Ken Silverstein EnergyBiz Insider Editor-in-Chief

After all, such high speed Internet access is growing exponentially and the possibilities are potentially limitless. The United States in particular lags many parts of the world in terms of broadband deployment. Internet service providers want to get direct access to the homes and the local utility companies with their ubiquitous wires can permit them to do just that -- and evade the local phone and cable companies that tend to hog the wires for their own usage.

Obviously, the risks are great for the broadband over power lines (BPL) companies and the utilities. While there are plenty of trials taking place in this realm, there are only a handful of commercial offerings. The idea is clearly doable. But while the technologies are promising they must still persuade the capital markets that BPL is economically feasible and that it can compete for subscribers.

"Customers will be amazed at the speed, low cost and reliability of BPL, as well as its ease of use," said William Grealis, president of Cinergy Broadband. Cinergy Broadband and Current Communications have formed a joint venture that will roll out broadband services to as many as 50,000 people in the Cincinnati area. Cinergy has also made an investment in Current, a power line technology company in Maryland.

Perhaps the best tactic utilities can take is to rent their lines to the highest bidder. By extension, they would be letting others take the risks -- presumably those with the proper skill set to make a success of the venture. They come from a monopoly culture that focuses on reliance and good service. It's a prudent approach. Digital subscriber lines (DSL) and cable modems are way ahead. Moreover, some other emerging technologies such as satellite and wireless communications as well as wireless fidelity, or Wi-Fi, are attracting lots of attention.

Research firm Chartwell has looked at the issue. It reports that utilities are interested in BPL, with 6 percent considering such investments in 2000, 20 percent in 2003 and about 33 percent in 2004. Why? Telecom Trends International estimates that the global revenues associated with the technology will rise from $57 million in 2004 to $4.4 billion by 2011. All told, there are four commercial offerings nationally with 36 field trials now taking place.

While other prevailing technologies now have the edge, consumers are always looking for a better, faster and cheaper way to connect to the Internet. And the Internet service providers are seeking new outlets. Earthlink, for example, is working with New York-based Consolidated Edison and Charlotte-based Duke Energy to provide such services. Duke hopes to deliver BPL to as many as 15,000 homes in the near term.

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There's a lot going on. Some well-healed enterprises see the potential for BPL, noting that government regulators are paving the way for further implementation and there are 40 million U.S. households still using dial-up Internet service. IBM and Houston-based CenterPoint Energy are testing the technology while Google, Goldman Sachs and media giant Hearst have invested $100 million in Current Communications.

Here's how BPL works: Power line adaptors at substations take the data that is sent over the Internet and convert it to frequencies that can be channeled over the distribution lines. Power-socket modems split the data from the electricity so that the two don't bounce against and off each other and disturb the connection.

While there is a lot of promise, there are also some concerns. Specifically, utilities' wires are generally "slow" and "noisy." What that means is that fast Internet traffic would somehow have to jibe with the lower-frequency electric power. Because electrical wires are noisy, they interfere with data transmissions that require general tranquility, although the latest "couplers" may be able to overcome these problems. Amateur radio broadcasters, however, are not persuaded and say that adding a signal to power lines interferes with their pursuits.

It's less a question as to whether BPL is technologically feasible and more of a question as to whether it can be economically viable. Manassas, Virginia made the leap from field trials to commercial offerings. A few hundred there use these services while another 1,200 are on a list to get hooked up for the $27 a month service that involves no installation fees or long-term contracts. Duquesne Light Co., meantime, is offering BPL service to 2,800 customers in the Pittsburgh area and for $30 a month.

To get there, more investment is needed. "Raising money in today's equity market requires more than the usual elements of a solid management team, an attractive market and proven technology as typically sought after by investors," says Phil Hunt, CEO of Lowell, Mass.-based Amperion Inc., which provides BPL technology over medium voltage electrical wires and works with such utilities as Con Edison. "Companies must also demonstrate huge opportunity from both technical innovation and market growth."

While there's been a lot activity in recent months, some are pulling out. PPL Corp. has ended the market trial of its BPL service for residential utility customers in Pennsylvania. President David Kelley called the broadband over power lines technology "promising" but said "the combination of a competitive marketplace and the need for significant scale" led it to decide not to become a retail communications service provider.

The aim of those utilities seeking to get into the broadband business is to sell subscriptions to their existing customer base, most likely through Internet service providers. As the technology advances and more data can be transmitted over the wires at faster rates, additional services such as video conferencing could be offered that would create more revenue opportunities. Meanwhile, the same power line communications network could support automated meter reading, outage management and demand controls.

DSL and cable Internet services may be more mature than BPL but development of broadband is ongoing. There is always room for new ideas and new players -- a role that could involve utilities and their prized distribution assets.

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