Federal incentive payment of 1.8 cents/kWh for the generation of renewable energy—part of The Energy Policy Act of 2005—increases the economic attractiveness of many potential hydro sites,...
to round out the BPL consumer broadband portfolio.
An Evolving Market
But competing just on the basis of current market conditions will not be sufficient. Along with price changes or vol-atility, expect changes in the availability, performance, and types of services offered as alternative broadband network technologies emerge. In particular, new and converged wireless and fiber networks are likely to alter the competitive landscape in many areas.
Consider the new fiber networks in which Verizon and other phone companies are planning to invest billions of dollars. Seeing a diminishing profit future in DSL and landline telephone, telecommunications companies are building fiber to the customers' premises from the telephone switch.
Previously impeded by very high costs, new fiber networks can use passive optical networks and advanced components that are now projected to bring the network cost to as low as $800 per home passed (compared with $50 to $200 per home passed for BPL, depending on customer density and other factors, plus another $30 to $300 per home for modems, depending on the BPL system type). Also, a recent FCC ruling, stipulating that such networks do not have to be made available to competitors, has removed a key barrier to deployment.
Although fiber to the home requires a huge investment, it will boost network speeds and allow Verizon and others to offer bundles of services now beyond the capability of DSL lines. Verizon's first deployments in Texas and California will have data speeds of 30 megabits per second (Mbps). This compares with today's DSL rate of about 1.5 Mbps, cable at 1 to 3 Mbps, and BPL at up to 3 Mbps.
The Bells' foray into fiber will enable them to sell "cable" TV, which, when packaged with Internet access and telephone service, could garner sufficient revenue to justify the billions of dollars needed for the investment in fiber.
In addition, wireless broadband services might become larger players in the broadband mix. Several municipalities are making entire neighborhoods, towns, or cities into big Wi-Fi hotspots. Although wireless broadband offers lower performance than BPL and other broadband services-and presents challenges according to topology of the area served-systems are relatively inexpensive to build.
Philadelphia, for instance, is creating a wireless broadband system to provide access to all of its 1.5 million residents. Dianah Neff, CIO for the city of Philadelphia, says the buildout will cost about 10 times less than other alternatives the city examined. Cost is pegged at $10 million for cells on streetlights and other structures in a citywide, 135-square-mile area. Neff reports Internet access speeds will be 1 Mbps and should give underserved areas access to very affordable broadband.
Also on the horizon is WiMax, or worldwide interoperability for microwave access, a long-distance, fixed-wireless network. Development is supported by IEEE Standard 802.16, which will enable standardization of components and thus lower the cost of a WiMax network. WiMax enthusiasts expect the network to be at very high speeds that are competitive with other providers, and with a predicted point-to-point range of 25 miles.
Backed by industry giant Intel, chips that enable WiMax