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Does any of this look familiar??

Link: http://www.bpltoday.com/public/848.cfm
Link mentioned in aricle: http://www.utility.net/

Body: http://www.bpltoday.com


Utility.net's BPL plan could change everything overnight
September 26, 2006

Using IBEC's strategy for rural success to win very big IOUs



CEO was executive at KeySpan, Verizon, Fortune's #16 firm



A number of the nation's largest utilities -- IOUs on both US coasts and in between -- are in "detailed discussions" with a new network integrator/operator called Utility.net about deploying BPL.

The new firm's business plan turns assumptions about the broadband business upside down.

The technology it's using could spark the BPL revolution that's been predicted in earnest for over a decade.

Sounds like just the latest BPL hype?

Read on.

The names of the utilities and details of the deals are under wraps for now -- but here's a few reasons Utility.net may be on the verge of changing the BPL industry for good:

The firm modeled its approach for IOUs on -- and is partly owned by -- the only BPL venture that's signing up utilities (co-ops) left and right -- IBEC;
The plan includes making profits by serving retail broadband to un-served and underserved power utility customers first -- making regulators, local authorities and investors happy;
Utility.net's business plan uses the landlord and carrier's carrier models making it utility- and consumer-friendly;
It creates an affordable network technology for "smart grid" applications in the most remote stretches of the grid, and
The whole thing works thanks to some clever inventions at IBEC plus air-tight licensing deals the firm has locked up tight.
BPL Today's been reporting success at IBEC for some time now.

The firm's business model pivots on serving the hardest-to-reach customers, rural consumers that other firms said were impossible to make money from.

If IBEC could deliver on promised bandwidth to those customers they'd be eager to mail in their checks for $30 or $40 or more each month.

IBEC made this plan work with the first RUS loan for BPL -- US$19 million for four co-ops (BT, 8/29/05), a follow-up application for $50 million for 13 co-ops and reports of dozens more waiting to sign up.

The plan worked.

The utilities are happy. The customers are happy. Regulators are happy and IBEC's happy.

Results like that are too good to ignore.

Utility.net's founders saw the brilliance at IBEC:

Unique, patented coupler design using electrical impedance matching for a clean signal;
The ingenious idea of putting the coupler inside a piece of common grid gear that every line worker knows how to install;
A nimble approach to finding the fastest and most affordable BPL gear without committing to any one vendor, and
A startling, digital-divide-crossing business plan that wins by accomplishing what the entire broadband industry said from day one was impossible -- making a profit by serving rural customers.
The founders of Utility.net made a deal with IBEC reportedly about a year ago -- divvying up the US utility market.

IBEC keeps its target market -- co-ops and small munis.

Utility.net gets the rest including the very biggest IOUs -- and the IOUs are reportedly intrigued.



Meet Utility.net



The new firm is a utility network integrator/operator and wholesale broadband bandwidth provider or carrier's carrier with headquarters in Los Angeles (www.utility.net).

It's existence, executive team, business plan and partnerships were announced at a reception the firm hosted last Monday night at the UPLC's annual BPL conference in Charlotte, NC.

Utility.net CEO Cheryl Smith made the announcement.

"We feel passionate about the fact that this is for the first time the right time with the right technology to serve not only the public but also the utilities," she told us in an exclusive interview Thursday.

Investors are realizing this, too, she added.

"In the past, the investors had a real problem with [BPL] because they could not see the business value proposition.

"There has to be a major revenue generation component to this.

"Offering broadband capabilities where there is no broadband today is a really good value proposition."



Her skills converged



Smith started out as a computer programmer and became a vice president at Verizon.

She was hired as CIO at huge Northeastern US gas and power utility KeySpan Energy in the mid `90s when KeySpan was buying up utilities.

Her job was to get the various systems at these firms to work with KeySpan's systems.

The utility was -- and is "keen," on advanced technology, said Smith.

Thus it created KeySpan Technology -- a wholly-owned R&D subsidiary that was given millions of dollars annually to study new energy-specific technology ventures.

