Why Telecom?

Dec. 18, 2000
Why does a municipal utility such as MLGW want to enter the competitive telecommunications business?Municipal utilities across the country are considering

Why does a municipal utility such as MLGW want to enter the competitive telecommunications business?

Municipal utilities across the country are considering a variety of telecommunications business strategies. Some are seeking to modernize their existing telecommunications systems, which monitor connections to the electric grid. Other municipal utilities that have existing telecom infrastructure see the synergies associated with upgrading technology and the potential to provide the community with enhanced telecommunications services and low-cost choice. Still others are concerned about becoming captive to the local telephone company, fearing they will not have access to the latest telecom services.

Ed Powell, CEO of Aptus Networks, says, "In contrast to the explosion of long-haul capacity, which is being rolled out coast-to-coast, the local loop has been neglected. This is due largely to the tremendous costs associated with upgrading an existing circuit-switched network to a new and different technology. Most new entrants to the local loop are not building networks to the home or new fiber-optics networks. It is the proverbial last-mile bottleneck."

The 1996 Telecommunications Act and other state and federal deregulation efforts have prompted much of the municipal telecom initiative. The electric, natural gas and telecommunications industries all are in the midst of revolutionary change and restructuring. Electric utilities have significant concerns about losing portions of their revenue base. This increased focus on competition has created major challenges and opportunities for participants across the energy and telecommunications value chains. Responding to these challenges and opportunities, innovative municipal utilities such as MLGW are discovering that providing telecommunications services to existing customers is a viable business option that capitalizes on core competencies and strategic assets already in place. It creates a robust new revenue stream and sets up an invitation for the latest telecommunications infrastructure that provides substantial benefits to the local community. By providing low-cost access to a high-speed, next-generation fiber network, Memphis Networx will enhance the status of the city of Memphis as the nation's distribution center by positioning it to be the center of information distribution. It will also help to close the digital divide by partnering with end-use retail service providers to bring the world of high-speed digital information to the community.

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