital and sensitive nature of their communications infrastructures, face the choice of using the public network or building their own.

Vendors, of course, will sell their wares to anyone involved in communications, whether they are utilities building and running their own networks, or public service providers. And, no doubt, the carriers themselves will provide consulting and other elements-including dark fiber-to the utilities. It is evident that carriers and vendors are well aware of the potential of the utility business. Here are three recent examples:

• This week, Sprint said that it is offering Proliphix's IMT-550 Internet Managed Thermostat on its wireless network. The carrier says that the device will help small- and medium-sized retailers monitor and reduce energy costs.

• Sprint also said that it will embed network connectivity into SmartLabs' INSTEON plug-n-play system. The offering, which will be available by the end of the year, will enable property owners to control energy from a portal or Sprint smartphone. Cisco also is getting involved.

• Late last month, Cisco introduced two versions of the Integrated Services Router (ISR) 819 Machine-to-Machine Gateway which, according to Network World, is designed to provide 3G and 4G connectivity to devices in "challenging environments." Utilities is one of the target vertical markets, according to the story.

The overlapping world of utility management, smart grid, "The Internet of things" and utility communications is potentially lucrative for many players. In all likelihood, these initiatives will be directly or indirectly buttressed by the infusion of investment and tax cuts contained in the American Jobs Act introduced by President Obama on Sept. 8 if, indeed, it makes it through Congress relatively intact.