IP Democracy: Broadband over Powerline: Taking Off or Fading?

As Cynthia notes, today’s New York Times features a bullish piece on the potential of broadband over powerline (BPL). But, as Om Malik points out, The Morning Call balances the NYT story with “a sobering report [that] PPL Corp of Allentown, considered one of the early leaders in the BPL space, is throwing in the towel and getting out of the BPL business.”

The Morning Call asks the question on a lot of our minds:

So which is it? Is broadband over power lines a failed experiment, or does the upstart technology present a real challenge to the two primary sources of residential high-speed Internet access — the cable modem and the digital subscriber line, DSL?

After citing former FCC chair Michael Powell’s statement that BPL is “within striking distance of becoming the third major broadband pipe into the home,” the Morning Call takes a stab at reconciling the disparate views of the technology’s potential.

PPL never said the broadband service didn’t work. The company came to the conclusion that it wasn’t profitable. It couldn’t charge a high enough price in the face of stiff competition from cable and telephone companies, and its pool of potential customers - 1.3 million Pennsylvania electricity customers - was too small. “The economies of scale wouldn’t work,” PPL spokesman Jim Santanasto said.

The city of Manassas, which is working work COMTek, “represents a very different business model,” according to the Morning Call.

The city’s electric grid is, unlike PPL’s, publicly owned. COMTek, the city’s partner on the project, is a telecommunications company, not an electric utility. And, COMTek used one broadband-over-power lines technology while PPL relied heavily on another [the final connection to homes is over power lines in Manassas, while PPL is linking homes to power lines via wireless].

Manassas joined forces with COMTek—a Chantilly, Va., company whose formal name is Communications Technologies Inc.—in July of 2004. The city’s utility staff makes the necessary changes to the electric grid, such as installing couplers and repeaters, while COMTek maintains the servers that enable e-mail and Web hosting. COMTek also handles the marketing and customer service. The arrangement allows the city and the company to focus on their respective strengths…PPL, on the other hand, ventured into an entirely new business when it first offered its broadband service.

The Morning call story cites a recent press release in which “Rick Nicholson, vice president of research for Energy Insights of Framingham, Mass., predicted that broadband over power lines growth would be limited by, among other factors, ‘a lack of utility expertise in running commercially successful consumer telecom businesses.’” In terms of the technology options, it cites a COMTek executive:

Walter Adams, vice president of new technology for COMTek, said the power outlet approach offers several advantages. First, it can be used in neighborhoods with below-ground utilities, whereas the wireless method relies on the availability of telephone poles. Second, it eliminates the problem of interference, since it does not require a line of sight between a telephone pole-mounted transmitter and the customer’s house. And lastly, it doesn’t require professional installation; all the customer needs is a modem, which can be delivered through the mail…”Utilities are risk averse. If it’s not a home-run, it’s not something they’re likely to stick with,” Adams said.

Posted by Mitch Shapiro on October 17, 2005 12:58 PM to IP Democracy