Is entry into telecoms the right strategy for your utility?

On the face of it, the argument for electric utilities to enter the telecoms market is irresistible, as they already possess many of the features that should ensure success in this new network business. However, the two industries are actually radically different, and require quite different approaches. If the US is any example, there will also be strong opposition from a wide variety of constituencies, all of which will attempt to game the regulatory process to deter entry. To wit, while telecoms incumbents obviously have no incentive to promote competition, consumer “ombudsmen” on the other end of the political spectrum often believe that electric utilities are unfairly exploiting a strong position that was gained and paid for exclusively by captive customers. Telecoms entry is therefore not a strategy to be entered into lightly. Lawrence J. Spiwak Phoenix Centre for Advanced Legal and Economic Public Policy Studies