Smith was president and chairman of the board from 1998 to 2002.

She figured BPL wouldn't be viable until it met four criteria and while she was at KeySpan it didn't.

Smith was hired as CIO at McKesson -- a US pharmaceutical shipping firm ranked at 14 on the Fortune 500 at the time (it's #16 now).

The firm at the time shipped US$300 million worth of drugs each night to hospitals and pharmacies in the Americas -- and that requires lots of IT, Smith explained.

McKesson has online, real-time systems and networks that pick up those orders and guarantee 24 hour delivery, she added.



Utility.net was born



A Los Angeles "early stage" venture capital firm called Mandeville Partners looked at IBEC and believed the firm's strategy would work at IOUs, Smith reported.

Mandeville specializes in telecom ventures especially in the cable TV world.

The firm teamed with IBEC, gained the sole rights and licenses to use IBEC's technology at IOUs and created Utility.net.

The latter is now owned jointly by IBEC, Mandeville and the Utility.net management team, said Smith.

For BPL to appeal to IOUs, the next generation of technology was needed and it wasn't ready so Utility.net went into a holding pattern.

Once IBEC started deploying G2 BPL gear at co-ops, IBEC CEO Scott Lee called Mandeville and said he believed it was time.

That was about six months ago.

Mandeville had been working with a number of attorneys on other venture projects and over dinner one night explained Utility.net to them.

One of the attorneys had been on KeySpan Technology's board when Smith was president and recommended her as CEO.

Mandeville called Smith, told her they believed her four criteria were met and that they needed a "top notch corporate management team."

Smith looked, saw that the triggers were met and quit her job at McKesson.



Four boxes checked



Smith's first trigger was that BPL had to work without impairing the grid's ability to deliver power or otherwise run.

That includes avoiding the need to shut off power for installation, Smith told us.

And it means connecting safely between MV and LV lines.

Those problems are fixed.

Second -- BPL needed enough bandwidth to handle utility applications plus retail broadband for consumers.

BPL chips were at 14 mbps when Smith wrote her criteria.

IP networks can consume almost half of a chipset's bandwidth.

Splitting the remainder between utility applications and multiple consumers didn't deliver enough.

Then DS2 created the 200 mbps chipset.

Smith's third criterion was avoiding interference with emergency and amateur radio services -- thus the invention of successful notching was vital, Smith reported.

Notching had to be by remote control.

"You can't deploy it on a mass basis if you have to become manually involved in any of it," noted Smith.

Smith's fourth criterion was distance -- the ability to send a signal far enough from the backhaul insertion point to limit deployment costs.



It's the regenerators



Many people in the BPL world incorrectly use the word repeater when they mean regenerator.

We've done it -- but we'll be clear from here out -- especially since the difference is so groundbreaking.

A repeater re-amplifies the radio signal -- and any noise the signal has picked up.

Thus the signal after moving through a few repeaters can degrade completely.

A regenerator decodes the signal, separating the noise from the message, recodes and retransmits it down the lines.

Thus it was the evolution of BPL repeaters into regenerators that put BPL over Smith's fourth and maybe toughest hurdle.

Regenerators do add some latency to the message -- a slight delay -- and over multiple regenerations that delay can add up.

Latency itself can be a problem for VOIP calls and video, for example, and that's one reason modern BPL chipsets use QoS to prioritize packets carrying voice or video data.

The real challenges in affordably sending signals down long stretches of power line caused many to question whether it will ever happen.

The idea is to "truly reuse the grid" and thus save costs by using infrastructure that's being maintained and supported for a use other than BPL, Smith reminded.

That value is lost if BPL can't send the signal far enough to limit the need for backhaul injection or "infusion" points.

IBEC has a customer 13 miles from an injection point, we've reported, that gets the same service as those one mile down the line (BT, 6/20/05).



Coupler/arrestor is key



"It's the coupler that's the big, new advantage here," Smith reported.

And not just the quality of IBEC's couplers.

