The Cellular Smart Grid: Can You Hear Me Now?


Will the fight for utility smart grid customers become as cutthroat as the battle over cellular subscribers between cell phone companies? Verizon Wireless (s vz) today is touting its smart grid network product for utilities in partnership with Itron (s ITRI), Ambient Corp. and Qualcomm (s qcom). While Verizon has been advertising its smart grid offer for months, AT&T (s T) has until now been the most aggressive cell phone provider for the smart grid market. Verizon’s increased efforts shows the growing opportunity and competition over smart grid services between cell phone companies.

So called “machine-to-machine communications” like the smart grid don’t include consumer customers and cell phone accounts, and run data over networks used by devices (see our new report on machine-to-machine networks at GigaOM Pro, subscription required). Consumers can be fickle when it comes to cell phone companies, resulting in churn and continuous upkeep. A smart grid utility deal, or a machine-to-machine service, in contrast, can be relatively low maintenance. Machine-to-machine services can also diversify cellular networks and the smart meter traffic on the wireless network. Real-time pricing, but perhaps also demand-response events, will likely be pretty minimal compared to, say, a wireless video stream.

As the market for smart grid networks — which Cisco (s CSCO) is claiming will be larger than the Internet — grows, cell phone companies see the massive opportunity. Utilities, like Texas utility Texas-New Mexico Power (TNMP), work with cell phone companies because they don’t have to put down the capital expense of building out and operating a network, but can, instead, rent space on an existing one. Cellular operators can also offer the utility the same tech advances that the large telecoms can deliver.

Startup Smart Synch has built a business off of working with AT&T and T-Mobile to offer utilities cellular smart grid networks. Network builder Silver Spring Networks announced a partnership with AT&T in December. Verizon, as detailed this morning, has its own partnerships and plans to launch its faster 4G Long Term Evolution (LTE) wireless network nationally, which it says can be used for the smart grid. But I have yet to hear of many utilities that have signed up to use Verizon’s smart grid service.

Utilities are also opting to build their own networks. Owning the network gives the utility control and avoids having to share bandwidth with other telecom customers. In addition, regulated utilities get to earn profits on capital expenses like building their own networks.

It’s still up for debate — at least in my mind — what method (build or rent) is more beneficial and cost effective. It seems like there’s major advantages for really large utilities to build their own networks, as well as for municipal utilities that can build networks and sell other services like broadband access. Smaller utilities, which have less access to capital, are probably better off renting the smart grid network space.

Regardless, the battle seems to be heating up between the two largest U.S. cell phone companies over which will convince more utilities to pay them to use their networks for the smart grid.

For more research on machine-to-machine and smart grid check out GigaOM Pro (subscription required):

M2M Is Taking Off From Kindle to Smart Grid

New Opportunities in the Smart Grid

Smart Algorithms: The Future of the Energy Industry


Two Sheds

1. Joe is right. Smart grid applications are not in mobile environments. In a static environment like smart grid, dropped calls are highly unlikely. Also, LTE is a standards-based technology that will allow for Quality of Service (QoS). What that means is, the issue of dropped calls should be a non-issue.

2. The iPhone congestion issue was a unique problem to AT&T. It remains to be seen how the other major carriers manage growing data transmission demands.

3. In terms of outside attacks, utilities would engineer their wireless smart grid solution for security by using a dedicated “private network” with restricted IP addressing. Using an approach like this completely eliminates any possibility of outside attacks.

  1. Smart Grid devices have a fixed location, so .01% of connection issues can be fixed in a day or less. It is a known location, not a roaming cell phone.

  2. Cell services have SLA’s also which can split off the bandwidth needed where no matter what happens with the Iphone users, the smartgrid users have what they need. Plus you have LTE ad WIMAX coming.

  3. What cant be attacked. you name it, it can be attacked. But we are not talking about controlling Power stations, we are talking about AMI/AMR and Monitoring.


Smart grids will require a degree of reliability not currently achievable with current cell phone networks:

  1. Have you ever suffered dropped calls or other types of service disruptions? It’s OK for humans to some extent, but machine to machine interactions are less tolerant. The Smart Grid will be a very complex network. What would be the consequences as parts lose wireless connectivity at rates comparable to current cell-phone networks?

  2. Since the introduction of the iPhone, we’ve seen the consequences of tower saturation and congestion. A wholly or partially wireless Smart Grid would have to co-exist with unruly and often unpredictable human activities.

  3. A wireless Smart Grid is vulnerable to outside disruption: everything from a sophisticated attack using fake transmissions to jamming by a device that cost less than $50 online.

This is not say that the carrier’s wireless networks couldn’t be made “bulletproof” enough to host a smart grid, though it’ll probably take a massive infusion of government funds for research and upgrades. My guess: this is the hope of a lot of the partnerships.

This is also not to say that a wired network wouldn’t have it’s own deficiencies and vulnerabilities, though I think a wired network capable of hosting a smart grid would be cheaper in the long run.

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