The firms envision a future where all appliances with power cords can be networked in the home--PCs, telephones, stereos, even refrigerators. For example, a DVD drive in one room could send a video to a TV or PC in other, while a computer in a bedroom could switch on a Web-enabled dishwasher.
Although the concept may sound far-fetched, analysts believe transferring data, video, and voice at high speeds over an electrical line is possible.
"Obviously, you're skeptical until you see it work, but it's certainly feasible. The hurdle [companies] have to overcome is people's skepticism over powerline," said Yankee Group analyst Karuna Uppal.
Devices from PCs to toasters will need special embedded chips for the networking technology to work. Once a device is plugged into electrical outlets, it can communicate with other devices.
As reported earlier, most industry observers had thought there was no easy solution to block the noise and interference that comes with sending data over powerlines. Powerline is considered "noisy" because electric signals from appliances can use the same frequencies as data, voice, and video.
In fact, Intel has spent a lot of research and development dollars working on powerline technology--yet executives say the technology is still a few years away from being a reality.
Powerline companies disagree. At the Network+Interop show last week, New Jersey start-up Enikia unveiled powerline technology that runs at speeds of 10 mbps, which is comparable to two other aspiring home networking technologies: telephone and wireless. Two of Enikia's powerline competitors--Adaptive Networks and Intellon--say they will also come out with similar technology later this year.
The 10 mbps speed is important because it's fast enough to deliver video. Current products on the market only offer 1 mbps.
The powerline companies--giants like Intel and IBM, as well as the 3Com-Microsoft alliance, believe the emerging home networking market will be huge once broadband access becomes more widely available. All these companies are looking to offer a mix of phoneline, wireless, and powerline technologies for the home.
In fact, a Cahners In-Stat Group study expects the U.S. home networking market will reach $230 million by 1999 and explode to $1.4 billion by 2003. The report predicts that phoneline technology will capture 50 to 70 percent of the market, wireless will capture a third, leaving powerline with less than 10 percent.
But Enikia's executive vice president Bob Dillon says those numbers aren't reflective of powerline's possibilities. Because there are more electrical outlets in a home than phone jacks, he believes phoneline technology will be a competitive technology.
The main issue, however, is that the powerline companies have lagged behind phoneline and wireless, which have standards and the backing of many technology companies including Compaq and Motorola.
But powerline companies claim standards will emerge once products are released later this year. Adaptive's chief executive Michael Propp said companies need to snag partners to help formulate powerline standards once products are on the market.
"No one is going to standardize on anything that doesn't work," Propp said. "Our approach is to get the silicon done and have a real product. The standards will happen like other standards have happened, once it's proven that it's producible."
So far, Intellon is the only vendor with backing, as Microsoft now licenses its technology. On Monday, the firm will also announce a licensing deal with phone manufacturer Phonex, which makes phones for RCA, General Electric, and Radio Shack. The company plans to use Intellon's technology to create telephones that run on electrical wires.
The company will perform field trials of its new product in the late summer and hopes to strike deals with telecommunications, consumer electronics, and networking companies in the next quarter, he said.
Dillon believes signing up one partner will help validate the technology--and will result in an avalanche of deals. "We have a full table of dominoes and we're waiting for one to knock over and the rest will fall," he said. "We are very close to deals and can start closing deals this quarter."
Analysts say telecommunications firms, such as AT&T and Sprint, may be interested as the technology could be combined in the firms' strategy for high-speed Internet access. The telcos are looking to use the networking technology to act as a residential gateway, or central hub, that connects devices and provides Internet access throughout the home.
Other potential licensees of the technology include networking companies like 3Com and Intel, as well as consumer electronics companies that make stereos, DVDs, and other appliances, said analyst Jeremey Donovan of Dataquest.
Yankee Group's Karuna also said power companies might get into the act so they can deliver Internet service through electrical wires. "For Enikia, if they can get one OEM [original equipment manufacturer] or service provider that gets them a large endorsement of their technology and I think they'll be well on their way," she said.
While phoneline and wireless products with 10 mbps speeds will be released in late 1999 or early 2000, the powerline companies hope to release their technology by the fourth quarter. Enikia, for example, hopes products will ship in the first half of 2000. Costs will be comparable to phoneline technology, Dillon said.