MAJOR BROADBAND OVER POWER LINE ROLLOUTS NOT EXPECTED IN 2004

Despite the FCC green light for broadband over power line (BPL) services, industry leaders don’t see electric utilities rushing to the market with high-speed and voice offerings. Some attribute the hesitation to a brand new business gauging the market. Others ascribe it to a “let the other guy do it first” mentality. In any case, there is near agreement that any sizeable deployment will come only next year.

As a “brand new business, a brand new technology, commercially speaking, and a brand new industry, we have our own internal guidelines,” on the pace of deployment, said Jay Birnbaum, pres. of Current Technologies, which announced a joint venture with Cinergy Broadband for commercial rollout in Ohio, Ind. and Ky. (CD March 3 p17). Unlike cable and DSL, which provide quarterly rollout schedules, the companies declined to provide a timetable. “We are more concerned with getting it right and learning the marketplace as we go along rather than making bold [deployment] predictions,” Birnbaum said. Saying the companies hoped to pass 60,000 homes this year starting with the Cincinnati market, he said, and there would be no monthly or quarterly rollout goals. “The main goal here is to do it well the first time, so that we learn both the best way to do it as well as demonstrate that this technology is economically and technically viable and deployable.”

Alan Shark, pres. of the Power Line Communications Assn. (PLCA) has a different take. He said if utilities were looking for an excuse to put off deployment, the FCC’s favorable notice of proposed rulemaking wasn’t it. “I'm amazed at the opportunities that is before these utilities and how slow moving they are.” He said his sense was that most utilities were waiting to see how the deployment in Manassas, Va., the first to deploy commercially in Jan., shaped up. “In today’s environment, the idea of market research is let the other guy do it first,” he said. Saying it wasn’t necessarily the fault of the utilities, Shark pointed that they had taken a beating in the deregulated market. “It’s a tough time for telecommunications and it’s been a tough time for utilities as well.” While more and more companies will commit to rollouts in the 2nd and 3rd quarters, “you will see a fairly extensive rollout in 2005,” he said. Birnbaum said utilities using Current technology would have “some small and large deployments over the course of next year.”

Shark said successful business models would likely resemble Manassas’s. He said utilities may not have the resources to do it by themselves and would get into partnerships. In Manassas, investment firm Prospect Street Broadband undertook branding and marketing the high-speed offering of the city utility, leaving installation and maintenance to the utility. Investor-owned utilities have issues of bureaucracy and accountability to shareholders, Shark said: “These were the people that went out and spent millions of dollars on fiber, and they got burned. Some of them still haven’t recovered. So they just don’t want another black eye.”

It was relatively smooth sailing with regulators in the 3 states of the Current-Cynergy deployment, said Birnbaum. Company officials briefed regulators “so they understood what we were doing -- but essentially, BPL, like cable modem, is broadband Internet access,” he said, pointing out that the FCC had ruled cable modem services were information services preempted from direct state regulation. In Ohio, a state proceeding on VoIP isn’t done, he said, and state regulators recently ruled Time Warner VoIP wasn’t yet subject to their jurisdiction but they might want to regulate it later. As for affiliate transaction approvals, Birnbaum said some states required companies to get approval, while others just expected companies to comply with the rules. In the Cynergy territories, states require only that companies comply with the rules, he said.

Although not a “showstopper,” industry standards is another issue to be addressed, said Brett Kilbourne, regulatory dir. of the United Power Line Council (UPLC). The approach is to work with existing standard setting bodies like IEEE rather than the industry’s developing standards itself, he said. There are also standard setting efforts overseas. A group called the PLC Utilities Alliance is trying to develop standards that would help the mass market production of equipment, he said. The European Union is funding an Open PLC Initiative for power line research and deployment, including standards. “So it’s an encouraging sign and contradicts the negative PR by some of the organizations about PLC being a nonstarter,” Kilbourne said. Shark said his guess was that standards were going to be set by those getting to the marketplace the “fastest, best and most consistently.” There is no concerted effort in the industry to develop standards, said Birnbaum: “I don’t think it is a big issue.” Only 3-4 companies boast a commercially available BPL system, he said, and “if one or two of us become the clear market leader that might become the de facto standard.”