Stay Focused on Job One: Power7/28/2006 8:00 PM Eastern
When the electricity goes out for several days in the heat of July, there are more pressing problems than missing high-speed Internet access or multichannel TV. Things like air conditioning, hot water, getting up and down flights of stairs if the elevator is out.
Still, that was a pathos-filled quote in The New York Times last Wednesday by Ana Gonzalez, the 75-year-old Queens, N.Y., resident who’d been without power for nine days. “My life is watching television, and I have no television,” Gonzalez, described as homebound after a stroke, told a Times reporter.
Con Edison, the New York City power provider, doesn’t offer broadband over power line service, or BPL, as this infant form of Internet access is often called. Few cities in this country have it.
The biggest commercial deployment is in Cincinnati, covering 50,000 homes, according to Current Communications, which is providing high-speed Internet service there with Duke Energy. The first deployment was in Manassas, Va., by Communications Technology (ComTek) and the municipal power system. Current has a trial going in Potomac, Md. No coincidence, Manassas and Potomac are both close to legislators and regulators in Washington, D.C., the companies would like to impress and not far from Dulles, Va., home of America Online, which has been a big backer of non-cable and non-DSL broadband providers.
Plenty of cities have had power outages, though. A friend rang to say her aging parents were without power in St. Louis for nine days. I called venture capital executive Neil Sequeira, of General Catalyst Partners and formerly of TW Investments, who’s studied BPL companies (and invested in at least one), and he mentioned that his parents, in San Jose, Calif., had been without power for a few days and had to leave their house.
So basically the question becomes, would you trust the power company to also deliver you broadband service?
If electric networks like the ancient underground system in Queens need a rebuild, a la cable-TV systems, it would appear a second revenue stream, like broadband, would be an important incentive.
Sequeira said power companies could be an emerging threat to cable and digital subscriber line providers in a few years, and will be interesting to watch as they develop along with wireless broadband companies such as Clearwire, started by Craig McCaw.
Power companies — assuming they’re not distracted with things like trying to restore electricity to people whose refrigerators haven’t run for days — will have some issues to get around before BPL goes mainstream. A big one, Sequeira said, is that Internet Protocol signals can’t go through the transformers on power poles, so the lines have to be clamped around those devices. Also, local repeaters have to be installed to amplify the data signals. And the technology won’t work as well in homes with older wiring systems. Interference when you turn on the vacuum cleaner, that kind of thing.
There are advantages to BPL, though, that have kept money flowing into companies such as Current, partly owned by John Malone’s Liberty Media Corp., which got a recent investment from Google Inc. Power companies have access to every home. With existing billing relationships, something Clearwire won’t have when it enters a market. The power grid in the home can become an instant home network — just plug into the nearest electric outlet. No need for a Linksys router to move data from device to device.
But there are other concerns. “The bigger issue, which is systemic, is that power companies are totally screwed up organizations and they haven’t proven capable of offering services beyond turning on a power switch at this time,” Sequeira said. In New York City, for instance, Queens power was declared fully restored on Wednesday — but then, thousands lost electricity on Staten Island.
Senior broadband analyst Joe Laszlo, from Jupiter Research, says he really doesn’t “see much scope for broadband over power lines in the United States,” given technical issues like interference from electric transmissions, the cost of deployment and Jupiter’s estimate that about 90% of the U.S. population already can obtain broadband service from cable or telephone companies. The question of whether power companies are up to the task is a valid one, he added, especially given problems this summer in California, New York and elsewhere.
Speaking as one who hasn’t quite recovered from the trauma of the Big Blackout of August 2003, I say: broadband later, maybe. Power now.