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Power firm pulls plug, bets on telecom

While other electric companies dip their toes in the new telecommunications waters, Montana Power is going all the way, selling off the company's power business in favor of the lucrative market.

While other electric companies dip their toes in the new telecommunications waters, Montana Power is going all the way.

The company's board of directors voted today to sell off the company's traditional power business, in order to focus on its telecommunications activities. The company will rename itself after its communications division, now called Touch America.

It's a bold step even for a company that has long been among the forefront of utilities experimenting with the new communications markets. But like other utility firms, Montana Power has seen the profit potential of high-speed Internet and data communications begin to outweigh the regulated business of providing electricity, natural gas and other standbys.

Montana Power has been part of a leading edge of firms that have used their right-of-ways and construction experience to build extensive fiber-optic networks. Enron Communications has worked similarly, trading on its expertise in the power and natural gas business. Even Qwest Communications International was initially formed by building fiber-optic cables along old railway right-of-ways.

As the Internet and telecommunications markets have skyrocketed, these firms have put an increasing focus on their new business. Other firms have also begun to follow suit. Washington State, for example, is looking to its publicly owned power companies to bring broadband communications to rural areas.

Montana Power's Touch America Division has its own 12,000 mile fiber-optic network, which it plans to build out to about 26,000 miles by the end of 2001. It sells capacity on that network to other carriers looking for extra bandwidth, and is increasingly getting into the business of offering service directly to businesses.

The company said it will seek buyers for its energy assets, noting that that side of the business was still strong financially. The companies' directors believed that both sides could work better if the company was separated, it added.

"By divesting our energy business, we will sharpen our focus on our fast-growing telecommunications business, while enabling our energy companies to grow," Montana Power chief executive Robert Gannon said in a statement. Gannon will become CEO of the Touch America company after the sale of the assets is complete, but will remain in charge of both division until that time, the company said.