Growing interest in wall-socket Net access

David Lazarus
Friday, August 18, 2006


With much fanfare, AT&T and PG&E announced in the summer of 2004 that they were teaming up to test technology for broadband Internet access over ordinary power lines -- plug into a wall socket and you're online.

Michael Powell, then-chairman of the Federal Communications Commission, even showed up at the Menlo Park lab where the companies were promising connection speeds as fast as cable and DSL hookups. "I think this is critical technology," he said. "This is something we want to see happen."

Then, just a few months later, AT&T quietly shut down the tests, saying broadband over power lines (BPL) technology didn't mesh with the company's newfound emphasis on business customers.

So where are we now? With high-speed Internet access rapidly becoming a choice between only two providers -- phone and cable companies -- is there any hope that competition can be increased via utility-sponsored BPL service to people's homes?

Possibly.

And one company that's invested millions of dollars in making this happen is none other than Mountain View's Google, which is exploring ways to transmit huge quantities of data to users without paying additional fees to network operators like AT&T and Comcast. More on that in a moment.

Pacific Gas and Electric Co. says it's still interested in committing its electricity grid to the creation of a Northern California BPL network that would rival the data systems of phone and cable companies.

"Our approach to this is that we're in the gas and electricity business," said Jon Tremayne, a PG&E spokesman. "But if some other company wanted to lease our wires, we're ready to discuss that."

For several months in 2004, it appeared AT&T was that company. Tremayne said the initial tests to a few dozen Menlo Park homes demonstrated that BPL could provide a viable alternative to cable and DSL.

Then AT&T walked away and the tests came to an abrupt halt.

"It certainly showed promise," acknowledged Gordon Diamond, an AT&T spokesman. "It worked. We're just focusing on other areas right now."

He said there were two major developments that soured AT&T on BPL. The first was a decision by federal regulators to allow local phone companies to charge higher rates for long-distance providers to access their networks.

This prompted AT&T -- at the time still a long-distance company -- to abandon the consumer market.

Shortly afterward, AT&T announced that it was being acquired by SBC for $16 billion, and BPL instantly became a redundancy. The newly merged AT&T had its own data network; it didn't need to piggy-back on PG&E's wires.

Competition

Diamond said pre-merger AT&T always saw BPL as a way to circumvent the likes of SBC and gain access to customers' homes without using SBC's system. "We don't have that issue any more," he said.

That's good for AT&T but not necessarily for consumers, who typically make do with a duopoly in the broadband market -- phone companies and cable companies. Most economists say competition is limited in any marketplace with fewer than three active players.

"Magic things happen when you have three competitors -- three forms of technology, better choice, better innovation and better prices for consumers," Powell, the former FCC chairman, said at the time of the AT&T-PG&E tests.

He said he wanted broadband service "to be from multiple providers with multiple pipes, with innovation occurring and consumers having a whole lot of choices."

The California Public Utilities Commission adopted regulatory guidelines earlier this year that it hopes will encourage BPL development statewide.

"BPL has the potential to bring broadband Internet services to communities who do not have broadband service available today from the telephone companies or cable companies," said PUC President Michael Peevey.

PG&E is similarly optimistic -- as long as someone else's money is on the line.

"We're not looking at making any investment in BPL as a technology," said Tremayne, the utility spokesman. "We have no plans to brand any sort of Internet service.

"But if there's another company that's interested in this," he added, "we'll certainly talk to them."

This is where things get potentially interesting.

A leading provider of BPL service is a Maryland company, Current Communications. It's cooperating with TXU, a Dallas power utility, to provide BPL service to 2 million customers.

Last year, Current received about $100 million in cash from investment bank Goldman Sachs, media giant Hearst Corp. (which happens to publish this newspaper) and, yes, Google.

Another $130 million was raised in May from other investors, including General Electric and Internet service provider Earthlink.

Google said at the time of its investment that it was keen to support alternative broadband technologies. That interest has since taken on new importance as Congress moves closer to passing legislation that would allow network operators like AT&T and Comcast to charge higher fees to heavy users like online video services.

Google interested

Google has made no secret of its interest in video and in making google.com a clearinghouse for everything from YouTube-style silliness to full-length movies. Last week, Google replaced the front-page link to its Froogle shopping service with a link to Google's video service -- a move that sent shockwaves through the tech community.

Speculation about Google's long-term intentions range from the company gunning for online video-rental powerhouse Netflix to Google becoming the, well, Google of all online video offerings.

Whatever else, the company's growing focus on video will require plenty of bandwidth.

Jon Murchinson, a Google spokesman, reiterated this week only that "our interest in BPL is to encourage alternate forms of Internet access."

Bill Berkman, chairman of Current Communications, was reluctant to discuss how BPL fits into Google's long-term plans. But he said Google's leaders wouldn't have invested in Current unless they believed BPL has a future.

"The Google guys get it," Berkman said. "They're ready to take a long-term view."

He acknowledged having spoken with PG&E about a possible BPL partnership. "I've talked to them and they've been receptive," Berkman said.

He also said he's "had conversations with Google about PG&E."

Beyond that, Berkman is playing his cards close to the vest. He said only that his goal is to eventually provide BPL service to as many as 20 million households nationwide, and that he hopes to announce partnerships with additional utilities in coming months.

Will one of those deals involve PG&E? If Google is playing a prominent role in future BPL activities, then it's possible. When Google decided to dabble in wireless Internet access -- "Wi-Fi" in tech parlance -- it started with its hometown of Mountain View.

Google's Wi-Fi service started this week, making Mountain View the largest U.S. city with free Internet access available to all residents. Google is partnering with EarthLink for a similar service in San Francisco.

A Google-affiliated BPL service might similarly begin close to home, and that would of course mean that PG&E's network would be involved.

PG&E's Tremayne confirmed that the utility has had more than one conversation with Current about BPL, but said the talks have stalled on Current's insistence that PG&E also pony up some cash to get things going.

"If that changes," he said, "we'd be happy to keep discussing this."


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