Energy companies could end up buying or spinning off internet service providers (ISPs) to subsidise the high cost of National Broadband Network (NBN) connections to support smart-meter roll-outs, an Ausgrid senior network executive has suggested.
Phillip King (Credit: David Braue/ZDNet Australia)
Detailing the energy giant's extensive smart grid-driven network refresh at the recent Cisco Live! conference in Melbourne, Ausgrid (formerly Energy Australia) manager of telecommunications development Phillip King told ZDNet Australia it is likely that the NBN will play a significant role in the network's ultimate structure despite a high-profile WiMAX roll-out that is now halfway complete, with 142 base stations expected to be rolled out by August, and eventual plans to move to future 4G LTE networks.
Although the WiMAX network will support remote access to smart meters above ground and outside of many homes, it won't be a universal service; "We're going to need a last-mile option for infill," King explained. "We'll have heaps of meters that are in basements of houses, and our WiMAX network is only deployed for outdoor coverage. We figure it's prudent to keep our options open and always be open to the possibility of utilising NBN or other third-party services."
Ausgrid is also considering potential synergies between its smart-meter roll-out and NBN Co's own optical network terminal (ONT) roll-out, with discussions including the potential for prototype ONTs that incorporate smart meters. NBN Co "have very much been told they have to work with us", according to King.
"There's a good level of information exchange — but whether that translates to a really meaningful trial or not, is probably a few months away."
Despite the broadly identified synergies between the roll-outs, relying on NBN services would pose challenges, with King calling NBN Co's mooted $24 per month wholesale price "more than an order of magnitude out of where it needs to be". Prices of around $1 a month would be more sustainable, he said; however, given that NBN Co's stated pricing remains at the higher rate, Ausgrid has a range of options on the table to recoup those costs.
One option would be to buy or build an ISP, which could sell services to Ausgrid customers and create profit margins that would allow smart-grid services to be sold as a value-add to NBN-speed internet access. Partnering with an existing ISP might also offer an option, he said, although for now the utility is focused on its WiMAX rollout because regulatory climate favours capital expenditure over operational expenditure.
"We're under a lot of pressure by the regulator to reduce operating expenditure," said King, "so at this point in time it makes sense to build our own network. But in five years' time, in the next regulatory cycle, that could all change and we could be told to stop spending capex, and start spending opex. That would change the whole business case."
Ausgrid signalled its intention to build a WiMAX network to support its smart-grid roll-out nearly a year ago. It clinched a major network equipment deal with Cisco Systems in November, and soon after signed a $12 million agreement with Ericsson to roll out fourth-generation LTE wireless services. Last week the company also announced it had linked 15 Central Coast, NSW substations with 110km of fibre-optic cable and 350 smart sensors, and would install another 1700 across the region in the next two years.
This flurry of investment has driven Ausgrid towards a major overhaul of its internal operations. King's ambit includes a program to improve the utility's Substation LAN operational monitoring and control network, which since 2006 has grown to include over 1000km of private fibre linking around 12,000 of Ausgrid's 30,000 power substations and its involvement in the Commonwealth Government-backed Smart Grid, Smart Cities (SGSC) initiative, trials for which will see 50,000 smart meters rolled out across five areas of NSW.
The concurrent initiatives gave Ausgrid impetus to kick off its Distributed Monitoring and Control project — a major network and sensor upgrade that will improve monitoring and communications across Ausgrid's mission-critical networks. Smart process controllers will be continually monitored and managed for rapid fault identification and resolution using both fixed and wireless networks.
Supporting this communication is an extensive dark-fibre wide area network (WAN) that utilises carrier-grade MPLS (multi-protocol layer switching) to enforce the strict quality-of-service requirements necessary for real-time infrastructure monitoring and control. The substation LAN also supports one or two VOIP phone services per substation, and some sites offer Wi-Fi connectivity as well. Each site has its own selection of applications depending on its requirements.
Ownership of its own fibre "is a luxury that cuts a lot of complexity out of the equation and enabled us to roll out that network quite quickly," King says. "Most other organisations would have a requirement to use third-party services".
More recently, AusGrid built a major datacentre — using equipment from Alcatel-Lucent, Cisco Systems and others — that offered the opportunity to centralise applications and security infrastructure used by the company's 40-odd corporate sites. The MPLS network was extended into the datacentre, allowing the entire network to be monitored by a single team and enforce security policies from one end to the other.