Posted 06/01/2001
Powerline Gets New Juice:
A 'New' Spark in Broadband Competition?
By Paula Bernier
Powerline, a technology to offer communications services over electrical lines, is having a resurgence.
With the deregulation of electric companies throughout the world; the recent adoption of the HomePlug spec, which uses in-home electrical wiring as a communications LAN; and significant powerline activities in the United States and abroad, customers may soon see their electrical companies competing with cable modem and DSL providers to offer high-speed Internet access and other services to homes and businesses.
Yet, despite this new surge of activity, a cloud hangs over this nascent industry.
Siemens AG (www.siemens.de) reportedly pulled the plug on its efforts in this space recently. (The company didn't return calls seeking comment on this topic). Meanwhile, some industry watchers are skeptical about the long-awaited technology, and utilities are hesitant to allot human and financial resources to test it.
"I basically have been pretty unconvinced by powerline because it keeps on not working very well," says Tim Johnson, principal analyst at U.K.-based consultancy Ovum (www.ovum.com). "The technology keeps not quite arriving."
According to Johnson and other sources, Nortel Networks Ltd. (www.nortelnetworks.com) in 1999 folded its Nor.Web project in Northwest England with local electric company United Utilities (www.unitedutilities.com). Nortel would not agree to be interviewed for this story. In response to xchange's requests for an interview, Nortel spokeswoman Gina Pesko wrote in an e-mail: "Because it took place two years ago, there isn't a spokesperson who can effectively speak to the topic."
New Energy
But a handful of lesser-known vendors are keeping the dream alive.
Ambient Corp. (www.ambientcorp.com), as one example, is working with Consolidated Edison Inc. of New York (www.conedison.com) and utilities abroad to test its technology. Ambient told xchange that it expects to go commercial with its systems by August 2002, probably with ConEd.
"We've been mapping their system, doing lots of alpha testing," says Mark Isaacson, CEO of Ambient. "ConEd is the most cooperative. They see this as a key line opportunity."
Elsewhere, Ambient in January announced it had concluded successfully a first alpha testing of its Powerline Telecommunications technology with Sumitomo Electric Industries Ltd. (www.sei.com.jp). The test was done over inside wiring in a building."
George Jee, director of corporate planning at ConEd, says his company is working with Ambient, which is providing equipment and integration services, because it is interested in using the 2 to 30 MHz frequency range on its copper to offer high-speed Internet access at data rates of at least 1mbps as well as video, VoIP and remote meter reading services to its existing electric customers.
"I think it's a logical thing," Jee says. "We're making use of existing infrastructure."
Jee says there's renewed interest in powerline technology because of advances in coupler and orthogonal frequency division multiplexing (OFDM) technology, as well as the creation of HomePlug.
He explains that Ambient has proprietary coupler technology, which jumps the signal from the high side to the low side of the transformer. OFDM is a new modulation scheme. And the HomePlug Powerline Alliance Inc. (www.homeplug.org) is an industry group that's developing a specification for devices such as TVs, PCs and other end points to use the power line as a path to communicate data within the home.
"So the logical thing would be to take it outside," Jee adds.
However, Bob Dillon, executive vice president of corporate development and co-founder of vendor Enikia Inc. (www.enikia.com), says with HomePlug there's no space for an access service on the wire, since the specification uses all available spectrum. But that could change in future releases of the spec.
Jee says Manhattan is a particularly interesting place to use powerline. "Because of density, we have a lot of customers all on a low-voltage grid," he says. "On a normal overhead transformer, it's higher voltage and then steps down voltage so the customer can use it. We usually have 10 homes per transformer, sometimes less. In Manhattan, it's a little different; it's a grid with several thousand customers on a low voltage grid. ConEd can connect directly to the low voltage grid and not need the transformer, although there are a lot of transformers in the system. The point is, rather than 10 customers, we have thousands connected to all one spot."
Ambient offers low- and medium-voltage systems, according to Isaacson. Common components of the systems include an inexpensive inductive transformer device/coupler for the last mile, which is a passive unit in that it goes "around the lines" rather than through them; a chipset modem; and a headend router server and a home gateway unit, both of which it codeveloped with Cisco Systems Inc. (www.cisco.com). (The gateway was still under development in March when xchange spoke with Ambient.)
