Broadband Over Powerline is For Real — continued

[February 23, 2004]

Tolnar says that medium-sized ISPs of over 20,000 subscribers are interested in the system as a means of getting free of the phone company.

He says any ISP can deploy the technology, but, to date, Amperion deployments have been at an ISP that is a subsidiary of a power company, such as Boise, Id.-based IDACOMM-BPL, or they have been at an ISP that is working with a specific power company, as in the recent announcement of a deployment by EarthLink and Progress Energy in North Carolina.

An ISP does have some bargaining power in these arrangements, because the bandwidth it provides can be used to better manage the power grid, making remote management possible (or, in some cases, merely easier). For the power company, savings through remote management can reach tens of millions of dollars, depending on the size and age of its network, and power companies vary widely in size and shape.

In the U.S., the utilities business is a patchwork (much like ISPs and phone companies) made up of cooperatives, municipal companies (including big ones like Tampa and Los Angeles but also many small ones), and public corporations (which tend to be the largest). Whatever you choose to do, it seems that every ISP should at least research what company provides power in areas it serves.

The local utility's billing system could potentially present the same headaches that the ILEC's billing system burdens ISPs with. In addition, there are laws and regulations specific to utilities that ISPs may not be familiar with, including certification requirements for line workers. But Tolnar says that Amperion can help ISPs connect with power companies and find work crews.

He adds that pilot projects for single neighborhoods need not be expensive. "We've done pilot deployments for $20,000 to $25,000," he says. "The cost per household passed is between $50 and $150 (without CPE). A large part of that is fixed costs such as the headend router access cabinets and a few of our units."

In order to profit from the deployment, an ISP would need a high takeup rate, and takeup rates should vary by area depending on the level of broadband competition, notes Joe Laszlo, senior analyst at Jupiter Research.

The broadband frontier
Laszlo says he does not expect broadband over powerline to be ubiquitous in the U.S. "If cable and DSL are already present in a market, you might not deploy powerline. The power companies will deploy broadband where there's less competition."

"Nobody knows the cost per home of deploying broadband over powerline," Laszlo warns. "It may not be radically cheaper than DSL or cable." Furthermore, cable and DSL companies continue to deploy, extending competition to areas that lacked it in the past.

He says it may be easier for smaller utilities to deploy broadband. "DSL prices are getting lower, and broadband over powerline could involve another massive upgrade to an old wired network."

Laszlo does not dismiss the large utilities, though. They will probably deploy pilot projects in areas with little competition. Some already have fiber networks that they can use. "We may see a hybrid network, using fiber for the backbone, broadband over powerline for distribution, and maybe Wi-Fi too."

So ISPs actually hoping to deploy the technology should look first to areas with little broadband competition, the broadband frontier, served by a power company that is willing to work with them. For unserved communities more than anyone else, 2004 could be the year that broadband over powerline reaches their home—if the market economics works.

— End

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