Energy execs debate future of broadband over power lines

Early adopters cite potential merits, while others note risks

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 favor the viability of BPL services. Last month, the Federal Communications Commission issued a notice of proposed rulemaking (04-37) that would allow electric utilities to provide BPL services so long as they adhere to power-line radiation-emission restrictions and follow consistent and repeatable measurement guidelines.

"The FCC has essentially given us the green light to go forward" with BPL, said Brett Kilbourne, director of regulatory services and associate counsel at the United Power Line Council, a Washington-based alliance of electric utilities and technology companies involved in BPL.

Before the FCC ruling, there were concerns that BPL transmissions would interfere with ham radio and other shortwave radio communications.

Power companies also hope that BPL investments will allow them to support utility industry applications such as load forecasting, demand management and the ability to predict and correct electrical equipment failures before they occur.

"It's like having a real-time asset management system," said Tim Frost, director of corporate planning at New York-based Consolidated Edison Inc., which is about to launch utility application trials using BPL services in Manhattan.

Copyright © 2004 IDG Communications, Inc.

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