IBEC engineers found that electrical impedance-matching in BPL couplers can boost the broadband signal a lot, we reported in February (BT, 2/27).

The firm has several patents pending and licensed a related patent from another entity, we quoted IBEC CEO Scott Lee at the time.

But "the big advantage" cited by IOUs in talks with Utility.net "is the fact that their coupler is actually built into a surge suppressor," said Smith.

IBEC teamed with Cooper Power Systems of Waukesha, Wisc, to put its couplers inside Cooper surge arrestors (BT, 2/27).

That's "already a part of any grid.

"It's a component that electrical contractors are used to working with," she added.

And IOUs in talks with Utility.net realize signing up for the firm's BPL would cut back by about 1/3 on their spending for arrestors on their grid.

That grid-friendly design is "brilliant on IBEC's part."



"The arrestors are an integral part of why I said 'yes' to this entire business proposition," reported Smith.



Cooper's arrestors are certified, well-tested and trusted by utilities that face lots of pressures from environmental and reliability interests.

In Utility.net's first talks with big IOUs the utilities warned of strict limits on installation responsibilities for any entity wanting access to the grid including strict certification requirements for contractors.

Utility.net has a deal with a national and well respected electrical contractor, Smith assured, but after some test deployments with the Cooper-enabled couplers the mood changed at several IOUs.

"'It wouldn't take us more than a couple hours of training to get your entire configuration up,'" she quoted one IOU, "'maybe we will do that for you.'"



She's been the buyer



For most of her career, Smith has been shopping for technology for big firms including KeySpan Energy.

"When I started looking at BPL technology I realized the drivers that are going to make a difference to the big IOUs."

It's a combination of services and guarantees.

"We truly are not an equipment provider. We do not sell the equipment."

IBEC's been installing Corinex gear and most recently Kaicom systems -- but isn't committed to any brand or chipset, we've been told.

"We are a full-service BPL system provider," Smith reported.



QUOTE OF THE WEEK: The IOUs that are looking to reuse their grid [by adding BPL] are very comfortable with the kinds of forethought IBEC has put into these patents and licenses. That was really important to me because I knew that if I was going out there and selling it to my peers -- because I worked with most of these guys over the years & it better be something I can look them right in the eye and say, 'this is going to solve your political problems and your technical problems. It's going to be a plus and not a minus. It will truly be cost-free, risk-free to you.

Cheryl Smith, CEO of Utility.net



What to expect



Utility.net uses a three-step process to show its BPL to an IOU, said Smith.

Each utility grid is complicated and different from the rest, she added.

Thus the first step is to install a trial at the utility's test lab or training facility to "certify" that the gear will work.

The second step is to deploy a trial at a substation or two or three and prove the service is as good at the end of the line as Utility.net says it will be.

That step gives the new firm a chance to show its installation procedures and attractive install time.

And it shows that existing utility applications including SCADA and AMR aren't disrupted by the BPL.

The third step is to devise a plan on where to deploy first -- looking for the underserved and thinking about what utility applications might be best to deploy first, Smith explained.



Smith has connections



Contacts she's made throughout her career are coming into play now with Utility.net.

"I spent billions and billions of dollars in the IT world over the years for my large corporations."

For NOC services, Utility.net hired the Houston firm Smith used while at KeySpan called Diverse Networks.

It was founded by a group of ex-Metricom executives with experience running large scale networks such as Palm.net and OmniSky, said Smith.

Smith believes Diverse Networks and Utility.net's other big contractors might not normally take on a start-up "but we have long term relationships. We know them. They know us."

Diverse Networks has software in place to monitor Utility.net networks nationwide at all seven network layers including the BPL-specific data.

Every IOU is different as is every interface, Smith reported.

Utility.net is working with its potential clients to ensure the NOC "will electronically interface with their systems to give them the notifications and to give them what they need and want."

Smith hired "probably one of the top telecom guys in the world," Daniel Crespo-Dubie to ensure good connections between the NOC and utility customers.

