November 11, 2004 (Computerworld) --
ORLANDO -- Executives at electric utilities that are pioneering the delivery of broadband-over-power-line (BPL) services to consumers and to support internal grid monitoring applications point to the business benefits of being able to tap existing infrastructure cheaply, filling market gaps in underserved regions and plummeting equipment costs. But uncertainties about consumer adoption and other technical challenges have others questioning the viability of the still-emerging broadband alternative. One of the earliest adopters of BPL technologies is the electric utility for the city of Manassas, Va. The city signed a revenue-sharing agreement in July with Chantilly, Va.-based Communication Technologies Inc. (ComTek) to extend BPL services across the city's power lines to 15,000 residential and commercial locations for less than $30 a month, said John Hewa, an assistant director at the electric utility. Since ComTek began installing the BPL equipment in September, the two organizations have penetrated 10% of the coverage area, said Walter Adams, a ComTek vice president. Under the revenue-sharing agreement, ComTek foots 100% of the BPL equipment expenditures and provides customer care and billing support. Manassas provides field technicians to install the BPL equipment and 60 miles of fiber optics for the Ethernet-based BPL backbone. Hewa and Adams spoke at Platts Energy Information Technology Conference held here yesterday. Under the agreement, the city draws 10.5% of the consumer BPL revenue and 25% of the commercial BPL revenue being generated, said Adams. As the organizations boost their market penetration, the city can scale up to a revenue cap of 40% for each of the two markets. Adams said he expects the two groups to achieve 10% penetration of the entire Manassas broadband market by next July. He said ComTek is expecting a three-to-seven-year return on investment from its $1.5 million BPL equipment outlay -- a projection that depends on changes in the cost of equipment and the volume of profitable services that customers buy, such as voice over IP bundled with Internet services.
Other energy executives, however, voiced skepticism about financial returns from BPL investments. After four hurricanes hit Florida this summer, Florida Power & Light Co. has had to replace 2,000 miles of power lines and 13,000 poles, said Phil Slack, BPL project manager at the Juno Beach, Fla.-based utility. "There is [BPL] equipment that you have to add to poles, and you have to factor that into your thinking," he said. Slack has other concerns, such as the vulnerability to rust of above-ground power equipment exposed to saltwater and humidity along the East Coast. "We haven't gone to a full-scale market trial yet," he said. "The technology isn't ready yet for Florida, but it's getting close." Still other factors
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