Posted 4/13/2003 10:30 PM
High-speed Net coming to a plug near you?
By Paul Davidson, USA TODAY
For years, high-speed Internet service was only a dream for Lee Stanton. His house in a nook of Potomac, Md., is too far from his phone company's switching center for DSL.
And forget cable broadband. Stanton, 68, "always had a negative feeling about" dealing with the cable company, even for TV. "I have perfectly good broadcast TV."
But just as Stanton had resigned himself to molasses-like dial-up speeds, an unlikely savior galloped to the rescue: his electric utility. Two months ago, the retired software engineer signed up for a free trial of broadband over power lines by Washington, D.C.-based Pepco.
"It's remarkably good," he says. And he can tap the service by plugging his laptop and modem into any outlet in his house.
After years of fits and starts -- marked by technological and economic hurdles -- electric utilities may be poised to jolt the high-speed Internet market by offering the service over the same wires that power your dishwasher, refrigerator and toaster.
That could bring broadband to millions of rural consumers with no access to cable or DSL. And it could add a third, low-priced alternative in urban areas. Several power companies say they can offer broadband for as little as $30 a month, well below the typical $40 to $55 range of cable and phone services.
"I think it's ready to explode," says Alan Shark, head of the Powerline Communications Association, which represents utilities interested in broadband. "We're talking about millions being served in the next 24 months."
At least a dozen utilities are conducting field trials, including, among the USA's 15 largest, the Southern Company of Atlanta, American Electric Power of Columbus, Ohio, and New York-based Con Edison. At least two utilities -- Pennsylvania Power & Light and Ameren of St. Louis -- are expected to launch service in a few neighborhoods this year. Some utilities in Europe and Asia already offer limited service.
Don't expect most of the USA's top power companies, however, to rush headlong into broadband. Noting past failures and the power grid's resistance to data traffic, many analysts and utility executives remain skeptical. "I've had enough of all these guys' Kool-Aid," says Yankee Group analyst Seth Libby. "It's still a work in progress."
Also, utilities are a cautious lot. They were chastened when a telecom glut decimated their late 1990s investments in stringing fiber-optic cable, which they planned to wholesale to local phone start-ups. "When the bottom fell out of the telecom market, Wall Street rewarded utilities for maintaining a more traditional electric utility viewpoint," says AEP tech chief Bill Randle.
But even skeptics say this year's planned broadband rollouts could be a watershed. "If they go well, you'll see a lot of utilities joining the bandwagon," says Brett Kilbourne, director of regulatory affairs for United Telecom Council, which represents 850 power companies that also offer telecommunications services.
Broadband would supply fresh revenue to a power industry buffeted by the sour economy and the implosion of the energy-trading business. And it would let utilities slash costs by using the fast data links for internal benefits, such as automated meter reading, line monitoring and load management.
The economics are appealing: The new technology only requires utilities to add certain equipment to their existing wire grids. It's potentially a way to "leverage our network for additional revenue," says Pepco Finance Director Jay Demarest. He adds that the communication capability can also be useful in tracking power outages.
For consumers, a new high-speed offering couldn't come at a better time. The Federal Communications Commission recently voted to phase out DSL competitors' discount access to the regional Bells' broadband networks, hobbling rival providers such as Covad Communications, EarthLink and AT&T. FCC officials say electric companies could replace that lost competition, helping to hold down retail prices.
"This is within striking distance of being the third major broadband pipe into the home," FCC Chairman Michael Powell said last week at a demonstration of the technology in Maryland by Current Technologies.
But if utilities are game, they ought to join the fray in the next year or two, industry officials say. While just 23% of online households buy broadband today, that figure is projected to jump to 40% by 2005, Jupiter Research says.
For nearly a decade, as the cable and phone behemoths haltingly rolled out high-speed Net services, power companies muttered: Why not us? After all, unlike cable, electric wires run to every home and business. And their grids can push broadband to remote areas more efficiently than phone networks.
Power companies also boast miles of fiber-optic cable -- largely used for internal communications -- which they can use to connect an Internet backbone to their medium-voltage power networks.
Some problems to solve
But the networks haven't greeted the Internet traffic warmly. "It's a hostile environment," Kilbourne says. Early attempts at providing broadband service through power lines by Siemens, Nortel and others failed.
