This article originally appeared in the Oct. 2011 issue of INTERNET TELEPHONY

Opportunity is knocking for telecommunications providers the world over. The same is true for utilities. They need only look to each other.

Smart grid applications such as smart metering, distribution automation, street lighting control, renewables integration and building energy management are delivered by distributed energy control networks that thrive on interconnectedness. The hundreds of millions of elements that make up control networks worldwide, such as smart meters and sensors, must be reliably, easily and cost-effectively connected to other elements such as control nodes and to enterprise business applications – aka headends.

Telecom firms weighing the smart grid market opportunity can look just about anywhere for examples.

In Europe, Linz Strom is embracing not only smart metering but also residential demand response, street light monitoring and control, and direct command and control of specific in-home devices, leveraging a 3G wireless network to connect all of the smart grid networks and services back to the enterprise.

Rongwen, a large street lighting company in China, uses energy control networking technology to connect and control smart street lighting systems across the power line, coupled with telecom backhaul, to reduce energy use by up to 55 percent and significantly lower maintenance costs.

Students at the Harker School in San Jose, Calif., use smart meters and an energy-efficiency software dashboard to spot sources of energy waste at their school, and to measure and verify the savings achieved by acting on the new information. Local monitoring and control applications at each building leverage standard Internet communications infrastructure to provide administrators and students alike with the ability to understand energy consumption and detect energy waste from any browser.

From the utility side of the equation, working with telecoms makes sense because performance is up, rates are down, offerings are broad, and the rise of Internet standards provides long-term assurance of backwards-compatible supply.

Both telecoms and utilities benefit also from the nature of today’s distributed energy control networks. Local processing and decision-making features of these networks enable the low latency that control applications require, and help minimize the load on the telecom backbone. Additionally, telecom firms are adding bandwidth at a rapid rate so there is more headroom than ever to transport growing amounts of smart grid data with no appreciable impact on the communications infrastructure. 

The switch to IP by telecom firms like AT&T, Sprint (News - Alert), T-Mobile and Verizon bolsters the argument to add telecom to the mix of IP-based backhaul transport options for distributed energy control networks. Many utilities in Europe – where open-standard technology for carriers’ communication networks is commonplace – already believe the incumbent networks deserve to be considered alongside private IP networks.

IP standards also mean that telecom companies can now offer utilities long-term assurance of interoperable communications infrastructure, overcoming limitations of earlier offerings. Even if that technology changes, there will be so much backwards capability provided that the path forward will not be compromised. Also, with IP as a standard transport, utilities are not limited to a single telecom firm.

Many telecoms now offer attractive rate plans for utilities. The economics are simple. Telecom firms have invested in networks to keep them running all the time. But traffic slows to a crawl at night as subscribers sleep – exactly when the bulk of utilities’ data transport naturally happens. The telecom firms have learned to adjust rates for utilities to reflect the fact that billing information and power quality information, for example, are being transported when the telecoms’ networks are underutilized or have idle capacity.

Conditions in the U.S. are now beginning to mirror those in Europe. The combination of intelligence at the edge of the grid – which keeps data off the WAN –- and attractive pricing plans optimized for the traffic patterns of smart grid systems, provides both telecom companies and utilities with the opportunity to prosper in the era of the smart grid.

Utilities and telecoms working together can develop a smart grid that reacts in near real time to remove stress from the grid, provide consumer-facing benefits and incorporate emerging smart grid and energy-aware homes and consumer devices, as well as almost any existing metering system. Their collaboration also makes the smart grid more reliable and efficient through applications like intelligent outage restoration, residential solar inverter management and real-time energy availability information processing to smart electric vehicle chargers.

Utilities and telecoms, time to check each other out again.

Ron Sege is CEO of Echelon Corp . (www.echelon.com).