Broadband Over Powerline: An 'electric' new player in the living room wars

Toronto, Canada

MARY KIRWAN
Specia to Globe and Mail Update
POSTED AT 5:16 PM EDT ON 05/07/06

Old monopolistic habits die hard. And no more so than in the hyper-competitive communications sector.

The telcos and cable companies have never warmed up to the idea of competition in their back yards, and they especially dislike each other. But better the devil you know than the upstart you don't.

And with revenue from fixed line phone customers on a rapid decline, the telcos are desperate to increase profitable wireless and high- speed Internet subscriptions, and to muscle in on the burgeoning TV and video on demand business traditionally owned by the cable companies.

So in the midst of the no- holds barred battle, distractions are unwelcome. Hence the reaction from Rogers and Telus here in Canada when Toronto Hydro recently announced it would enter enemy territory and offer wireless Internet access from equipment installed on hydro poles and traffic lights. "It's expensive and hard"… "they are wasting their time," the incumbents railed.

But there is precedence for utilities entering the fray, and in a far more ambitious way than Toronto Hydro currently envisage.

Broadband over Power Line (BPL) technology uses existing electric wires and outlets to provide high-speed Internet access, Voice over Internet Protocol (VoIP), and video to end customers at competitive prices. It's been around for a while, but the technology and equipment to drive it has only come into its own in the last while.

I spoke with Jim Dondero, vice-president of marketing at U.S.-based Current Communications LLC, a company making serious headway in the BPL marketplace. In 2004, Current partnered with Duke Energy, formerly known as Cinergy, in Cincinnati, Ohio to sell competitively priced broadband services to 50,000 customers, going head to head with DSL and cable access offerings from Cincinnati Bell and Time Warner Cable in the process.

In Texas, Current has partnered with TXU Electric Delivery, a subsidiary of TXU Corp. to service more than two million homes and businesses and provide 'smart grid capabilities to the giant utility.

The large utilities are interested in BPL as it allows them to digitize their stale decades old infrastructure. The 'smart grid' concept also allows them to remotely monitor power lines and identify outages quickly and gather data on customer energy usage patterns. And possibly to save millions of dollars in the process.

But can Current, the new kid on a very tough block, survive the inevitable dust up?

Jim Dondero acknowledged that Current is not the only player in the BPL space, but it has built its own equipment and software, it has substantial IP in the underlying technology, a decent head-start with an installed base, and deep-pocketed investors with an eye to the end game.

"We have much more experience than anyone else and we know how to scale." The big US ISP Earthlink has agreed to become a channel partner- it doesn't own a carrier so it must rely on cable and phone companies- so it is looking at B.P.L. as an alternative channel to market. Dondero also added that the large TXU rollout later this year would prove that the business is viable.

But he maintains that a far more significant differentiator in the David and Goliath battle is that the technology 'just works'. You simply need a special adaptor that plugs into an electric socket in your home or office that you connect to your computer with an Ethernet cable. The adaptor costs about $25 and you can buy extra adapters for about $30.

It will come as music to the ears of folk driven demented by complex cable and DSL installations, to learn that BPL requires no new software, no dreaded installation discs and no extra wires to break your neck over. Once you are plugged in, you are redirected to a log-in page, and Mum's the word - you are good to surf. And several folk in a house can be on the Net at once with no drag on speed. Better still, you can use the system to set up home networks and it works with industry standard WiFi networks.

It seems too good to be true. But existing customers in the Cincinnati region, if an article in the New York Times a while back is anything to go by, seem hugely keen. In fact, their enthusiasm is akin to St Paul's epiphany on the road to Damascus. Once you go BPL, it seems you will never go back. Affordability, ease of use and faster upload speeds are a big draw.

Indeed, according to Jim Dondero, "not all broadband is created equally." BPL offers a two-way symmetric high-speed connection, with an upload speed that Current claims is up to 25 times faster than other high-speed services, and as much as 75 times faster than dial-up - important considerations for customers, as popular video and music files hog bandwidth.

Current is planning to introduce new services, including an Internet phone service later this year. Customers will be able to plug their phones into a BPL adapter instead of a phone jack.

And there is yet more to come, as Current will offer TV and video with a content provider partner in the near future. "We are firm believers in this, and we won't wait," Dondero said.

I quizzed Dondero about possible partners. "We have lots of options, and we are talking to folk." He wasn't telling. But he was willing to say who it wouldn't be: "We certainly won't partner with a cable company or teleco."

