Be it over phone lines or cable connections, broadband Internet is steadily making its way into Americans' homes. Now a new technology is bringing high-speed, two-way broadband through electric power outlets, too. Called broadband over power line, or BPL, it works by sending data over existing lines in the high-frequency signal range left unused by standard electric power (see BW, 11/22/04, "Easy Broadband -- And Smarter Power").
Utility companies, including Consolidated Edison (ED), Hawaiian Electric (HE), Cinergy (CIN), and Southern Co. (SO), are now exploring the technology, and major tech players are taking note. Last week, search giant Google (GOOG), global investment behemoth Goldman Sachs (GS), and communications and media company Hearst revealed they're investing in Current Communications Group, a BPL startup that helps utilities roll out and manage broadband service. And on July 11, IBM (IBM) announced it would manage a BPL pilot project for CenterPoint Energy (CNP), a Houston-based utility.
BusinessWeek Online reporter Burt Helm recently spoke with William Berkman, the chairman of Germantown (Md.)-based Current Communications, about the emerging technology; the recent investment from Google, Goldman, and Hearst; and how Current plans to compete against cable and telecom giants in the broadband market. Edited excerpts of their conversation follow:
Q: What's the appeal of BPL?
A: There are still a lot of places in the U.S. that haven't upgraded to broadband yet, or where the data rate is limited. The electric power grid is in place everywhere, not just to the home, but throughout each and every home. That makes it incredibly simple for the consumer. We drop off a little cell-phone-charger-sized modem, and you plug it into any socket, and get speeds of 3 megabits per second up, 3 megabits per second down, on par with a cable or DSL modem.
Q: How do you plan to compete against established broadband providers, like cable and telecom companies, that have already made huge investments in broadband services?
A: If you put it in perspective, our wire already exists. We don't need to put entirely new networks into the ground like [the telecom companies] [see BW Online, 3/18/03, "Verizon's Bold Broadband Upgrade"]. The rollout can happen quickly if we're good in executing.
Q: Utility companies are traditionally very conservative with new investments. Why would they venture into the broadband market, which is already viciously competitive?
A: The primary reason utilities want to roll out BPL is not to be an Internet provider. BPL offers the utilities a chance to upgrade a grid that fundamentally hasn't changed in 70 years. Crews still must drive around to read power meters individually. When power goes out in the U.S., the only way utilities find out is when customers call up to complain -- and then they have to drive crews around to see if the power is on again.
A broadband connection throughout the grid allows them to see everything that's going on and drastically increase efficiency. You could immediately detect power outages, read meters instantaneously, and even charge different prices for peak and off-peak hours.
Q: How does Current fit into this?
A: Current services, designs, and operates the network, and then [the utility company] powers the network. We're in charge of marketing and billing consumers for Internet services. We then contract with the utility to offer whatever services they would like, such as meter reading or outage detection.
Right now, we have a partnership with Cinergy, a utility that serves 1.5 million homes in Kentucky, Ohio, and Indiana. BPL is being rolled out and built as we speak -- it's commercial in Cincinnati and has been for about 12 months.
Q: Google, Goldman Sachs, and Hearst recently invested a sum said to be approaching $100 million in Current. Are these companies getting involved beyond just funding?
A: Each one is an equity owner in the private corporation, and each one has a different set of roles that I can't really comment on. Let's just say with partners [like Hearst] that own papers and TV stations across the country, there are a lot of interesting things one can do when married with broadband service.