Division of Power
For nearly two years, companies have bragged about the prospect of delivering broadband Internet access over the electric lines hooked to nearly every home in America. And though that promise has amounted to little more than hype here, consumers in Brazil, Germany and the Republic of Korea are beginning to use power line communications technology.
Next month, Korea Electric Power Corp. will begin serving 100 homes on Cheju Island with PLC systems. The effort is backed by $15 million in research and development funding from the South Korean Ministry of Commerce, Industry and Energy. Also next month, 50 homes in the southern Brazilian state of Parana that are served by electric utility Paranaense de Energia will begin using PLC systems. And this summer, three Germany electric utilities EnBW, MVV Energie and RWE will begin offering the service to their customers.
PLC technology holds tremendous promise. It offers high data transfer rates 2 megabits per second or more as well as the potential to carry TV signals and voice. So if PLC is viable in Asia, Europe and South America, why hasnt the so-called third line into the U.S. home been exploited?
The answer appears to lie within a knot of regulatory issues, differences between the European and American power grids, continuing skepticism toward technology and upheaval at a prominent American PLC firm.
"European utilities are more telecom savvy than American electric utilities," says Bob Dillon, executive vice president and founder of Enikia, a New Jersey company developing PLC products for home networking. And, he notes, there are fewer high-speed providers to choose from in the European market. In Germany, for example, Deutsche Telekom still dominates the broadband landscape. In the U.S., telecommunications industry deregulation has opened the market, and consumers can choose from a relatively large menu of high-speed access providers, making the need for PLC service less urgent.
But electrical grid design may be the most to blame for the slow rollout of the technology. In Europe, several hundred homes and businesses may be hooked up to a single electrical transformer. Here in the U.S., a transformer may serve 10 to 20 homes and businesses.
"Transformers serve as a choke for radio frequency energy," explains Tom Griffy, a physics professor at the University of Texas at Austin.
And because the transformer chokes the radio signal, any company that wants to offer PLC must figure out a way to work around the transformer, he says. Because European utilities can serve more homes from a single transformer, they can reduce the number of points of aggregation a PLC provider must build, which, of course, means better economics.
The layout of the electrical system also has allowed European companies to test the technology on a much larger scale than has been attempted in the U.S.
Earlier this year, MVV, in a joint venture with Israeli company M@in.net Communication, successfully supplied PLC to 200 homes in the city of Mannheim, Germany.
The biggest test carried out so far in the U.S. was completed earlier this year at a small cooperative outside Atlanta. The Coweta-Fayette Electric Membership test involved two homes.
The test was performed by Powerline Technologies, a joint venture of M@in.net and Virginia energy services company PowerTrust, and the results were encouraging data sped along at 2.5 Mbps.
"If you already have the poles and wires in place and you can use them to deliver another service to your customers, the economics of it become very attractive," says Dan Hart, the co-ops vice president of marketing.
But even PLC promoters acknowledge difficulties in the domestic market. "If theres a hurdle I have to overcome for this technology, its the skepticism of the utilities," says Joe Marsilii, president and chief operating officer of Powerline Technologies.
Skeptics, including Griffy, point out that electric power lines frequently have significant interference caused by surges in voltage or by electrical appliances. Plus, given the recent telecommunications market carnage, it may be difficult for PLC firms to raise capital to build the infrastructure needed for their data networks. Cobbling together a network on power poles might be cheaper than adding new fiber or copper, but the gear is still expensive.
Those facts helped convince German gear maker Siemens to announce in March that it saw little opportunity in PLC and was pulling out worldwide.
Additional skepticism about PLC may stem from the disarray at Media Fusion Holdings, a Dallas PLC company that has developed a way to piggyback telecom signals on the outside of power lines.
Media Fusions ideas once were touted as "the next big thing," and in 1999, Rep. Billy Tauzin, R-La., said in a press release that the companys technology will allow everyone to access the Internet with a "small device that plugs into every socket." And perhaps it will, although it now appears doubtful that Media Fusion will be providing that access.
Last February, the company announced it had fired CEO William L. "Luke" Stewart, who, along with Media Fusion, owns a U.S. patent on PLC technology. Stewart, who could not be reached for comment, was accused of using company credit cards for personal expenses and to purchase things like jewelry, liquor and limousine service.
Internal upheaval or no, Jonn Randel, executive vice president of corporate development at Media Fusion, says the company will continue to develop PLC technology.
"Our focus is to finish research and then go into development phase," Randel says, adding that the company expects to issue some "fairly significant press releases" later this year.
While American firms continue to fine-tune the technology, RWE, using modems built by Swiss technology company Ascom, expects to sign up 20,000 PLC customers in the Essen region of Germany by years end. EnBW hopes to provide PLC to about 7,500 customers in the southern town of Ellwangen, Germany. MVV is targeting Mannheim and is seeking exclusive rights to provide PLC services in Austria. Last month, during a technology conference in Hannover, Germany, Ascom officials told reporters that the company which expects to produce 100,000 power socket modems this year is also targeting Southeast Asian and South American markets.
Like Ascom, RWE sees opportunity in the Southern Hemisphere and beyond.
"Many more households in the world have power access than telephone access," says Martina Rudy, a spokeswoman at RWE Plus, a RWE division helping to deploy PLC in Brazil. "Every country where you have lots of power access, this technology is possible."