Although data can easily share the same wire as electric current by running on a higher frequency, overhead power lines are not insulated. So data, which travel in energy waves, can easily disrupt -- and be disrupted by -- TV, radio and mobile communication system transmissions. Also interfering is the electric noise generated by say, a vacuum or fan on the same circuit. Another problem is that the power network is laid out in branches, with the same wires feeding many customers. That, as well as a collision course of capacitors, switches and other gadgets, weakens data signals.
But a new crop of technology suppliers has cleared most of these hurdles by chopping the data into tiny packets. If a few are lost through interference or attenuation, your computer can still figure out the message. Amplifiers and repeaters boost the signal.
The biggest roadblock, however, is the transformer that converts medium-voltage current (10,000 to 69,000 volts) to the low voltages (220/110) that enter your home. It can swallow data signals whole.
The upstarts believe they've finally solved this with a variety of techniques. Ambient and Current Technologies bypass the transformer with a special wire that carries the data, while only electric current passes through the transformer. Main.Net relies on packet-chopping technology to slip the data intact through the trash-can-sized transformer. And Amperion's Wi-Fi antennas wirelessly link the Internet signal to the customer before it gets to the transformer.
Such solutions were around a few years ago, but then they cost as much as $2,000 per home to put in service, says William Blair of the Electric Power Research Institute.
Costs recently have fallen to $50 to $160 per home passed, suppliers say. "The breakthrough is that cheaper silicon has made this possible on a large scale," says Amperion CEO Philip Hunt.
This is much cheaper than what cable and phone giants had to spend beefing up their networks with fiber or copper, as well as adding broadband gear. At first, they spent $750 to $1,000 per home passed, though costs lately have fallen to $200 to $400, Jupiter's Joe Laszlo says.
The less-leveraged power companies, thus, say they can charge $30 to $39 per month for speeds of 256 kilobits to 1.5 megabits -- comparable to cable and DSL. Yet Libby questions whether the services will slash data speeds to offer that price, just as cable and DSL firms are starting to do.
'A major business opportunity'
PPL, whose trial serves about 60 households in Allentown, Pa., is closest to a real-world service offering. "It's really a chance to offer high-speed service, especially to rural customers in northeastern and central Pennsylvania that don't have access" to it, says PPL spokesman George Lewis.
Other utilities performing trials are optimistic but have made no decision about service offerings.
And many major utilities around the USA simply are watching the tests with varying degrees of interest. "Assuming it works, as it appears it may, then there's certainly a major business opportunity," says Bill Muston research manager for Dallas-based TXU.
"We have a modest effort underway to understand the technology, but no firm plans to apply it," says Florida Power & Light spokeswoman Kathy Scott.
Some companies are considering becoming Internet service providers, but most plan to wholesale the service or simply lease their wires to the equipment suppliers.
"Our core business is electricity. Do we want to take on another thing we have no clue about?" asks George Jee, Con Edison's director of resource planning.
EarthLink, the No. 3 Internet service provider, is in discussions with several utilities to resell their broadband offerings. AT&T says it, too, may use the power grid to reach broadband customers.
Some utilities say selling broadband would merely be icing on the cake for other uses they see for a data link: to improve customer service by installing modems on meters and home appliances. It costs AEP 70 cents a month to read each of its 5 million customers' meters. Remote readings, Randle says, could save $42 million a year.
Other companies say data feeds can let them turn off air-conditioning during peak load times when a customer isn't home or know immediately when a customer's power is out.
Unanswered questions
Despite the optimism, challenges remain. While the trials have gone well, no one is certain how the electric and data networks will mesh if hundreds or thousands of customers are using both at the same time. Says Pepco's Demarest: "Does the speed slow down? Does it interfere with the (electric service)? So far, the answer is no."
Another hurdle -- though apparently a small one -- is regulatory approval. State regulators will likely ensure that utilities' unregulated broadband units pay adequate lease rates to use the wires of the regulated electric arm, officials say. Pennsylvania regulators endorsed PPL's arrangement last month, the first such approval in the nation.
And the FCC's Powell believes the service can be rolled out under rules that let unlicensed wireless services emit tiny amounts of energy. At worst, however, officials say, a waiver or slight change to rules or equipment standards might be needed.
So far, cable and phone companies profess not to be worried. "It sounds like they have an awful lot of work left to do," says Rob Stoddard, spokesman for the National Cable Television Association.
Maybe not that much. Stanton would plunk down as much as $40 monthly for the Pepco service. "I would swear by it," he says.
AI
