European Utility Telecom Conference, Rome, 27 October 2006 - As utilities look at ways to maximise their communications infrastructure in an effort to become alternative Telcos, or UTelcos, Mason Communications warns of underestimating the impact that moving from being a supplier of telecoms for internal users to supplying an external, public market has on utilities.
The advice came from Max Khan, principal consultant at Mason prior to the annual European Utility Telecom Conference in Rome.
"Telcos have great appeal since utilities typically have huge capital already invested in their telecoms infrastructures, which can consist of a rich mix of fibre and transmission equipment and consequently the cost of providing capacity over existing networks can be marginal," says Khan.
While encouraging senior ranking officials, board members and government ministers to factor telecoms into their strategic thinking, Khan also outlined the challenges facing utilities wanting to make the transition. He pointed to the difficulties experienced by some utilities in Western Europe who shared similar thinking in the wake of liberalisation in the 1990s.
"The transition often creates tremendous tensions within utilities, from the skills shortage to deal with the transformation - for instance where will the specialist sales, marketing and customer service people come from -to the implications for the continued provision of telecoms on internal businesses. In an attempt to deal with these tensions, utilities have adopted a variety of ownership models and organisational structures, but many have proved less than optimal," explains Khan.
"The regulatory regime has a huge impact on a UTelco, but countries in the process of deregulating their energy and telecoms sectors, are likely to have an evolving regulatory environment for the foreseeable future because it is not possible to deregulate everything at once. This creates opportunities for UTelcos, in parallel with uncertainty, that need to be managed."
According to Khan, a `multiple perspectives` approach to UTelco strategy development is needed to avoid common pitfalls as experienced by UTelcos in others markets across the globe.
"This approach takes into account not only deep telecoms market opportunity analysis but also assesses a broader range of factors such as; organisational culture, operating/delivery models, stakeholder conflict, attitude to risk, asset ownership/cross-charging and management of new internal relationships that can exist between a utility and a UTelco," Khan says.
"Mason has used this approach across numerous consulting assignments with UTelcos. By using this approach, you ensure the development of compelling, but at the same time pragmatic, strategies that achieve greater acceptance and all-round buy in. Essential ingredients to ensure that a utility develops a successful UTelco whilst at the same time protecting the core business."
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