Ambient and ConEd declined to provide additional technical details or pricing for the systems. But Isaacson and Jee noted that, because it would all run on existing infrastructure, entry costs would be much lower for an electrical company like ConEd than for a telco that would need to lease or lay copper or fiber to offer similar services.
That and the fact that deregulation of the energy industry is siphoning off between 20 and 40 percent of utilities' revenues are strong arguments for the implementation of powerline technology, says Joe Marsilii, president and COO with PowerLine Technologies Inc. (www.powerline.com), a subsidiary of Reston, Va.-based PowerTrust Energy Services Inc. (www.powertrust.com). "It takes advantage of an asset in a field and lets it do something other than just put a kilowatt hour over it," he says.
PowerLine has exclusive rights to distribute in the United States, the Israel-based M@in.net Ltd.'s (www. mainnet-plc.com) powerline technology, a low- and medium-voltage, end-to-end system that includes access and in-home connectivity.
The system, which PowerLine will install and manage on an ongoing basis for utilities, offers high-speed data, VoIP services (forwarded to the PSTN via a gateway), video and automated meter reading on a shared connection of up to 2.44mbs, he says. A 10mbps chip is now in field tests and will go into production in early fall, when the company expects to be in pilots with several utilities. And a 24mbps chip is now in the lab, with availability expected by spring 2002, he says.
Price points for the services will be similar to cable modem or DSL, says Marsilii. But a power company would require just 40 to 60 percent of the capital outlay per home passed, versus a cable company or telco deploying the services.
"For traditional providers of broadband services, cost and buildout is higher and it takes longer than ours," he says. "With ours, you just plug it into the outlet and transformer. There's no truck roll to the end user."
PowerLine, which launched at the end of 2000, hadn't named any customers as of mid-April, but Marsilii said earlier this year that the company did a field trial with a small cooperative outside Atlanta to prove its technology.
Since then, Marsilii says the company has visited several electric utilities, but he admits that many are hesitant to dedicate resources to trials of powerline technology because of past failures.
"The largest roadblock to deployment of this technology today is the failure of the PLC [powerline communications] industry to date up until this time," he says. Still, he says PowerLine is "well on our way to achieve seven to 10 utilities in some form of evaluation and have at least three in full-scale deployment beginning in 2002."
Powerline Abroad
In Europe, things are moving more quickly.
"You'll see the technology catch on very significantly in Europe in the next 12 months, with major deployments in Sweden, Spain and Germany," Marsilii says.
Indeed. Germany is a veritable hotbed of activity for powerline.
In February, Swiss equipment supplier Ascom Powerline Communications AG (www.ascom.com) won a long-term supply contract with Germany's RWE Powerline GmbH (www.rweplus.com) for its modem and network management powerline equipment, which transmits data at up to 2mbps. The companies have been working together testing Internet access via powerline with more than 200 households in Essen, Germany, since May 2000. Specific rollout schedules and the value of the contract have not been disclosed.
But according to Enikia's Dillon, "Ascom has made [an] announcement to do full-scale deployments with RWE in 2001."
Also in Germany, E.ON Energie AG (www.eon.de) will be rolling this out to tens of thousands of customers in 2001, says Dillon. ONELINE AG, subsidiary of E.ON, holds a 3.3 percent stake in Enikia and a seat on the vendor's board of directors. ONELINE is incorporating Enikia's in-home networking technology into its existing ONELINE Box. The Box is the communications and control center for a consumer household.
In parallel, the companies aim to develop a joint technical approach, creating a best-of-breed technology solution for access and in-home powerline communication. Enikia will develop and supply the core networking and access technology solutions to support ONELINE's powerline-based services. Meanwhile, ONELINE is working in Finland to test powerline with Sonera Entrum Ltd. (www.sonera.fi). Elsewhere in Germany, MVV Energie AG (www.mvv.de), which recently had completed a 200-customer pilot with M@in.net, in March announced plans to launch powerline commercially with the vendor by connecting 3,000 users in the city of Mannheim. The city has an advanced fiber optical network, which means MVV needs only to install inexpensive modems at outdoor grid substations and equip customers with small indoor modems. MVV also has formed a 50/50 joint venture, Power Plus Communications AG (PPC), with M@in.net for exclusive rights to bring powerline to Germany and Austria.
