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The May 31, 2004 Issue Provided by System Dynamics Inc.
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Moving Forward with the "Third Wire" - BPL Part 1

The Federal Communications Commission has enthusiastically embraced broadband over power line (BPL) as a competitor to cable modem and DSL service. In a BPL inquiry more than a year ago, FCC Chairman Michael Powell wrote: "Broadband over Power Line has the potential to provide consumers with a ubiquitous third broadband pipe to the home. The development of multiple broadband-capable platforms ... will transform the competitive broadband landscape and reap dramatic windfalls for American consumers and the economy. ... Broadband over power lines can offer consumers freedom to access broadband services from any room in their home without need to pay for additional wiring, by simply plugging an adaptor into an existing electrical outlet."

The words sound good. We understand the potential. We wanted to see if the reality can match it.

We describe what we learned in a four-part survey:

Overview of BPL

We wrote about BPL more than a year ago after attending a conference at Columbia University. In Power Line Communications: Third Wire To the Home?, we concluded that "PLC access works, but big hurdles remain to make it a major business."

We learned more about BPL in Europe during a visit last year, and six months ago we published a guest article Spain Plugs Into Broadband about a BPL rollout in Spain.

Many North American electric utility companies have run BPL trials and several are now moving toward deployment. In the absence of BPL standards, utilities are deploying several different technologies, with different ways of carrying data over the electrical grid and different ways of delivering data to the home.

Other utilities, particularly municipally-owned ones, have been running pilots of broadband services over fiber to the home (FTTH), and some have moved to full deployment. We wondered why some utilities would choose one approach over the other. See Putting Jackson, Tennessee on the Fiber Map on Jackson Energy Authority's FTTH service rollout in Jackson, Tennessee.

We have been researching the current status of broadband provided by electric utility companies, using both BPL and FTTH. To learn more about BPL technologies and service offerings, we attended several BPL conferences and visited several electric utility companies; we will make additional visits over the next few months.

Our tentative conclusion is that BPL has come a long way in the past year. While the issues we raised then--especially the lack of standards for "Access BPL"--remain unresolved, the technologies appear to work well enough to provide commercial service. In fact, the state of BPL today strikes us as having many resemblances to what cable modem service was like in 1997. There are several proprietary technologies that work, standards are not yet there, and a pretty significant culture change will have to occur in utility personnel, just as it did for cable. We are told that in utilities, there is still a mindset that says: "It worked for a hundred years this way -- don't mess with it. We want to keep the lights on and not have the phones ring."

The next year or so should demonstrate whether BPL is indeed capable of being Powell's "ubiquitous third broadband pipe".

A Guide to the Jargon

Three brief explanations may clarify the terms used in the balance of this survey of BPL.

"Access BPL" and "In-House BPL"

The FCC inquiry a year ago defined two types of BPL:

  • "Access BPL" provides broadband access to homes - in competition with cable modems, DSL, wireless, fiber, etc.
  • "In-House BPL" is for home networking, in competition with or complementary to Category 5 wiring, Wi-Fi wireless, etc.

The FCC inquiry--and this survey--are focused on Access BPL. We have covered HomePlug--the most common form of In-House BPL--extensively in the past; see Home Networking - HomePlug Evaluation for more information.

BPL and "Power Line Communications" (PLC)

BPL is a form of "power line communications" or PLC. Power companies have often employed low-speed PLC for their own internal use--to monitor and control equipment in the power grid.

Many people use the terms PLC and BPL interchangeably. The FCC chose to use the term "broadband over power line" for consumer applications.

"Munis", "IOUs" and "Co-ops"

Willingness of utilities to invest in new technologies and take risks is, to some extent, determined by what constituencies they serve:

  • Municipally-owned utilities or "munis" use the revenues from electricity sales toward operation of the system and the improvement of services to the community. They answer to the community and do not have to pay a dividend to shareholders.
  • By contrast, Investor Owned Utilities (IOUs) are governed by a board of directors elected by stockholders. IOUs exist to make a profit for their stockholders while serving the public.
  • A third type of utility is the co-op, also known as electric membership corporations or cooperatives, which are consumer-owned electric systems with customers primarily in rural areas. Co-ops are governed by an elected board of directors. Those cooperative customers whose name appears on a bill are eligible to vote for these directors.

We are told that munis have historically been quicker to embrace new technology, since they do not have to produce results for shareholders.

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