Broadband powerline service gains backers
One of the largest Midwestern power companies announces a joint venture to provide Internet access directly to consumers through power sockets in their homes.
Current Communications Group and Cinergy Broadband, a subsidiary of a Midwestern utility with the same name, announced on Tuesday one of the first large-scale rollouts of broadband over power line (BPL) technology in the United States. The service promises lower prices and more convenience by allowing consumers to access the Internet simply by plugging into an electrical outlet in their house.
The joint venture will offer Cinergy's 1.5 million power customers in Ohio, Indiana and Kentucky a bundle of broadband and voice services. It will also deploy BPL to smaller municipal and cooperatively owned power companies covering 24 million customers across the United States. The rollout of the service is currently underway in the Cincinnati area after 14 months of trials.
The concept of using power lines to access the Internet has been around for years. Because electricity travels at a lower frequency than Internet signals, the two can co-exist on the same line without interference.
Power lines are also an attractive broadband delivery system because they are already in place and reach more homes than either cable systems or telephone lines. But the technology has yet to catch on because of technical issues and the expense of delivering services.
Due to advances in semiconductor technology, BPL modems, which can plug into the wall sockets, have come down in price dramatically--to roughly $30 a piece. This has helped make the technology more accessible.
The technology is also getting a push from the federal government. Just last month, the Federal Communications Commission proposed rules to facilitate the deployment of BPL over the electric power grid. The FCC is hoping BPL will become a viable alternative to DSL (digital subscriber line) and cable modem technology, which are controlled by the Baby Bells and the cable industry, respectively.
The FCC hopes electric utilities will partner with service providers to tap the nation's power grid to help provide high-speed Internet access to all areas, including those in which there is a limited choice of broadband providers or no broadband coverage at all.
Other providers are also starting to rollout BPL services. Internet service provider EarthLink recently announced it would be testing a broadband service using power lines leased from Progress Energy, an electric company serving North and South Carolina and central Florida. The service will initially be deployed in roughly 500 homes.
Current and Cinergy plan to focus on price and convenience as they compete against current DSL and cable services. The companies plan to sell the service for about $30 to $40 a month, depending on the connection speed. Cable operators usually charge about $35 to $40 a month, while DSL lines are priced at roughly $30 to $35.
But some experts said it will take more than reduced pricing to compete with entrenched services. DSL and cable offerings are already part of bundled services, and consumers tend to be reluctant to switch providers when buying such bundles.
BPL providers also face a steep learning curve in terms of working out the kinks on their networks. DSL and cable providers have several years of experience under their belts. They've already worked out network connection problems and billing issues, said Matt Davis, director of broadband access technologies at Yankee Group.
"If you're coming into an established market, you need a really disruptive technology," said Davis. "Unless we see an AT&T, an MCI or a Microsoft driving this market, I don't see much potential. It's really a technology looking for a market."