Also this spring, Union Fenosa (www.unionfenosa.com), one of the three leading power utilities in Spain, expanded its trial activities of M@in.net's Plus Power Line Communication System "with a view to placing commercial orders." As part of this pilot, a section of the low-voltage electrical grid of a city with more than 80,000 citizens will be connected to broadband Internet over the power line in the second quarter of this year. The two companies also are exploring the possibilities for future cooperation in Central America, where Union Fenosa has significant presence.
In addition, M@in.net and Union Fenosa, which has 4.6 million utility customers worldwide, recently signed a cooperation agreement, consisting of a large-scale pilot project, a business plan, and strategies to jointly develop supporting applications and products related to the implementation of powerline products. The planned activities also include integration to the Internet backbone, end-user marketing strategies, integration to billing systems, the setting up of customer support and a call center concept.
M@in.net also has trials running in Austria, Finland, Italy and Sweden. Numerous additional projects are planned for the second quarter of 2001, covering Europe, the Far East and North and South America, according to the company.
Lingering Questions
But despite all of this promising activity, key questions remain about the viability of powerline technology to actually reach widespread commercial adoption.
Clearly, the most important question is: Will it work at an affordable price point?
Despite the noise on electrical lines, safety concerns, regulatory radiation limitations and other barriers of offering communications services over electric grids, vendors say they have it all figured out. Yet they say that for competitive reasons, they cannot provide more in-depth details on their equipment. But those interviewed by xchange tended to agree that advances in coupler technology, the introduction of the OFDM modulation scheme and a recent spark in in-home networking are making the technology more attractive now.
One source, who asked to remain anonymous, told xchange that the early powerline effort by Nortel failed because the company made bad, but not irrevocable, mistakes. One of the key mistakes, he says, was not choosing OFDM, which would have resulted in a more affordable solution. But rather than changing direction and embracing OFDM for powerline, Nortel, which already had DSL and cable efforts in place, dropped out of powerline, according to the source.
Even if today's powerline solutions have cracked the technology nut in trials, new issues can always crop up as technology hits widespread commercial deployment. That's something the DSL industry has recently learned.
And speaking of DSL, Ovum's Johnson is not clear on the benefits of powerline for end users. "When you come down to it, what benefits has powerline over other broadband technologies? The answer is not much," he says.
Johnson opines that the prospects for widespread adoption of powerline are low. "I think it's partly because there's a lot of competition out there already" with DSL, cable modem and broadband fixed wireless, he says. Powerline, meanwhile, "is behind the competition, and they're not showing much signs of catching up."
In places like the U.S. and Western Europe where most people have telephone lines, it makes more sense to offer communications over those connections, he says. But in Brazil, where most people are connected to power lines, but penetration of phone lines is lower, powerline might make more sense, he adds. "But how do you convince people that don't even have a phone that they need a broadband connection?" he questions.
Of course, customers might be interested in buying a variety of services, including communications from their electric companies, which could offer an even broader bundle of services than telecom providers. Cobranding or other partnerships between telecom providers and electric companies are another possibility. Enikia's Dillon says an electric utility could partner with a company, such as an AOL Time Warner Inc. (www.aoltimewarner.com), AT&T Corp. (www.att.com) or Sprint Corp. (www.sprint.com), that doesn't have local assets in a given market. That could also give an electric utility a partner that would have more experience managing a communications network. Outsourcing that function to a vendor or integrator would be another option for an electric company, of course.
But Ovum's Johnson says the best opportunity here might be for the electric companies to provide narrowband services, like monitoring street lights to see if the bulbs are working, rather than offer copycat broadband services.
Better yet, he says, electric companies should play communications carrier indoors.
"I think it would be much more interesting for home networking," Johnson says. "The power network has a more unique role in the home than in the wide area because, in the home, people do not have networks existing and it's quite a severe constraint to network the home with new [wires]."
