Smart grid could fuel telco-utility company mergers

There has been a lot of talk in the last year about the opportunity for telcos to provide connectivity to utility companies to support smart grid deployments. A small local telco and small local utility in rural Indiana have taken this opportunity seriously -- so seriously that they recently merged the two companies.

The story starts with the board chairmen of the two companies, Hancock Telecom and Central Indiana Power. The two men, who had been friends since childhood, first began kicking around the idea of merging when they realized that both companies had a need to deploy fiber in territories that largely overlapped, said Mike Burrow, vice president and general counsel for the new company -- now known as NineStar Connect. “Everything we were seeing was that broadband power line was not working,” said Burrow, who came from the telco side of the business. “We realized the electric utilities would be deploying fiber, and they probably wouldn't deploy it just for the smart grid. If they were going to go to that expense, it would be inevitable that at some level they would compete against us.” What appealed to the telco was not only that it could neutralize a potential competitor and gain a customer, the company also would be extending service to areas not in the telco’s existing footprint, paving the way for future growth on the telco side.