But hints at possible alliances can be found by looking at the list of investors who recently added $130-million in funding to Currents' coffers. The money came from existing partners TXU Corp., and EarthLink, but also from General Electric, which owns the TV network, NBC. Other deep pocket investors include partners Duke Energy, Goldman Sachs, Google, and the Hearst Corporation. Indeed, with this investor base, Current has enviable access to some of Hollywood and TV land's biggest movers and shakers.

In fact, Current was founded by Liberty Associated Partners, L.P., an investment fund vehicle partnership between the wealthy Berkman family and media baron John Malone's Liberty Media Corporation.

So can we expect NBC or Hearst, with its many media assets, to deliver a nice content-rich bundle over BPL? Such a move by broadcasters would surely tick off their long- term partners, the cable companies, but they too are mixing it up by making their own content.

The truth is that the Internet has muddied the waters, with mobile TV and Web video also viable channels to market. And the big guns all want a piece. They are also vying to win the living room wars. From the slow-to- react electronics (TV) makers, to software giants like Microsoft, with its PC centric media centre (it wants to embed Windows in everything we hold dear), to the carriers and broadcasters, who depend on ad dollars to deliver content.

But chasing ad dollars, the inimitable Google way, means that the battle will inevitably revolve around content, as the best content drives eyeballs, which in turn attracts advertisers.

So BPL may simply be yet another wild card thrown into an already heady mix.

And it is not all rosy in BPL land, as providers have been besieged with complaints from ham radio operators, who say that BPL interferes with their radio signals. The U.S. Federal Communications Commission (FCC) has set guidelines and it seems that there is potential for both to co-exist, but time will tell. Some of the most infamous hackers were ham radio enthusiasts so they are not a crowd to tick off.

The FCC is, however, supportive of BPL as an alternative to the telcos and cable companies that dominate the broadband market in the U.S. There is lots of room for growth in the broadband market both in Canada and in the U.S. — we both respectively ranked 8th and 12th in the broadband stakes worldwide, according to an OECD report in Dec. 2005.

So what are the chances that BPL will emerge as a real player? The telcos and cable companies say 'no way', and indeed they are heavily entrenched, but they fail to recognize that many consumers are still smarting from the numerous indignities we suffered at their hands over the years.

Remember the good old days when getting in a phone or cable meant taking the day off work, sitting on your new IKEA sofa twiddling your thumbs waiting for The Guy to arrive, usually at 4.55 p.m. when you had finally lost all hope. And then to add insult to injury, he would set about ruthlessly wrecking your place with miles of poorly placed and monstrously ugly cables and be on his merry way. And the telcos were no better.

We consumers are rather like elephants and small children; we have long memories and if given real choice, it may be payback time. Making nice to us now hasn't erased the scars.

And regulators also have an axe to grind. They are committed to increasing broadband uptake and in bridging the digital divide that exists in many countries, which has been attributed to the telcos hanging on to the last mile for dear life, and keeping access fees, especially in the EU exorbitantly high. This is the primary reason that cities and municipalities around the world are looking to introduce free WiFi to citizens, to work around the problem.

In fact, after successful trials, BPL is the third broadband access system available in Spain, and it is hoped it will eventually be offered throughout the country. Other countries are taking a close look as well. Trials in Quebec and Sault St Marie have taken place, but it is unclear what the future holds for BPL in Canada.

Where does security fit into the picture?

Utilities are generally considered pretty hopeless on the data security front, as traditionally they did not have to care, as critical assets were isolated. That is no longer the case as IP connections are rife, so utilities and BPL providers will have to carefully manage the security risk.

But the telcos are no strangers to data loss and theft, and content providers, with the Sony rootkit example, have shown us that they too can turn a good thing bad, by shipping malicious code on CDs to one and all to protect content. Let he who is blameless throw the first security stone.

One thing is clear, we've gamely put up with lousy software for too long, as we know no better - unless you own a MAC - but some things are sacred, and when it comes to TV, there is a implicit 'zero tolerance' rule.

If the TV crashes, or it gets too smart or weird on us, we will cry blue murder. This is an especially hostile environment for the software guys, to whom consumers are a terrifying alien species. It may be the rock on which they perish.

So if BPL is truly plug and play, rather than plug and pray, as well as cheap, fast and content rich, it may be the dawn of a new era.

Bring it on.


BROADBAND over POWER LINES: new 200 Mbps Technology !!!