Broadband over Powerline company PPL calls it quits b ut a telecomcompany pushes on in Virginia.

["David Farber" <dave () farber net>]

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Subject:        Broadband over Powerline company PPL calls it quits but a telecomcompany pushes on in Virginia.
Author: "Robert J. Berger" <rberger () ibd com>
Date:           19th October 2005 4:44:08 am


End of Internet over power lines?

PPL calls it quits but a telecom company pushes on in Virginia.

By Sam Kennedy Of The Morning Call October 16, 2005

http://www.mcall.com/business/local/all- 
broadbandoct16,0,4487727.story?coll=all-businesslocal-hed

PPL Corp. announced this month that it was giving up on the
futuristic technology that provides high-speed Internet access,
or broadband, through electrical wires and power outlets.

A day later, another company held a news conferrence celebrating
the country's first city-wide deployment of that very
technology, called broadband over power lines. The company was
COMTek, whose focus is telecommunications, and the city was
Manassas, Va., a Washington, D.C., suburb with 37,000 residents
and 12,500 households — 700 of which are already using the
technology to get on line.

So which is it? Is broadband over power lines a failed
experiment, or does the upstart technology present a real
challenge to the two primary sources of residential high-speed
Internet access — the cable modem and the digital subscriber
line, DSL?

PPL of Allentown was widely considered one of the county's
leaders in broadband over power lines. Its unexpected
announcement seemed a dark omen for a technology that the head
of the Federal Communications Commission once proclaimed to be
''within striking distance of becoming the third major broadband
pipe into the home.''

But PPL never said the broadband service didn't work. The
company came to the conclusion that it wasn't profitable.

It couldn't charge a high enough price in the face of stiff
competition from cable and telephone companies, and its pool of
potential customers — 1.3 million Pennsylvania electricity
customers — was too small.

''The economies of scale wouldn't work,'' PPL spokesman Jim
Santanasto said.

Manassas represents a very different business model. The city's
electric grid is, unlike PPL's, publicly owned. COMTek, the
city's partner on the project, is a telecommunications company,
not an electric utility. And, COMTek used one
broadband-over-power lines technology while PPL relied heavily
on another.

Manassas joined forces with COMTek — a Chantilly, Va., company
whose formal name is Communications Technologies Inc. — in July
of 2004. The city's utility staff makes the necessary changes to
the electric grid, such as installing couplers and repeaters,
while COMTek maintains the servers that enable e-mail and Web
hosting. COMTek also handles the marketing and customer service.

The arrangement allows the city and the company to focus on
their respective strengths. COMTek, a private company with
annual revenues of about $75 million, owns an Internet service
provider on the Virgin Islands and provides telecommunications
services to the U.S. government.

PPL, on the other hand, ventured into an entirely new business
when it first offered its broadband service in Whitehall
Township and Emmaus two years ago.

In a news release last month, Rick Nicholson, vice president of
research for Energy Insights of Framingham, Mass., predicted
that broadband over power lines growth would be limited by,
among other factors, ''a lack of utility expertise in running
commercially successful consumer telecom businesses.''

PPL, which last year expanded its broadband trials to parts of
Bethlehem, Upper Macungie Township and Hanover Township,
Northampton County, experimented with two forms of the
technology.

One allows customers to connect to the Internet anywhere in
their homes by plugging a portable modem into a power
outlet. The other works like the wireless hot spots common in
airports, hotels and cafes: The Internet signal — sent from a
transmitter attached to a medium-voltage power line outside — is
carried to the computer on radio waves.

Over time, PPL came to favor the wireless approach. COMTek, one
the other hand, adopted the power outlet approach.

Walter Adams, vice president of new technology for COMTek, said
the power outlet approach offers several advantages.

First, it can be used in neighborhoods with below-ground
utilities, whereas the wireless method relies on the
availability of telephone poles. Second, it eliminates the
problem of interference, since it does not require a line of
sight between a telephone pole-mounted transmitter and the
customer's house. And lastly, it doesn't require professional
installation; all the customer needs is a modem, which can be
delivered through the mail.

What's more, Adams said, PPL, with annual revenues of nearly $6
billion, had relatively little to gain from broadband over power
lines. But the company did have something to lose — its good
name.

PPL's electric utility consistently scores high in customer
service surveys. Technical difficulties and other problems
associated with its broadband service could hurt the company's
hard-earned reputation.

''Utilities are risk averse. If it's not a home-run, it's not
something they're likely to stick with,'' Adams said.

Which is not to say the Lehigh Valley will never have broadband
over power lines.

While COMTek partnered with a public utility in Manassas, the
company is planning similar projects with private utilities
elsewhere. COMTek has to yet make a profit on its
broadband-over-power-lines initiative. But, should its business
model prove viable, the company might even make a pitch to PPL
someday, Adams said.

It's an offer PPL spokesman Santanasto said his company would be
willing to entertain, ''as a matter of good business practice.''

---
Robert J. Berger - Internet Bandwidth Development, LLC.
Voice: 408-882-4755 eFax: +1-408-490-2868
PGP Key: http://www.ibd.com/html/rbergerPublic.gpgkey
http://www.ibd.com



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