IBM eyes stimulus funds for broadband over power lines

Tue Feb 17, 2009 6:59pm EST

NEW YORK, Feb 17 (Reuters) - IBM (IBM.N) plans to take advantage of the U.S. economic stimulus package signed earlier on Tuesday by offering Internet services over power lines to more rural consumers.

IBM said its venture with International Broadband Electric Communications (IBEC), a company that provides broadband over power line (BPL) services, had begun to sign up Internet customers in rural parts of Alabama, Indiana, Michigan and Virginia and that it hoped to access more government funds.

The economic stimulus law signed by President Barack Obama included $2.5 billion for the Agricultural Department to expand broadband service in rural America.

International Business Machines Corp Chief Executive Sam Palmisano was one of several U.S. business leaders who met with Obama late last month, and IBEC's chief executive is set to meet with lawmakers on Wednesday to see how much of that funding would be available to the venture.

BPL technologies use radio signals which help connect Internet service over electric power lines. Consumers can access the Internet by plugging modems into power outlets.

Such services are widely seen as slower and less reliable than that of cable and phone providers, which offer increasingly fast connections as well as online video services with the help of fiber-optic networks and advanced network gear.

But IBM said the IBEC venture's service is aimed at remote and sparsely populated areas where advanced Internet services are not available, meaning the only competition would be traditional dial-up services which are even slower.

IBM said it did not know how much government funds it could receive but that the venture would proceed regardless, and that it expects broader Internet use to stimulate the economy and help create more business opportunities in the long run.

"In the long-term, the effort will lead to the expansion of small businesses and creation of new industries, bringing new jobs to rural Americans and driving net new economic growth," said Raymond Blair, director of advanced networks at IBM. (Reporting by Ritsuko Ando; Editing by Phil Berlowitz)