Four Companies Poised to Benefit from America's Smart Grid

What do Cisco Systems (Nasdaq: CSCO), [[IBM]], AT&T (NYSE: T) and Intel (Nasdaq: INTC) all have in common?

The obvious answer is that they’re four of the most successful technology companies on the planet.

But they’re also heavily involved in the modernization plans for America’s “Smart Grid” – a topic I introduced in a previous column.

Make no mistake, with a decade-long project as monumental as modernizing the country’s “Smart Grid,” the devil is truly in the details. And the Commerce Department released the finer details of the initiative last week.

Until now, one of the big problems with the “Smart Grid” was the lack of set standards. Without them, each power company would be free to do as it pleases, resulting in a hodge-podge of small grids that, in all likelihood, wouldn’t work together.

To put this in perspective, just imagine how well the Internet would work if there weren’t hundreds (or perhaps even thousands) of standards in place so that everything works seamlessly.

So the National Institute of Standards (NIST) prepared the detailed standards that the Commerce Department wants the power industry to use as they build intelligence into the electrical power grid.

Job #1: Setting Up an American “Smart Grid” Standard

The standards released last week are the result of NIST’s review of proposed measures it sent out to companies like Cisco, IBM, AT&T and Intel, plus hundreds of others, seeking industry comments.

This plan basically details the integration and connection of smart meters, plus data sharing on energy usage among utilities and cyber security standards.

With regard to the latter, the big four firms lobbied vigorously for certain data and communications standards. This is because they want to integrate the essential “hooks” into their product lines as soon as possible.

And the NIST standards require internet-protocol (IP) technology in any system connected to the “Smart Grid.” The idea here is that the existing Internet could be used as the information highway for “Smart Grid” data communications and also for control purposes.

That’s good news for Cisco, in particular. It’s already a leader in IP technology, having integrated it into the “Smart Grid” systems that it currently sells.

But this brings up a potentially big problem.

Smart Meters By Name… But Not By Nature

If “Smart Grid” communication is based on IP technology, how vulnerable is it to hacking?

In order to attack the hardware, you first need to gain access to it to determine the kind of programming required to hack it. Smart hackers could simply walk up to a house where no one is home and steal one using a pair of pliers.

Once the hacker has access to the smart meter’s programming and special software codes, he can then begin communicating with all the meters made by that same manufacturer. As utilities continue their rollout of smart meters, those numbers will be in the millions.

As Mike Davis, a senior security consultant at IOActive, says, current smart meters are “probably not mature enough” and can easily be hacked.

Davis has tested a number of currently available meters (he hasn’t publicly revealed which ones) and identified vulnerabilities that could allow an experienced hacker to shut off large numbers of meters all at once from anywhere in the world.

Imagine a hacker issuing a command to several hundred thousand meters, telling them to simultaneously turn off all at once… and then immediately back on. The resulting surge would blow just about every breaker in the utilities’ grid, taking hours if not days to restore. And the next day, they could do it all over again.

Clearly, this is a serious problem for the utilities and meter makers to address. So what’s being done about it?

These Four Tech Titans Are Poised to Cash In

The good news is that with standards now in place, the Obama administration is ready to start issuing checks – perhaps as early as November. And those checks are worth a total $4.5 billion – money that the government earmarked for the “Smart Grid” project back in January.

And the beneficiaries of this windfall? Cisco, IBM, AT&T, Intel and others.

This just goes to show that it’s not just the obvious candidates that stand to profit from the electrical “Smart Grid” plans (utilities, etc). These great tech giants are ready and waiting to deliver crucial services, too.

Comments

[BeachRider:]

It looks like we are prepared to declare these projects as 'shovel ready'. That is great, so long as it is true. Standards are important, but so is the mechanism to enforce the standards. I haven't heard very much about enforcement.

I am investing in IBM, for this and other reasons. I don't understand the INTC aspect, though. INTC sells chips mostly. Standards that limit the chips can be useful, but can be unnecessarily expensive, too.

Sep 30 04:31 PM

[whisperonth...:]

AT&T provides my telephone and internet service, and at one time I also had their stock. However, my problem with the company is that they are so dependent on new technology that some problems get overlooked.

Recently I "lost" the dial tone on my telephone, rendering it incapable of placing and receiving calls. Although the internet and phone lines were from the same wall jack, the internet was terrific. No phone. After two weeks of complaints, two weeks in which they insisted they had tested my line and it was clear, I insisted they come out and check INSIDE. I had tried three different telephones, two different cords, two different jacks, and even tried plugging the telephone directly into the wall instead of into the internet connector. No luck.

(It may be interesting to note that ATT had been in the area for weeks, setting up telephone service for a new bank close by. It may also be interesting to note that I had asked them to just CALL the phone number and they would see that there was no service. They chose to rely on their electronic line checker thing.)

They finally came out to the house (to shut me up, I'm sure), and the first thing they did was check to see if I really had lost the dial tone - honestly! - and the second thing was to see if THEY could get a dial tone. No luck. It actually took them almost two hours to find the problem... in the main box where they had been doing repairs over the last few weeks! The same box where they were setting up the new bank telephone system.

If they had called me when I first asked them to - a 15-second test that would have proven to them that I was seriously having phone issues - we could have fixed the whole problem quickly. Instead, I had to make several phone calls, they tested and cleared the line each time.

I like the phone service, and the internet, but I'm not really happy with their customer service. And no, there isn't really a customer service phone line to call. Their "Customer Care" line is for billing issues, not service issues, and not complaints.

Oct 01 09:27 AM