Electrifying Broadband-Making gains with power lines as a high-speed data conduit

Traditional broadband service providers could be
in for a real shock. Within two years, sellers of
digital subscriber lines, cable-modem and
satellite services will face a new heavyweight
contender: electric utilities.

Lloyd Batzler
Washington Techway

If the rosiest predictions hold true.

After years of research and development, a
handful of technology companies report what
one study calls "significant advances" in
systems and software to move data, voice and
video across existing electricity lines and
transformers and into homes and small
businesses at high speeds.

Power line telecommunications, known as PLT
or PLC, "is in many ways the Holy Grail in
telecom for utilities," says Beth Griffiths,
director of research at the United Telecom
Council, a Washington trade group.

Power lines reach virtually every building in the United States, an estimated 125 million
customers. But meshing electrons and filtering
"noise" on neighborhood power distribution
networks has proved an engineering challenge,
despite success stories in Europe and Asia,
where there are differences in electric grids.

"Because of the cost of the technology and the
complexity of the technology … it has been very
difficult to cost-justify," Griffiths says.

That’s changing. Five companies have
conducted technical trials or signed agreements
with about a dozen U.S. utilities for partnerships
or other tests, according to a United Telecom
Council report published last month, industry
analysts and public records.

Small-scale tests have been promising,
although results and investments are closely
guarded, executives and analysts note. Speeds
rival or exceed those of cable modem and DSL.

"It is an excellent small- and medium-sized
business solution because it is a cheaper
technology. … It is in the same realm as DSL
or the cable modem," Griffiths says.

The conservative culture of utilities, coupled with
the highly visible collapse of
telecommunications and broadband companies
in recent years, has tempered enthusiasm,
analysts and executives say.

"The lesson that [power line communications]
providers learned is, ‘Don’t go to market with
anything, unless you are able to provide it,’"
says Seth Libby, senior analyst in the
wholesale communications group of researcher
Yankee Group.

"I believe the ability to deliver on this technology
does not meet their pronouncements – to date,"
Libby cautions. "The potential of this technology
is just amazing. Just the potential alone has
been enough to keep money coming into the

In January, a $10 million venture investment
flowed to Current Technologies of Germantown
from two Pennsylvania funds, EnerTech Capital
and Liberty Associated Partners, a unit of the
giant Liberty Media.

A month later, Ambient Corp. of Brookline, Mass., announced it is expanding its 18-month-old research
agreement with Consolidated Edison of New York to build a "fully functioning power line communication
demonstration" on ConEd’s network and will get a $325,000 advance from the utility. Privately held
Current has spent nearly two years developing a core technology that allows broadband transmissions to
safely bypass transformers, which distort signals. The company plans to continue field tests on its
system, refine its products and expand talks with power companies. "Working with utilities is a slow
process because it is a regulated industry," says Chris Ladas, Current’s vice president of business

"The biggest stumbling block had been the transformer," says Jay Birnbaum, Current’s vice president and
general counsel. He says Current’s tests also have shown "we do not cause interference to other
systems," such as wireless or cable signals, a worry with early generations of some systems. The utility
serving Washington and its Maryland suburbs, Pepco, is testing Current’s system, according to industry
reports. Current and Pepco won’t confirm or comment on specifics, citing confidentiality agreements.

In addition to offering a range of broadband services, from telephone to video, utilities could use the
technology to monitor the performance of their power grids, directly to the individual meter, and make it
easier to adopt time-of-use rates for electricity sales.

"If this technology does become commercialized, it would help us utilize our assets," says Mark S. Gray,
manager of telecommunications for Pepco. "It certainly would help us in a cost-effective manner to provide
communications deeper into our network."

Larger utility companies have been telecommunications wholesalers for years, selling unused capacity on
their fiber optic networks that monitor and control power systems.

So embryonic is the PLT field that the latest Federal Communications Commission report on "deployment
of advanced telecommunications capability," published two months ago, makes no mention of it in its
emerging trends section. But the FCC report contains updated statistics showing the promise of
broadband – and of markets untapped. From the end of 1999 to June 2001, the penetration rate of what
the FCC defines as "advanced services" nearly quadrupled. The report also noted only 7 percent of U.S.
households subscribe to high-speed services, which include DSL, satellite and cable modem.

"Penetration rates of all of those is extremely low," Pepco’s Gray said of broadband services. Current
hopes to have a "broader deployment" of its system later this year, Ladas says. "We’ll probably be
seeking more money before the year ends," Birnbaum adds.

"Overall, PLT is a technically feasible and economically attractive means for utilities to enter the
broadband market," the United Telecom Council report concludes. "That said, as is true in any business
model, the PLT business is a challenging one that requires smart rollout, careful operation and controlled

Plug and play

As power companies consider
entering broadband markets with
power line communications
technology, the ability to use a
home’s electric wiring for
connecting computers and other
equipment is already on the

At least four companies are selling
adapters and routers that use
existing electric wiring in a house
as the conduit for a local area

Backers say the systems are
simpler to install, faster, more
secure and reliable than existing
wireless networks – and a vast
improvement from earlier designs
that harnessed phone wires for the

The HomePlug Powerline Alliance,
a nonprofit organization whose
members include equipment
developers and suppliers, has
established technical standards.

Cost to connect three or four
computers, a printer and Internet
connection are about $500, but
prices are expected to drop,
analysts estimate.

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