Can Broadband Over Powerlines Deliver?

LONDON — A leading market researcher warned that broadband-over-powerline (BPL) communications may fail to compete against DSL and cable. Undeterred, corporate heavyweights are investing in the techology.

Google, Goldman Sachs and Hearst have invested in a major utility providing fast data access over AC power lines, and IBM is reported to be partnering with another utility to trial the technology.

Broadband analyst Melissa Yocom of IMS Research (Austin, Texas) said that with many BPL operators still working on trial deployments there's a large chance the technology may not make it off the ground.

WiMax fixed wireless broadband access, considered by many to be BPL's direct competitor for the underserved rural market, has the potential of beating BPL to market, Yocom said, especially in the U.S. where ratification of a universal BPL standard is still pending.

Europe is also pushing ahead with what is more commonly known there as 'power line communications'(PLC). Earlier this year The European Commission (EC) issued a recommendation to national telecommunications and utilities regulators to remove "any unjustified regulatory obstacles," especially from utilities, in order to open up the market for providing broadband over the power grid.Similar to earlier statements by the Federal Communications Commission, the EC sees power line communications, as a way to liberalize the market and potentially cut the cost of broadband delivery.

"The biggest hurdle for broadband powerline will be achieving market share in DSL and cable modem saturated markets. The volume of BPL deployments will have to increase substantially during the next 12 to 18 months if this technology is going to gain any ground," said Yocom.

The warning comes just as Current Communications Group LLC announced July 7 that Google, Goldman Sachs and Hearst Corp. made strategic investments in the company, reportedly almost $100 million, to help it roll out broadband over powerline services in parts of the U.S and in international markets.

Current is already partnering with Cinergy Broadband, a subsidiary of energy utility Cinergy, and their joint ventures last year received about $70 million from existing backers Liberty Media Corp. and Current's largest shareholder EnerTech Capital.

The joint venture is gearing up to offer a bundled broadband service for Cinergy's 1.5 million customers in Ohio, Indiana and Kentucky. Another joint venture is also planning to offer BPL services to smaller municipal and cooperatively owned power companies in rural areas.Earlier this week, the New York Times reported that IBM is set to partner with CenterPoint Energy, a Texas-based utility, to test BPL in about 250 homes in the Houston area as well as establish a technology center to demonstrate the benefits of the data access technology to other utilities.