By Chris Roden
TechNewsWorld
05/01/07 4:00 AM PT
While broadband services have penetrated a large portion of the United States, many rural communities still have few options beyond dial-up. Forty-four percent of dial-up subscribers live in rural areas. Only 23 percent of rural residents subscribe to broadband services. This low broadband penetration is not due to lack of demand.
The use of power lines as a medium for communication services has been widely discussed for many years. Similar to the characteristics that led to the development of DSL (digital subscriber line), the use of surplus frequency space on power lines for communication is a simple concept that has been difficult to implement.
However, as the broadband gap between rural and more densely populated areas in the United States continues to widen, the idea of sending signals over power lines is gaining ground as a viable broadband option. Utility companies' interest in BPL (broadband over power lines) has increased as well because this technology provides a possible tool for improving overall power management.
The Rural Divide
While broadband services have penetrated a large portion of the United States, many rural communities still have few options beyond dial-up. Parks Associates' "Managing the Digital Home: Installation and Support Services" showed that 44 percent of dial-up subscribers live in rural areas. Furthermore, only 23 percent of rural residents subscribe to broadband services.
Parks Associates research also shows that this low broadband penetration is not due to lack of demand. Twenty-four percent of rural residents using dial-up are very interested in upgrading to broadband services, a number similar to the percentage of high intenders in suburban and urban areas (27 percent and 22 percent, respectively).
These findings show an opportunity is available for alternative broadband providers that can balance the capital expenditures and the revenue structure associated with serving these populations.
Utility Company Perspective
For BPL to become a legitimate broadband option in the United States, the utility companies must be involved. The use of their infrastructure is the key to making BPL a profitable enterprise.
Past failures in providing new services and an overall industry tendency to be slow in adopting new technology have limited their adoption of BPL in the United States. However, utility companies are beginning to understand the benefits that BPL can provide not only to their own power networks but also to their customers.
For utilities, the most attractive feature of BPL is the use of "smart grid" services. As energy prices continue to rise, the utility industry is being pressured to manage its grid more efficiently in terms of cost and power demand.
Because of BPL's duplex communication functions, it can provide the metrics needed to reduce costs by automating many tasks that are currently being performed manually.
Some of these duties include outage detection, automated meter reading, remote monitoring, and voltage monitoring throughout the system and security functions. These types of measurement solutions will ultimately persuade utility companies to use BPL equipment and services.
Factors for BPL Success
Most telcos and cable companies have chosen not to expand their networks to rural areas because of the high installation costs and reduced revenue potential.
Some BPL vendors are filling this void and beginning to find success by minimizing installation and operating costs while providing a high level of service comparable to that offered by existing broadband options.
To ensure future success, BPL vendors and service providers will need to do the following:
Minimize capital and operating expenditures by developing solutions that can transmit broadband signals over long distances with minimal line degradation and injection points.
Most of the typical expenditures associated with installing broadband service are eliminated when using existing utility lines. However, BPL providers incur costs each time equipment is installed to boost and/or transmit the signal down the line.
The successful companies in this space have continually improved equipment such as couplers and regenerators that can pass on signals over long distances, thus lessening the interaction with line equipment.
Other vendors have developed solutions that bypass the medium-voltage lines altogether and send broadband signals wirelessly from the central office directly to the low-voltage lines and into the home. These solutions result in even lower maintenance costs and less grid disruption than the medium-voltage solutions.
Offer a suite of products and services that provide utility companies with "smart grid" metrics.
For BPL to become successful, utility companies must see benefits outside the stream of revenue generated from the delivery of broadband communications to their consumers. "Smart grid" services can provide the added incentive for utility companies to embrace the integration of BPL on their networks.
Develop partnerships with service providers and utility companies to deliver broadband services to consumers.
Most power companies do not have the experience or the capital funds to pursue a business model in which they provide both the back-end and the front-end broadband services to their customers. By outsourcing the retail broadband services like marketing and customer service to other firms, utility companies will still capture a portion of the broadband revenue without having to incur the financial and administrative burdens associated with retail service.
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Chris Roden is a research analyst at Parks Associates.
