The electricity system in the United States received renewed attention after the August 2003 blackout that affected more than 50 million customers across the Northeast United States and caused...
out that neither dial-up Internet service nor cable broadband service has been treated as regulated services.
The worst thing, according to Keck, would be PUCs requiring utilities to offer a transfer price for wire access that makes offering PLC uncompetitive. And the overall regulatory uncertainty does not bode well for PLC. As Keck says, "If you want into this business, you don't want entry barriers."
Then there are RF electromagnetic fields or emissions issues, also known as the FCC Part 15 regulations. One of the obstacles that has surfaced in trials in the United Kingdom, Germany, and the United States is RF emissions that exceed permissible limits. The problem is that at the higher frequencies required for broadband communications, current travels through the soil, rather than through the neutral wire, according to Larry Carmichael, project director at the Electric Power Research Institute. In the United Kingdom, he says, the metal light poles began acting as antennas. PLC affected the frequencies used by the British Broadcasting Corp. and the emergency broadcasting system, according to other reports.
If PLC cannot meet RF emissions criteria, it could spell doom for PLC. According to a utility executive who did not want to be identified, asking for a waiver on RF emissions from the FCC is untenable. "If we ask for relief, we open the Pandora's box of every intervenor [coming out of] the woodwork. … It would drag on forever," the executive predicts. "We can't go forward with a commercial business unless we have met the FCC limits."
The Price To Beat
"The technological possibility for power line communications is reasonably certain, but the business case is going to be the rub," says Karen George, principal and director of customer insight at Primen, a Madison, Wis.-based research and consulting firm.
The cable industry has spent $75 million to upgrade their networks for broadband service to 65 million subscribers-amounting to around $900 per household. That build-out required cable companies to equip every home passed. On the other hand, to build out a PLC network, utilities need only equip, essentially, every transformer. So, the anonymous executive points out, utilities can share the cost between the number of homes per transformer. "The bottom line is our costs are going to be lower on a capital cost basis. So we should be able to have competitive pricing advantage against what cable modem service has, for example," he argues.
Others, though, question whether most utilities can provide PLC broadband service at even an equivalent rate to current DSL and cable prices. In Europe, the build-out cost approaches $400 per residence, according to Primen's George. Based on research Primen conducted in the fall of 2001, George estimates that build-out costs for most U.S. utilities will fall somewhere in the range of $700 per residence.
Even if the installation cost per residence is closer to the $400 mark, George questions whether PLC service can compete profitably with DSL or cable. Assuming a $400 installation cost, with the customer paying $100 and the remaining $300 amortized, utilities would need to sell $500 in service