Cognyst Consulting, L.L.C. is pleased to provide the following information as an educational resource for the AMR industry. Feel free to borrow this material; we only ask that you reference this page. The material presented is just the "tip of the iceberg." Cognyst Consulting is available to help you individualize this material for your specific needs.

• What is AMR?
• Types of AMR Systems
• AMR Definitions and Distinctions
• Building the Business Case for AMR
• AMR and Competitive Strategy
• Risk Factors for AMR
• Planning for AMR Implementation

What is AMR?

Automatic meter reading is the collection at a remote central location of data from meters and other devices at customers’ premises via telecommunications. It involves the following components:

• meter
• meter register or index capable of generating pulses corresponding to the consumption through the meter, or creating an electronic data stream containing its current reading as well as additional information (cumulative consumption, peak demand, alarm flags, etc.)
• telemetry interface unit (TIU) connected to the meter that transmits the information
• communication network or system to transfer the data from the TIU to the utility’s offices. For radio systems, there may also be a local data collection unit (DCU) that gathers data from many nearby TIUs and transmits it over the communications network to the utility's offices.
• an AMR control computer or utility terminal unit (UTU) to receive, collect and manage this data
• software to run the system and present the data to the utility's billing and other information systems

Types of AMR Systems

AMR systems are usually characterized by the technology used for the "first hop" the TIU to the next point of data communications. AMR system types include:

Fixed Radio. A radio receiver or data collection unit (DCU) located on a utility pole or building near the meter receives transmissions from the TIU and re-transmits them either by radio or telephone line to the utility’s offices. The transmission range between a TIU and a DCU could be from a hundred yards to a few miles. Environmental factors affect radio propagation. Fixed radio AMR systems employ an array of DCUs to ensure that the signal from the TIU finds its way to the utility’s offices.

Mobile Radio. A meter reader with a radio transceiver passes near the TIU placed at the meter. The TIU sends a signal to the mobile transceiver. In some systems, this is in response to a "wake-up" signal from the mobile transceiver. The meter reader can be walking or driving. Some vendors refer to the data collection device carried by a person walking near the meter as "hand-held RF," and "mobile RF" when it is in a moving vehicle.

Dial-Inbound Telephone. The TIU calls the utility to download data over a telephone line. Normal meter reading calls are always initiated from the customer’s premises, and usually scheduled, with each TIU having a pre-assigned time "window." The utility computer may also send information back to the TIU (e.g., when to call next). The TIU can call in immediately upon detecting a tamper or other alarm condition. Some TIUs can be remotely activated on demand by the utility, but this requires knowing the customer’s phone number and, in some cases, customer involvement.

Dial-Outbound Telephone. A TIU is plugged into a phone line in the customer’s premises. The utility interrogates the TIU by accessing the phone line through equipment or software located in the telephone company’s central office without ringing the phones on that line.

Power Line Communications. A signal injector located at the electric distribution substation injects an addressing signal onto the power line, and the appropriate TIU responds. Data rates can range from several kilobits per second to less than one bit per second. The lowest rate signals can travel over 100 miles and pass through existing transformers.

Broadband Cable. Broadband technology uses fiber optic or coaxial cable to carry signals. While difficult to justify for meter reading alone, broadband systems can deliver several applications that make effective use of the bandwidth; AMR becomes just one service.

Internet. The TIU has an Internet address, and uses Internet Protocol to transmit the readings to the utility’s computer.

AMR Definitions and Distinctions

First Hop. The communication from the meter to the utility’s offices usually takes place in several steps (meter to TIU, TIU to data collector, etc.). AMR systems are categorized according to the communication method used on the "first hop" from the TIU to the next point of data communications. For example, a system that uses radio frequency to communicate from the TIU at the meter to a data collector on a nearby utility pole is labeled "fixed RF," even though the data collector may communicate with the control computer by telephone.

Wireless. Wireless technologies communicate using radio frequency (RF) between pairs of antennas. The communication speed and reliability depend on the shape of antennas, the power level of the signal, the frequency, the number of data channels, the coding pattern, and environmental conditions (humidity, obstacles, electromagnetic noise, etc.).

