the power of communications

utc’s brett kilbourne talks about bpl

FEDERAL REGULATORS HAVE EXPRESSED optimism that broadband over power line (BPL) technology could serve as the third high-speed Internet wire into the home, representing an alternative to DSL and cable-modem services and reaching parts of rural America where broadband access is not yet available.

Nevertheless, widespread availability of BPL is far from certain: Utilities that own the power lines are not celebrated for being risktakers, few have introduced commercial broadband service over the electric grid and many of their telecom ventures failed.

xchange business writer Josh Long recently asked a representative of the utility industry to share his views on the potential for utility-powered high-speed Internet service. Brett Kilbourne is the director of regulatory affairs at the United Telecom Council, where he provides legal guidance to utilities on telecom issues pending before state and federal agencies and Congress.

Brett Kilbourne

Still, there are some utilities that are deciding whether to go commercial, what business model to adopt, how to structure it, what services to offer and what applications to support.

It is a complicated decision process, and this is a new technology. Plus, the utilities tend to be conservative, and this is a business that is generally outside of their core competencies. I suspect as the leading utilities demonstrate that BPL can be successfully deployed commercially, other utilities will quickly follow suit.

There are a few specific factors that we’re trying to address that will further accelerate BPL deployment: standards, internal applications and regulatory incentives.

The technology has dramatically evolved over the last three years through innovation. But that innovation has created different standards between different technologies. Not only does that create potential technical obstacles, but economic ones as well in terms of mass market production of equipment.

There are several standards efforts under way in Europe and the U.S., and the UPLC is engaging with those standards-setting bodies to coordinate those efforts. (The UPLC is the United Power Line Council, a group UTC created in 2002 for the utilities and their BPL technology partners.)

Utilities are keenly interested in the potential for BPL to support internal applications, such as load management, outage reporting, automated meter reading (AMR) and system monitoring and control. These applications tend to get overlooked by the rest of the world, but I believe they will ultimately determine whether BPL gets rolled out ubiquitously or is deployed on a limited basis. If the utility is using the system for these internal applications, not only would it offset the costs, but it would also follow that the technology should be deployed across the entire network. In fact, Bill Graelis [vice president] of Cinergy Corp. said essentially the same thing when he referred to AMR as the holy grail of BPL. So, the UPLC created an Internal Applications Committee and there have been a number of meetings over the last six months devoted to driving the development of these applications.

Finally, utilities are watching to see what regulators do toward BPL. Certainly, there is a great deal of upheaval right now on the regulations that will apply to broadband in general, and that uncertainty discourages investment. But, specifically with respect to BPL, there is very little to go on as far as affiliate transactions and other state regulation of the BPL business.

The good news is that the state of Pennsylvania — the only state to review an affiliate agreement for BPL — approved the agreement in short order. The question is whether other states will do the same, and now NARUC (the National Association of Regulatory Utility Commissioners) is working on a whitepaper for BPL policies for other states to follow. The UPLC is engaging with the NARUC BPL Task Force, chaired by Michigan Public Service Commissioner Laura Chappelle, on the white paper.

To be sure, utilities were late entrants in the telecom market and limited their exposure to wholesale long-haul services generally: mostly dark fiber. And there were some utilities that had to write down their telecom investments when the market went bust. So, they were conservative to begin with and especially are now.

I think it speaks very well about BPL that utilities are even considering it. There are many reasons why I think they are looking at BPL in spite of the telecom bust. I mentioned the internal applications before, and that is a big driver. But there are some other differences from the telecom technologies and offerings that burned utilities in the past.

First, BPL provides connectivity to the customer, which was not generally the case before. That allows utilities to control their own destiny to a greater extent. Second, the technology is relatively low-risk, because the equipment can be deployed and redeployed in response to changes in market demand and supply.

Third, provisioning services is easy: the equipment can be installed in a matter of minutes and customers can self-subscribe. Fourth, the technology can be deployed in rural and underserved areas, and utilities — typically municipal utilities and coops — are positioned to deploy those networks, and they have the resources for backhaul [fiber/microwave].

Fifth, BPL offers features such as low latency and synchronous speeds that distinguish it from other broadband technologies, and it has been able to compete with cable and DSL on price and performance generally.

But fundamentally, these are power lines we are talking about — not fiber or wireless. That’s hard to ignore for utilities.

Yes. As much as BPL is a technology that is suited to serve markets that cable and DSL do not, it can (and does) compete head-to-head where cable and DSL have been deployed.

The remarkable story for your readers is the opportunity that BPL represents for them, because utilities are conservative. Most utilities are pursuing a wholesale strategy and would love to partner with a third party or to just lease the lines as a landlord. EarthLink was proactive with Progress Energy, and a number of utilities are working with other smaller independent ISPs in their deployments. Surprisingly, there have been relatively few third-party CLECs involved to date. Don’t know exactly why.

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