The telecom and energy industries have a long shared history. Many of the nation’s utilities also are its telecom service providers; they leveraged their private networks to not only serve residences and businesses but also to sell to telcos seeking deeper, diverse or off-net coverage. A case in point: WilTel, which was acquired by Level 3 communications Inc. in 2005, was part of the Tulsa-based energy outfit Williams Companies Inc. But there are many others still operating — PPL Telecom LLC, Edison Carrier Solutions, etc. There are so many – and they’ve been part of the telecom fabric for so long – that their origins hardly register.
Turnabout – telcos getting into the energy business – is fair play, but is it a logical, or better yet profitable, one? There is at least one carrier, some former telecom execs and scores of agents who say, “absolutely.”
The Energy Buzz. Admittedly, deregulation of the energy business – though limited to 14 states – has been happening for more than a decade. Even the telecom industry’s interest in it is not new. Some CLEC executives/entrepreneurs like Louis Frate, CEO of Patriot Energy Group, left the telecom industry during the nuclear winter of the early 2000s to build energy brokerages. In 2004 Alternative Utility Services Inc. exhibited at the Channel Partners Conference & Expo in an effort to recruit telecom agents to the energy sales opportunity. And many telecom agents are converts. You can (as we did for PHONE+ ASKS) contact a dozen agents and find a number of them have been selling electricity or natural gas for some time.
With only this limited evidence, it’s clear this conversation is not new. Yet, the energy sales workshop at the Spring 2010 Channel Partners Conference & Expo in Vegas this past March was standing-room only. And there were an unprecedented number of energy suppliers – Glacial Energy, BlueStar Energy and Patriot Energy Group – as well as the energy divisions of CLEC PAETEC and master agency World Telecom Group exhibiting new channel programs on the show floor.
Why is there a buzz about energy in the telecom industry today? The answer is a combination of factors – not the least of which is the green movement. Energy consumption – and the need to reduce it – is top of mind for businesses these days. The recession, which has forced companies to re-evaluate their spending, has paired the environmental imperative with a cost-cutting goal. All of the sudden, big-ticket items like energy have come under scrutiny like never before. Companies who are challenged by demand-side approaches to energy cost reduction are more than willing to consider a supply-side change if given the chance.
Customers’ interest and willingness to discuss energy certainly make selling it a more attractive opportunity for newcomers today. But there also are more specific triggers going on in both industries.
In our own, there is continued margin erosion for traditional telephony services and a potentially burdensome imperative to gear up to sell increasingly complex products with longer sales cycles. For companies that have built their businesses on a “transactional” model, energy sales appeals. “Telecom is a business of declining margins while energy prices move up and down, so there is opportunity,” said Patriot Energy’s Frate. “From a financial model, many see opportunity they don’t see in telecom.”
