Monday, October 29, 2012

Frontier Communications Lends Name to Retail Energy Services

Frontier Communications Corporation has lent its name to "FTR Energy Services," as part of a marketing agreement with Crius Energy. That doesn't mean Frontier Communications is "getting into the business of retailing energy services." 

It means Frontier is lending its name and marketing muscle, presumably, to a third party affiliate that will sell "clean energy" including electricity and natural gas to customers. 

FTR Energy Services is a wholly-owned subsidiary of Crius Energy and will launch in select markets in November 2012. 

The company will initially provide 100-percent "green electricity" to customers in New York and Ohio, and clean-burning natural gas to customers in Indiana.

Some will be glad to hear that Frontier has not made a direct effort to add energy retailing to its triple play or quad play offers. At various times over the last couple of decades, telecom service providers have dabbled with the notion of adding energy services to the retail menu, as some also had dabbled at home security.

Financial results have been quite mixed. None of that is stopping cable companies and telcos from taking another look at home security, particularly as broadband access, smart phones, tablets and video now offer opportunities not available before. 

The historic problem with energy services is the low profit margin. Traditionally, a service provider would wholesale capacity from a utility, then offer a discount to consumers. The problem always has been the thin profit margins. 

So some will be happy Frontier has not gotten enamored of that approach. Instead, it simply seems to be testing a way of earning a bit of incremental revenue from a marketing partnership. 

The more lucrative opportunity might arise from selling automated meter reading or energy management services to firms such as Crius, at some point. 

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