Posts
Consumers Energy to expand broadband over power lines
ReplyDeletehttp://www.glitr.com/Article.asp?id=398563&spid=
Los Angeles-based Utility.net LLC Monday announced an expansion of its broadband-over-power-line (BPL) Internet service with Jackson-based Consumers Energy, which provides electric or natural gas service to 6.5 million Michigan residents.
In 2006, Consumers Energy and the Shpigler Group conducted a proof-of-concept BPL system.
The next step: an initial deployment to 10,000 homes in and around the city of Grand Ledge, west of Lansing.
Once this initial phase is completed, scheduled to be operational by end of 2007, Consumers Energy intends to grant to Utility.net additional service areas in blocks of 100,000 customers. Utility.net intends to roll out its BPL network to eventually reach one million Michigan customers over the next several years.
Utility.net and its ISP partners will be offering three different levels of high speed Internet service in central Michigan: 768 Kbps symmetrical, 1.5 Mbps symmetrical and 3.0 Mbps symmetrical.
Most broadband services available to customers today are asymmetrical services featuring upload speeds that are much slower than download speeds and are marketed as "up to" speeds. Utility.net's symmetrical service provides upload speeds that are just as fast as its download speeds and both are expected to be at or near the purchased service speeds 95 percent of the time.
To customers this means that large files and files with pictures and other graphics will be sent much more quickly, internet chats that include video will be much more responsive, VPN connections and hosted websites will be better performing and Internet gaming will be more enjoyable.
Utility.net says its business strategy is to deploy broadband networks into rural and other areas that are either unserved, with no broadband providers, or underserved, with only one broadband provider choice. This strategy enables Consumers Energy, and other large energy companies, to enter into a landlord relationship with Utility.net, which assumes full responsibility for the network and the business model. In addition, Utility.net partners with one or more Internet Service Providers who manage the relationship with the end customer.
Lawmakers May Refocus Rural Internet Financing
ReplyDeleteBy Dan Morgan and Gilbert Gaul
Washington Post Staff Writers
Wednesday, May 2, 2007; Page A05
Members of a House committee charged yesterday that a five-year, $1.2 billion program to expand broadband Internet services to rural communities has missed many unserved areas while channeling hundreds of millions of dollars in subsidized loans to companies in places where service already exists.
"If you don't fix this, I guarantee you this committee will," House Agriculture Committee Chairman Collin C. Peterson (D-Minn.) told James M. Andrew, administrator of the Rural Utilities Service at the U.S. Department of Agriculture. "I don't know why it should be this hard."
Peterson said he was "not happy" with the information in a recent Washington Post article about the USDA's overall rural development program. The program provides grants, loans and loan guarantees to expand housing, small business, water and sewer, electricity and telecommunications services in rural areas.
The Post reported that since 2001 more than half the money has gone to metropolitan regions or communities within easy commutes of a mid-size city. An Internet provider in Houston got $23 million in loans to wire affluent subdivisions, including one that boasts million-dollar houses and an equestrian center.
Congress created the rural broadband program in 2002. To date, according to Andrew, 69 loans for $1.2 billion have been approved to finance infrastructure in 40 states. Only 40 percent of the communities benefiting were unserved at the time of the loan, Andrew said.
In September 2005, USDA's inspector general reported that the broadband program "has not maintained its focus on rural communities" that are without service.
The USDA has been drafting new regulations to address the problem since late 2005. Rep. Mike McIntyre (D-N.C.), who chairs the subcommittee overseeing rural development issues, yesterday directed Andrews to send the proposal to Congress within 10 days. "I'm disappointed these regulations are still under wraps," McIntyre said.
A spokesman for the USDA's Rural Development division told a reporter the agency could not comment until they are published.
Several industry witnesses charged that the program has undercut privately financed telecommunications companies.
"Taxpayer funds are being misspent on projects that are not extending broadband service to unserved rural communities," said Tom Simmons, senior vice president of Midcontinent Communications of Sioux Falls, S.D.
Last week, Rep. Stephanie Herseth Sandlin (D-S.D.) introduced legislation to close loopholes that allow areas that "are neither rural nor suffer a lack of service" to collect the loans and loan guarantees.
http://www.washingtonpost.com/wp-dyn/content/article/2007/05/01/AR2007050101919.html?nav=rss_technology