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The prospects for smart energy prices: observations from 50 years of residential pricing for fixed line telecoms and electricity

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  • Musiliu O. Oseni

    () (Energy Policy Research Group, Judge Business School, University of Cambridge)

  • Michael G. Pollitt

    (Energy Policy Research Group, Judge Business School, University of Cambridge)

Abstract

This study focuses on how energy and communications have evolved over the last 50 years and what we can learn from history in order to examine the prospects for smart energy pricing by 2050. We begin by discussing the nature of energy and telecoms products and why price discrimination should be expected. We then review various business and pricing strategies that have evolved in the two industries. We find that business models for both the telecoms and energy sectors have changed from the traditional services business model (i.e., offering of calls and messages for telecoms, and utility supply services for energy) to more dynamic, integrated and complex business models. These new business models include the managed services provider model, the bundled services model, and the prosumer business model, among others. Similarly, several changes in pricing structure have evolved. There has been a reduction in the number of distanced-based and increasing time-based price differentiation in fixed line telecoms and the abolition of residential floor area-based differentiation in electricity pricing. We conclude with a discussion on how the rollout of the next generation of electricity meters (smart and advanced meters) may further shape electricity pricing in the future.
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Suggested Citation

  • Musiliu O. Oseni & Michael G. Pollitt, 2016. "The prospects for smart energy prices: observations from 50 years of residential pricing for fixed line telecoms and electricity," Working Papers EPRG 1611, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
  • Handle: RePEc:enp:wpaper:eprg1611
    as

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    References listed on IDEAS

    as
    1. Morris, Michael & Schindehutte, Minet & Allen, Jeffrey, 2005. "The entrepreneur's business model: toward a unified perspective," Journal of Business Research, Elsevier, vol. 58(6), pages 726-735, June.
    2. Musiliu 0. Oseni & Michael G. Poilitt & David M. Retner & Laura-Lucia Richter & Kong Chyong, 2013. "2013 EPRG Public Opinion Survey: Smart Energy Survey — Attitudes and Behaviours," Cambridge Working Papers in Economics 1352, Faculty of Economics, University of Cambridge.
    3. Peter M. Noble & Thomas S. Gruca, 1999. "Industrial Pricing: Theory and Managerial Practice," Marketing Science, INFORMS, vol. 18(3), pages 435-454.
    4. Henry Chesbrough & Richard S. Rosenbloom, 2002. "The role of the business model in capturing value from innovation: evidence from Xerox Corporation's technology spin-off companies," Industrial and Corporate Change, Oxford University Press, vol. 11(3), pages 529-555, June.
    5. Begoña García-Mariñoso & Xavier Martinez-Giralt & Pau Olivella, 2008. "Bundling in Telecommunications," UFAE and IAE Working Papers 762.08, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    6. Peter M. Noble & Thomas S. Gruca, 1999. "Response to the Comments on “Industrial Pricing: Theory and Managerial Practice”," Marketing Science, INFORMS, vol. 18(3), pages 458-459.
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    Cited by:

    1. repec:eee:enepol:v:129:y:2019:i:c:p:796-804 is not listed on IDEAS
    2. Michael G. Pollitt, 2016. "Electricity Network Charging for Flexibility," Working Papers EPRG 1623, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    3. repec:eee:eneeco:v:74:y:2018:i:c:p:733-745 is not listed on IDEAS
    4. repec:eee:rensus:v:79:y:2017:i:c:p:533-543 is not listed on IDEAS

    More about this item

    Keywords

    smart pricing; business models; telecoms; energy; residential; UK;

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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