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Are consumer broadband over powerline (BPL) services enough to make the business case for utilities?
After years of development, technology to deliver high-speed data over the existing electric power delivery network has emerged in the marketplace. In some sections of Cincinnati and Manassas, Va., consumers now have an alternative to DSL and cable for broadband Internet access. It's real and it works.
The technology is viable, the Federal Communications Commission (FCC) has issued new rules for mitigating potential radio interference from broadband-over-powerline (BPL) systems, and the first commercial-scale BPL networks are being built out. But is it a good business bet?
This is a key question for utility executives, and like many business-case questions, the answer is: It depends. At least that's what the Electric Power Research Institute (EPRI) and its market intelligence subsidiary, Primen, found in a recent examination of the current status of the BPL market. "Internet access for consumers has been the focus of initial BPL deployments, but what we think is likely to make or break the business case in the long run is the bundle of broadband services that can be offered, and the ability to use BPL as a communications platform for utility applications," says Clark Gellings, vice president for innovation at EPRI.
Pricing Internet Access
Take, for example, the high-speed Internet access market. The broadband market in the United States is ex-pected to double in the next few years from approximately 30 million households.
Today, the pioneering commercial BPL providers are pricing Internet access service at levels below current DSL and cable prices, starting at about $28/month-less than the typical $35 to $50 for DSL or cable. Both the city of Manassas and Current Broadband (Cincinnati's BPL provider) expect they can obtain a 20 percent share of the broadband market in their respective network territories, and both estimate positive cash flow within about three years.
Continued price competition is likely to drive down Internet access prices; in fact, some DSL companies already have dropped prices to as low as $27/month in a few locations, in an attempt to gain market share from cable. New competitors and a trend for "value priced," dial-up access also will apply pressure.
In the face of such downward price pressure, broadband services other than Internet access will be important to boost the amount of revenue per customer. Multiple services also will be needed to make BPL competitive with the convenience and discounted bundled prices offered by other Internet providers.
Parks Associates, a research firm that specializes in digital and home networking markets, reported that 65 percent of all Internet households are willing to subscribe to a bundled service package for data, voice, and video services that would save them $20 a month.
Cable, for instance, already can offer an attractive bundle of high-speed Internet access, TV, video on demand, and voice over Internet Protocol (VoIP-telephone service via the Internet). As a result, BPL providers are planning or investigating similar additional consumer broadband services to stay in the game. Watch for VoIP, video on demand, and streaming video