Utilities plug into telecom services

When people think of Sudbury, Ont., the first things likely to come to mind are the Big Nickel, mining and the Canadian Shield.

Few would associate the words “telecommunications mecca” with the city of 93,000. But a telecommunications mecca is exactly what Sudbury has become over the last several months thanks to a $6-million broadband fibre-optic network known as the Sudbury Regional Network (sureNet).

The driving force behind Sudbury’s transformation into a well-connected community isn’t a traditional telecommunications carrier, but the municipal utility, Sudbury Hydro. While it might seem unusual for a provider of electricity to jump into the telecommunications game, it’s a trend analysts believe Canadians will see a lot more of in the coming months as utilities shift from being publicly owned utilities to privately run concerns.

That should be good news for Canadian businesses seeking more high-speed routes for their expanding data needs.

John Jeza, Sudbury Hydro’s manager of services, said it wasn’t much of a stretch for the utility to move from electricity into telecommunications. Electric utilities already own and operate fibre networks for electrical distribution and they can provide data services over extra space on existing fibre lines, or easily lay new fibre lines along existing rights of way.

“We own the infrastructure already,” Jeza said. “We have a lot of expertise. Not all of it, but we understand what mission critical is. Our uptime is 99.9987 per cent on the electrical side and that corresponds with a lot of expectations of 99.5 per cent in terms of uptime on telecommunications.”

Sudbury Hydro and its 20 partners in the sureNet network are able to provide links ranging in speed from 512Kbps to OC-3 throughout the city. They’re also able to offer high-speed WAN connections outside the city through sureNet partner AT&T Canada.

Jeza said he knows of at least 14 or 15 other utilities preparing to get into the telecommunications business.

Sudbury Hydro managed to get a good head start, he believes, because there aren’t as many service options in northern Ontario as there are in the south.

“If you look at the north, we’re the highest tariff structure (under Bell Canada’s rates) and we have the lowest level of service,” he said. “The density just isn’t there…If you just did this for communications services, it would just prove what the telcos already know — that it’s very expensive to do.”

One sureNet customer who’s glad Sudbury Hydro branched into data services is Bruno Mangiardi, IS director for the City of Sudbury.

Thanks to sureNet, Mangiardi has been able to connect all city-owned facilities to high-speed links for such tasks as file sharing, e-mail and Internet access. Previously, Mangiardi said, the city had ISDN lines for some sites and Centrex and old data lines for others.

“From my users’ point of view, it’s black and white as far as the speed,” he said. “The speed is incredible and it’s much easier to communicate.”

Kim Allen, president of DTE/Probyn Energy Solutions of Toronto, a firm that advises utilities on business opportunities, noted Sudbury Hydro isn’t the only utility to branch into the telecommunications arena. In fact Allen’s former employer, the Scarborough Public Utility Commission in Ontario, began offering telecommunications services as far back as 1992.

“Utilities have been in the telecom business for years,” Allen said. “All they’ve been doing is leasing space on their poles.”

But according to Allen, that’s changing.

“How I like to look at it is the whole value chain…As you move up the value chain, the next step is leasing dark fibre, and many utilities are into that, the next stage is leasing some lit fibre, the next stage is providing some data services and the next step up is providing data and voice services.”

There are several factors driving utilities further into the telecommunications field, Allen said.

The first, and most significant, is the deregulation of the Ontario hydro market and impending deregulation in other provinces. Now that utilities must compete to stay viable, they’re looking to get into new businesses and telecom is a natural fit, Allen said.

Not only are there similarities in building hydro and telecom networks, but utilities also have experience in delivering services to many customers and sending out monthly bills.

“So the businesses match up very well,” Allen said.

Steve Power, a utilities consultant with Ernst & Young in Toronto, echoed Allen’s thoughts.

“As the industry is deregulating and monopolies are being shattered, utilities are looking for additional revenue streams. Most of those utilities have telecom assets that are required to run their transmission networks and to run the whole power supply network.”

For example, Power said, Ontario Hydro operates a province-wide network of towers, fibre optics and satellites that has plenty of additional capacity.

Power believes that utilities will offer the space on their networks to other telecommunications providers, rather than to enterprises directly.

“They want to be the carrier’s carrier,” he said.

That way the utilities need only concentrate on their main specialty, which is infrastructure maintenance.

In Sudbury, Mangiardi plans to take maximum advantage of his access to Sudbury Hydro’s infrastructure.

The city has plans to get into videoconferencing and sometime this month hopes to install customer service kiosks at various locations in Sudbury.

“People will be able to buy arena tickets, register for programs, book facilities, pay their tax and utility bills,” Mangiardi said. “We’re even going to give them Internet and e-mail access from these kiosks.”