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Powerline Telecommunications: Mission Impossible?

PLT: History of Developments and Debacles
Fortnightly Magazine - July 1 2000

lot of competition out there. There are wireless applications being widely used. Wireless Internet is about to explode. DSL is a fairly proven technology," he says.

Steve Greene, manager of technology development, AEP Communications, adds that the main obstacle is to find the partner who has developed technology that will work with North American infrastructure.

"If you look at our infrastructure and figure three to four customers can be fed by the same transformer, and look at the European model and see that 200 to 300 customers can be served by the same transformer, it makes the economics a lot different," he says. "We need a technology to get the data signal transmitted around the transformer in order to make sense."

Although both BG&E and AEP say they would be interested in partnering with IT firms to develop the technology, neither has conducted technology trials as of yet.

"We can leverage the billions of dollars in assets, and offer these attractive services to customers. It is just a matter of finding the right company with the right technology," AEP's Greene says.

"AEP has been looking at the technology for the last 12 to 15 months and [become more] focused for the last 6 months."

Greene says utilities are interested in the higher stock valuations possible through involvement in PLT work. For instance, he notes, on the day a German utility announced its successful PLT trials in Europe, its stock jumped 15 percent.

He notes, "That obviously catches our attention because we are looking to do the same thing."

Nevertheless, Greene says he understands utilities' reluctance to go public with their involvement in the technology. He says most utilities are taking a cautious approach to make sure that the technology works, and then once it's proven, to see if they can even roll it out without jeopardizing their competitiveness.

"People are very cautious in their ability to deliver what they promised. You see with other cases such as Nortel making some of the promises and missing deadlines and projections. I think that really rubs shareholders and the market itself in the wrong way," he explains.

But Greene has no illusions that PLT someday might become AEP's core business.

"I would say it is a more of a niche that has an upside that has to be developed," he says.

He sums up the competitive issues with just one question: "Do you think you can successfully compete against an AT&T?"

Greene explains that competition from the AT&Ts and Bell Atlantics of the world is one reason no company is willing to make promises about PLT. Of course, on the surface, telecoms don't seem to be worried either.

"We welcome electric utilities into the telecom space," says a spokesman for Bell Atlantic, adding that his company would welcome the competition.

PLT Regulation: Too Much Risk?

Lawrence J. Spiwak, president and chairman of the board of editorial advisors at the Phoenix Center for Advanced Legal and Economic Public Policy Studies, explains some of the regulatory reasons for utilities' reluctance to make public their PLT work.