"Broadband over power lines was once an abstract concept. But, it is now real. Utilities, in fact, are using their current distribution lines ..." !!!

Energy Risk - Broadband's Evolution
Author: Ken Silverstein, EnergyBiz Insider, Editor-in-Chief
Date: 2006-10-05


Broadband over power lines was once an abstract concept. But, it is now real. Utilities, in fact, are using their current distribution lines to not only communicate internally but to also deliver high-speed Internet access to their customers.


Certainly, utilities are focused on their bread and butter enterprises. But, they are in an enviable position: They own the rights-of-way where the fiber that allows for high-speed Internet connections would go. That's fortuitous. The wave of mergers within the telecom sector is a precursor as to who will control the so-called last mile into consumers' homes. Utilities are not necessarily eager to retail telecom services. But, they would certainly lease their limited rights to others who would be all too happy to do the leg work.

"Broadband over power lines (BPL) promises to be the third wire into homes," says Steve Turner, chief operating office of IBEC in Huntsville, Alabama, which manufactures equipment used to provide such high-speed services. "It offers speeds that are comparable to digital subscriber lines and cable modems. And it offers the possibility to turn every power outlet into a channel for high-speed access. His comments came at a conference in Atlanta sponsored by EnerVision, a consulting firm.

According to Turner, 28 percent of all homes have access to high-speed Internet service. But another 31 percent live in locations that are considered too remote for conventional providers of such service while another 14 percent are "waiting" for these features to be sold by some entity. That means 47 million homes are underserved, he says. With their ubiquitous wires, utilities could bridge that divide.

Certainly, the potential is enormous. Telecom Trends International says that BPL revenues will grow from $57 million in 2004 to $4.4 billion in 2011. Right now, digital subscriber lines (DSL) that are provided by telecom carriers and cable modems have made the greatest inroads. But BPL is making its presence known. Already, there are six commercial deployments that include a rural electric cooperative in Virginia and one in south central Indiana. "Rural areas want these services too," says IBEC's Turner.

At the height of the telecom boom around early 2000, about 150 utilities offered telecom services as wholesale providers of capacity. Many have dropped out, like Williams and Dynegy. But others such as Southern Co. have stayed in the game. Even municipal electric companies are participating in the telecom market in some measure because the major players are not enticed to build out. Tacoma Power, the city of Manassas, Virginia and Morristown Utility Systems in Tennessee are three.

During the tech boom of the late 1990s, the marketplace was enamored of companies that could deliver the latest and greatest technologies to homes and businesses. Utilities had longed to shed their stodgy images. They wanted to be viewed as enterprises that had just as much foresight as the tech ventures that were ruling the day. As such, they sought to use their goodwill in the markets they served to offer new products and services.

Digital Living

All told, about 20 percent of the nation's utilities are considering investments in BPL, says New Millennium Research. But power companies don't want to get burned, again. That's why -- in the majority of cases -- they won't make the capital investments in infrastructure and equipment and why they won't actually sell the services to customers.

In most circumstances, utilities serve as "landlords" by leasing space on their wires. The service providers own the equipment and market the product, although customers generally will get their bill from their utility. None of this precludes utilities from vertically integrating high-speed assets and offerings or even from making the needed investments and letting partners provide the service. But, such forays have proved risky in the past and utilities have learned to stick to generating and delivering power.

Utilities have long used low speed technologies to optimize their grids. But, the acceleration of fiber optics has allowed them to place devices along their wires that increase the speeds to deliver data. Through their power substations, they can use couplers along medium voltage power lines that transmit data. A converter is then used to move the signal to a low voltage line that goes into homes. Once inside, a BPL modem is used to provide high-speed access from any electrical outlet.

There are some delivery issues. Emergency responders have expressed concerns that BPL signals might interfere with the government's ability to deliver care during times of crisis. That's why the Federal Communications Commission has issued rules that became effective in July that mandate all equipment be made so as not to cloud communications. Existing gear, however, is grandfathered.

Other concerns: electrical wires are noisy and impede data transmissions. That means that Internet traffic must adapt. But, companies are working on this by developing more advanced couplers.

Without a doubt, BPL ventures pose a lot of risks. The fallout from the telecom bust in the 2001 time period still reverberates. But, the key to winning the broadband wars is controlling the lines into homes and possibly the customers themselves. All players want to provide bundled services such as voice, data and cable. If utilities choose to participate, the object would be to expand those services to include advanced home monitoring as well as technologies that interact with smart appliances.

The opportunities are especially appealing for rural electric cooperatives. At least half of their members -- customers -- say that they trust their management more than they do their phone or cable companies, says IBEC's Turner. Besides that loyalty, they are a captive market that is trying to boost job growth. Without high-speed Internet services, they will not have the underlying infrastructure they need to economically develop.

Technology is indisputably going to change rapidly over the next 10 years. The extent of broadband's evolution is pure guesswork. Still, there are certain factors that are known. Chief among them is that the cable and copper wire are the only services that are prevalent and that lead directly into consumers' homes. And while they are capital-intensive technologies, they are still cost effective when compared to others that are immediately available. The evolution, though, is ongoing. And, there's room for new ideas and new players -- a role that some utilities think they can play.