Utility executives will need little convincing that communication systems must be built to utility-grade standards. But there are stark contrasts between common carriers and utilities with respect to how networks should be designed, built and operated to serve critical applications.
Long-term evolution (LTE) is the wireless technology used by all the major wireless carriers worldwide, and utilities are contemplating building communications networks by utilizing this same equipment, technology and standards — often running over the same spectrum.
The similarities generally stop there, however. This broad, foundational communication network must be designed and built for utility-grade applications, with all the resiliency and redundancy the industry expects for its core power delivery systems. These standards of resiliency and redundancy are at the heart of the many reasons utilities historically haven’t trusted public carriers.
Though there is broad agreement on the need for robust, foundational communications networks, these are still complex decisions with many nuances and considerations. Here are 10 things the C-suite should understand about private LTE (PLTE):
1. Total Cost of Ownership
Executives with fiduciary responsibilities need confidence that the financials make sense. Total cost of ownership (TCO) modeling will be helpful in arriving at the true value delivered. Once disparate communication systems are unified into a foundational network, the TCO generally shows positive returns. Whether the project driver is for land mobile radio (LMR) replacement, advanced metering infrastructure (AMI)/backhaul, distribution monitoring and automation, electric vehicle monitoring, or supporting distributed energy resources (DER) integration, the TCO is likely to show a positive net present value. The TCO model optimizes for three things:
- Capital and operations cost
- System performance (throughput/latency)
Use cases and business and technical requirements combine to drive system requirements and ultimately this forms the basis for appropriate technology selection. The spectrum selection drives coverage and infrastructure density. This determines system complexity. Though it sounds complicated, it really is not. The device ecosystem, spectrum selection and infrastructure together determine the TCO.
2. Integration of Capital Programs
Many utilities are looking for strategic investment options that can help them fill in gaps in capital programs. In some cases, the goal of the capital program is to reduce operations costs through efficiency and unification of platforms. PLTE can support any number of strategic investment objectives and may be the right enabling technology if the objective is grid modernization, IT/OT systems convergence, simplifying operations costs or addressing capital budget shortfalls.
The spectrum options now available to utilities are unprecedented and now can be acquired at fair market prices. Now is the time to invest. Despite common perceptions, spectrum is not prohibitively expensive. In fact, spectrum is not in the top three component costs of building out a PLTE system. Spectrum is an intangible asset with an indefinite life. Still, it can be amortized by specifying parameters for expected useful life. Its fair market value generally increases over time, so whether the utility leases or buys it today, a viable secondary market will likely be available tomorrow. For those that do lease, there are accounting strategies and precedent suggested by the Federal Energy Regulatory Commission (FERC) that allow rate-basing, similar to treatment of recurring costs for cloud computing services.
4. Proven Technology
Utilities choosing LTE technology will not be early adopters. LTE is proven and there is no need for a pilot to prove 4G works. 4G has been around for more than a decade now and utilities receive the benefit of five generations of cellular technology innovation, now serving more than a billion customers worldwide. The transition to private LTE is accelerating and the industry has hit a tipping point with major utilities like Southern Company, Ameren and SDG&E moving ahead. Southern Company successfully deployed its wireless system in 2015 and Ameren and SDG&E have both acquired significant enabling spectrum and have made their plans public. Ten other utilities across the U.S. have also acquired spectrum in the CBRS auction. Most utilities use public LTE for many edge applications today, accepting the loss of control and security they would normally desire.
5. Leverage Existing Infrastructure to Fast-Track Deployment
Since utilities are expanding and building out infrastructure, sunk and stranded costs are minimal. Investments already made to harden and expand the system can be used for a PLTE network. Existing fiber deployments, microwave systems, transport systems, tall assets, data centers and operations centers are among the enabling components that will make the transition easier and more cost-effective. Each component adds value and some utilities may be surprised how prepared they are for this transition. Some utility radio frequency (RF) models demonstrate as much as 80% device coverage available without significant construction of new infrastructure. That last 20% will be challenging, but not insurmountable. It’s not necessary to hit every device on day one. This is an evolution. Each utility can proceed at its most optimal pace.
6. Control Operations and Restoration
Utilities must have ownership and control over system performance and the ability to respond quickly and recover from any outage or security event is the top priority. That means end-to-end control over communications infrastructure is just as important as control over power delivery assets. A utility-grade communications system must be built on a platform of proven technology designed with utility use cases as the priority for determining how the asset ecosystem is configured. The system must be optimized to deliver reliable service — the one thing no utility can compromise on. If the utility has unified spectrum bands and a technology ecosystem across a multistate territory, communication devices can be a crucial element of mutual aid agreements with other utilities. The need for utility control is more evident than ever.
As device endpoints increase on a communications network, cyberattack vectors likewise increase proportionally. Utilities have long recognized that the best way to counter this risk is with a private network they control. Security can be designed into a private network because it is baked into the system standards. PLTE networks deliver proven security controls, and they complement the existing security posture, reducing endpoint attack vectors that ride on a public carrier system. The wireless link of a private LTE system is one of the most secure links available.
8. 4G or 5G? Look Past the Hype
Promotional campaigns from carriers and manufacturers on the benefits of 5G and mmWave spectrum are visible everywhere. To choose the right technology solution and system architecture, utilities must look past the hype and make decisions based on a rigorous evaluation of the optimal solution for a purpose-built network. Utility systems must answer two questions:
- What is the most advantageous cost solution?
- What technology will best support today’s use cases and projected future growth — both known and unknown?
Because of the expansive ecosystem of 4G devices, significant savings may be achieved on the purchase of millions of devices. Plus, 4G isn't going anywhere. The runway is long. There are ways to position utilities to build a network that can transition to 5G when the time is right.
9. Leverage Existing Carrier Relationships
Commercial carriers have expansive systems, large staffs and vast coverage. A carrier’s system and services can provide significant benefit before, during and after a PLTE deployment, so it may not make sense to completely ditch this relationship. It will require a fundamental shift, however, as the list of needed services will change. With the right relationship — not simply a service transaction — carriers can provide coverage during build-out and failover once it is operational. There are also ways to mutually leverage infrastructure through tall assets, and core and radio access network sharing arrangements, helping get the build-out done quicker and more cost-effectively. Win-win relationships are attainable if utilities are willing to pursue them.
10. Platform and Excess Capacity for Additional Services
PLTE, with its infrastructure and vast device ecosystem, can do more than just provide a robust and secure communications network for utility operations. It will serve as a platform that will enable utilities to layer new services to customers and communities. For example, a utility could enable rural broadband through fixed wireless access or could support devices for local first responders or adjacent utilities, including water and gas as well as electric utilities. Though PLTE networks are unlikely to be significant sources of revenue, there are opportunities to offset some large, fixed costs while supporting longstanding obligations by utilities to enrich the communities they serve.
Utilities are facing demands that are transforming longstanding business models.