Some RF signals require an unobstructed straight "line of sight," whereas others do not. All wireless AMR systems in the U.S. use radio frequencies that are controlled and assigned by the Federal Communications Commission (FCC). Many portions of the electromagnetic spectrum are used for AMR systems, for example: 455 MHz, 902-928 MHz (the unlicensed band), 928-952 MHz (the “MAS” band), and 1 gigahertz.

Short-range versus long-range RF. AMR systems using short-range RF collect data within a few hundred feet of the TIU at the customer’s meter. Data can be collected via a mobile collection device (either hand-held or in a moving vehicle), or by a local permanently mounted data collector.

Long-range RF is used to carry signals over many miles. The transmitters require more power, but fewer data collectors are needed.

Wireline. Wireline AMR systems are characterized by a physical link between the telemetry interface unit (TIU) and the utility’s offices. Most wireline systems use an existing network, such as the telephone system, electric power lines, or cable TV.

If the transmission medium is metallic, then the rate at which data can be transmitted (measured in bits per second) depends upon the conductivity of the metal, the distance between the transmitter and the receiver, the strength of the signal, the amount of electromagnetic noise in the environment and the shielding. Digital technologies (as opposed to the analog techniques used for voice conversations and modems) can increase the data rate. The characteristics of the medium affect the bandwidth that can be delivered. Coaxial cables (that are both shielded and provide waveguide features) are the most efficient, followed by shielded copper pairs (e.g., telephone lines). Unshielded cable (e.g., powerlines) is most susceptible to environmental noise.

Fiber optic cable is not subject to electromagnetic noise, can carry light signals with minimal loss over very long distances, and is capable of delivering a much higher bandwidth than coaxial cable.

One-Way Versus Two-Way Communications. In one-way systems, a call or transmission is initiated at the customer’s premises and received by the utility. Other systems rely on a signal in one medium to alert the TIU, and another signal in another medium to send the data from the TIU to the data collection unit. These are not fully two-way communications. Two-way systems allow the utility to send information to the customer’s premises in addition to receiving information from the customer’s premises over the same transmission medium. Two-way systems tend to be more complex and more expensive than one-way systems. However, they can provide additional capabilities, such as remote deactivation of a customer’s service, real-time price signals, or control of customers’ appliances. Telephone systems by nature use two-way communications, even though the call is initiated at one end.

Public Versus Private Networks. Some AMR systems rely on existing "public access carrier" communications networks, like the telephone system, radio data networks, cellular telephony, or paging frequencies. The owners of these networks generally charge for their use on the basis of traffic. Other AMR systems involve constructing a dedicated communications network, such as a series of radio towers.

Building the Business Case for AMR

Benefits of an AMR system include

• Save on regular "on-cycle" meter reading
• Obtain more easily (and in some cases, instantly) initial and final meter readings for opening and closing accounts
• Streamline high bill investigations
• Flag potential high consumption before customers get a high bill
• Help pinpoint system losses
• Help detect theft of service
• Enable more frequent readings with little incremental cost
• Enable custom billing dates
• Support customized rates (e.g., for large customers)
• Provide detailed consumption information to customers
• Provide watchdog services, like leakage monitoring
• Improve cash flow management
• Improve revenue forecasting, by tying detailed consumption information to production data and expected billings
• Aid in rate design
• Enable more sophisticated rates; i.e., that more closely track costs, or encourage conservation.
• Improve meter management: ensure meters are properly sized; determine optimal time in service or cumulative registration
• Reduce bill adjustments

Financial Analysis. Elements of a financial analysis of AMR include:

• Capital costs, including meters, TIUs, network, control computer hardware and software, installation, and project management
• Labor savings, including the reduction in staff hours for meter reading and meter reading-related customer service, and savings on vehicles and miscellaneous costs associated with meter reading
• Operation and maintenance of the system, including telecommunications costs, labor and vehicle costs, repair of system components, battery replacements
• Increased revenues from reducing system losses or replacing older inaccurate meters

Intangible Benefits, even though they cannot be easily quantified, are important. They include improved customer service and confidence, and the value of consumption information to customers and the utility. In an era of privatization and increasing competition in the utility industries, these intangible benefits, and the customer loyalty they create, are increasingly important.

