Telefonica and Arqiva set to mop up BILLIONS in smart meter cash

Companies who win upcoming government contracts to install smart utility meters across the UK are set to pocket over £2bn in public money.

The money will come from the Department of Energy and Climate Change and will be spent over the next 15 years, at which point the UK is expected to have 20 million smart meters in operation. But it's still only part of the £4.59bn our government is committed to spend to make our utility meters more intelligent.

Arqiva, BT, US outfit Sensus and security specialist Detica are expected to earn up to £625m for connecting up and supporting the networks for northern 'leccy meters, while Telefonica is in line for £1.5bn for doing the same in the south.

The companies can't start counting the cash just yet – they're only "preferred bidders" at this stage - but contracts should be finalised in the next few weeks, with Telefonica providing connectivity to southern and central UK, while the consortium headed by Arqiva and Sensus connects up Scotland and the north.

The involvement of Sensus is interesting, as in the United States the company uses long-range mesh networks in licensed bands to connect their meters. The UK will, in general, rely on the 2G phone networks for backhauling the data. Such networks are almost entirely inappropriate for the application, but they are already there and falling into disuse as humans shift to 3G and 4G connectivity.

Just maintaining a GPRS (2G data) connection uses more data than a smart meter is expected to generate, but it's hard to compete with the ubiquity of coverage and operators see it as the perfect way to make money from a network which would otherwise be redundant.

It won't reach everywhere, of course; meters in basements and beyond network coverage will need mesh technologies to keep them connected. A Zigbee link to a home hub will work in most in most cases, but competing bidders Silver Spring and Vodafone had something in the 900MHz ISM band in mind.

Arqiva opposed the release of that band back in June, arguing that it should instead be reserved for smart meters, so presumably is also planning something along those lines.

We'll have to see how well that works in practice, and how effective smart meters are in reducing our energy usage. The government, and industry, remain adamant that once we can see how much gas and electricity we're using – on a minute-by-minute basis – then we'll magically start to use less, and government policy is based on that article of faith.

If we don't, then those smart meters will have to start enforcing our compliance. The meters will work across suppliers, which is why the government is awarding the contracts, but once they're all offering cheap-rate power at night and penalising those of us without smart appliances (capable of responding to National Grid requests to power down or switch off) then that might be a Hobson's choice. ®