He's Utility.net's vice president for network and technology operations and responsible for all network architectures and all telecom and call center operations.

Crespo-Dubie led the operation of mission critical telecom systems required to run uninterrupted and that played a critical role at a large utility in NYC, said Utility.net.

In the days immediately after 9/11 his call center and telecom system and networks were used by the NYC emergency response groups.



Utilities need retail



Power firms have to create "multiple business cases for applications that don't yet exist and that's a really difficult thing to do," said Smith.

"But if it's going to be funded by a retail broadband play then it's cost-free/risk-free to the utility and then the utility applications that are unique to having a broadband system and equipment on their lines becomes really cost effective and very valuable to the utility."

But is it really risk free, we asked.

What if the retail broadband half of the team fails to make a buck?

That's where the business model and technology used by IBEC and Utility.net makes the difference, Smith answered.

Broadband insertion points are the costliest part of a deployment.

IBEC's technology needs one insertion point at each substation and the signal "travels the distance because it uses regenerators."

Our preliminary research didn't show what technology firms may be using regeneration or repeaters.

"IBEC and Utility.net use unique coupler technology and regenerators that are designed specifically for serving rural markets where customer density is low," reported the UPLC in its BPL 2006 report released last week (www.utc.org/?p=33398).

We don't find any other BPL firms talking about the difference.

IBEC ignored the broadband business model used by cable and DSL incumbents and found a way to serve the very people those firms left out.

The firm went straight to the least densely populated areas.

Utility.net believes IOUs should do the same.

The new firm is "in detailed partnership discussions with a number of the largest power companies in the US," Smith told the press last week.



A new way of thinking



"Our business proposition is, 'OK IOUs, let's do the market research and find where there are no broadband providers in your territory or only one,'" said Smith.

"We know we're going to go through cities, but let's assume we're not going to pick up very many customers in a city because they have huge choices."

The math is compelling.

Co-ops offering IBEC's BPL find their members don't mind spending US$29.95/month for 256 kbps symmetrical service.

Utility.net's first tier is 768 kbps.

The next two are 1.5 mbps and 3 mbps.

That said, higher bit-rates are possible by adding injection points but the cost would be looked at on a case-by-case basis and need to be justified.

Utility.net's Chief Technology Officer Michael Keselman is doing R&D to boost bandwidth by cutting the overhead bandwidth used by the network, Smith reported.

He's working to create products and services that take advantage of unique BPL capabilities such as in-home/in-business gateways, customer portals and clearinghouses, said Smith.

Keselman's been responsible for all aspects -- engineering, planning, implementation, contract administration/compliance, security and operations -- of global video, voice and data networks.

Build-outs will no doubt cover urban and suburban areas but the plan doesn't hinge on winning in competition with the incumbents.

Utility.net expects to get higher take rates in rural areas where it's the only -- or almost only broadband option.

"We are guaranteeing to the utilities that we will be cost effective& we'll have multiple choices for ISP" including VOIP providers.

"Our business case says this is going to be paid for by people who want broadband and don't have access to it today or have very limited access," said Smith.



Investors like it



"You have got to have a business value proposition that you can take to an investor that shows where your revenue stream is going to come from.

"It can't come 100% from the utility because then the only investor you can have is the utility."

Thus far that's left most IOUs cold to BPL.

Some pioneering IOUs famously have a vision of BPL's long-term value and have pushed ahead with deployments.

Those firms are well known to BPL Today readers and can be counted on one hand -- TXU, CenterPoint and Duke.

Others such as Consumers Energy and Duquesne Light are in the game with minor but at least commercial deployments.



No booth in the hall



Utility.net didn't have a booth in the demo hall at the UPLC event.

Neither did IBEC.

Before the Utility.net story broke one might have guessed IBEC was too successful signing up co-ops to need a booth.

Now we know its likely going to have its hands full serving co-ops and helping it's new partner deliver at IOUs.

EDITOR'S NOTE: Our coverage of the UPLC event continues next week.





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