AMR and Competitive Strategy

AMR can figure prominently in a utility’s strategy to maintain market share and grow profits in a competitive marketplace. The initial focus in a competitive industry is on commercial and industrial customers. This market segment it consumes the most resources and contributes most to the utility’s bottom line. The best way to prevent customer defection is to provide them valuable data to improve their profitability. Proactively providing them AMR data as often as they need it sets an expensive barrier to entry that a competitor must exceed to steal the customer. When gas, electricity or water is most expensive to the customer, it is usually most expensive for the utility. Thus, providing the customer with the information to reduce costs also helps the utility by reducing demand when it is most needed. Retaining the higher value customer allows the utility to retain revenue that can then be re-focused on retaining other customers. Also, as consumption data becomes a more valuable commodity in the marketplace, the utility is also better positioned to benefit from other uses of the data.

Risk Factors for AMR

Batteries. Many radio AMR units, and some telephone units, require a battery. Most AMR units are designed to operate at low power with short bursts of data transmission. Battery life depends on transmission duration, power and frequency (e.g., once per hour), as well as environmental conditions, such as fluctuations in temperature. Changing all TIU batteries is a significant undertaking. Although TIU batteries could last 15 or more years, no AMR manufacturer nor battery manufacturer is guaranteeing battery life over the useful life of the AMR system.

Standards. The AMR marketplace is rapidly evolving. New systems, vendors and products are being introduced constantly. New business alliances between manufacturers, and more interoperability between components are also creating more choices for utilities. Unfortunately, there are few standards for AMR, due more to marketing strategies than any technological barriers. In lieu of standards, many AMR manufacturers have created inter-operability with several brands of meters. If a utility or ESP wants an AMR system that supports multiple makes of meters, it must demand interoperability in its Request for Proposals, be prepared to reject certain vendors, and be willing to negotiate with the selected vendor to avoid expensive and risky sole source supply situations.

Technological Obsolescence. Traditionally, meters have had long service lives, and utilities have required AMR systems to have comparably long lives. However, an AMR system’s incorporation of telecommunications and information technologies¾areas that are rapidly advancing¾raises the specter that it could become obsolete before it had generated the anticipated payback.

Prospective buyers of AMR systems should realize that while the equipment may be technologically outdated in a few years, it need not be functionally obsolete. Old telephones, TVs and even computers continue to perform to specifications for many years despite being dramatically surpassed by new technology, in part because of interface standards. Some early AMR installations, now more than ten years old, are still performing satisfactorily even as their owners contemplate their replacement. A utility’s greatest protection from obsolescence is to consider future needs in its specifications for an AMR system, to advocate standards, to strive for "open" architecture and interoperability among system components, and to insist on extended support from prospective vendors.

Other customer service related technologies, such as meters and billing systems, also experience obsolescence, particularly as the levels of service required to be competitive rise. An AMR system can provide the utility with a platform around which to plan for new metering hardware, customer information systems and customer service processes that will enable it to win in the competitive marketplace.

Financial Stability Among AMR Vendors. The recent Chapter 11 filing by CellNet Data Systems has raised customer questions about the financial stability of the remaining AMR companies. The AMR industry is undergoing a period of rapid growth and consolidation. Experience from other industries suggests that this is likely to be a time of greater risk in the AMR industry. However, the high premium paid for CellNet’s assets also teaches a valuable lesson: companies with good products and a significant base of customers are extremely valuable, even when they are insolvent! The company emerges from CellNet’s reorganization will be a stronger and better competitor; that’s good news for the AMR industry and the companies that use AMR products.

The best inventions in the AMR industry have traditionally come from the small companies; the best sales and service from the large ones. Almost all of today’s mainstream AMR products are "acquired" technologies.

The current situation requires utilities that plan to purchase an AMR system exercise due diligence in their selection process, and build into their contracts reasonable safeguards while not quashing innovative products through excessively restrictive language.

Planning for AMR Implementation

An AMR deployment is a high-profile project that requires careful planning. The implementation plan should include: