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FCC Tries To Jolt Life into Power Line Broadband

FCC Tries To Jolt Life into Power Line Broadband

Meta Group senior analyst David Willis said although the FCC initiative to breed more competition into the U.S. broadband market may have its merits, the power line broadband effort is unlikely to do so. "It's hard to make a business case," Willis told TechNewsWorld.

By Jay Lyman
10/15/04 2:43 PM PT

The Federal Communications Commission looked to take its multi-modal broadband competition initiative to electrical outlets in the U.S., but industry analysts question the significance of the broadband over power line (BPL) technology, which may not get the juice it needs from utility companies.

The FCC announced this week rule changes that allow Internet and network access by power line, insisting that it is safeguarding existing services against interference. While there is some criticism that amateur ham radio may suffer from the newly approved power line application, the FCC said it is limiting the rule changes to pilot projects and continuing to study the matter.

Meta Group senior analyst David Willis said although the FCC initiative to breed more competition into the U.S. broadband market may have its merits, the power line broadband effort is unlikely to do so.

"It's hard to make a business case," Willis told TechNewsWorld. "Given the current war between the DSL guys and the cable guys, this is not going to be good for utility companies. There's no business case for the utility companies."

Broadband For All

The FCC said in a statement that the BPL rule changes were aimed at increasing the availability of broadband to wider areas of the country, including rural areas, since power lines reach virtually every home.

The commission said BPL would enhance competition in areas already served by cable or DSL broadband by providing another alternative.

Lastly, the commission indicated that access to BPL would facilitate the ability of electric companies to manage the power grid by delivering remote diagnosis of electrical failures.

Failed Attempts Already

Despite the FCC rule changes, BPL faces several significant hurdles, including issues that have not been overcome in the past, according to Willis.

"People have been trying this for a number of years and it's never been successful," Willis said.

The analyst indicated the FCC was grasping somewhat to find ways to introduce more competition into broadband, citing the failure of satellite high-speed Internet service.

"The only thing they can find is this broadband over power line," Willis said.

Investment Unlikely

Frost & Sullivan industry analyst Imran Khan told TechNewsWorld that despite some testing and potential for another revenue stream, utility companies would have to invest as well, and it could mean divergence from their core competencies.

"They could maybe expand the [broadband] capabilities in rural markets, but they're not big enough to make it worthwhile," Khan said.

The analyst added that BPL would also have to be technically on par with cable and DSL broadband, which are both improving in performance and dropping in price.

Khan said that even in places such as Ireland or Germany where BPL has seen some deployment and success, it was not widespread enough to make a mark on the radar.

Wireless More Attractive

Both Willis and Khan said that broader, faster wireless broadband technologies are much more likely than BPL to serve the market segments that cable and DSL currently do not reach.

Willis said coverage through Wi-MAX, a broadband wireless technology capable of longer geographic reach, could allow wireless carriers to turn a profit by 2007, presenting a much more favorable opportunity compared to that from BPL.

Khan added that wireless Internet service providers (WISPs) -- which are successfully serving smaller, rural markets around the country -- are using a variety of technologies to serve the pockets without high-speed Internet.

"There are more than 1,000 wireless Internet service providers across the country," Khan said. "These WISPS are very active in these rural markets."


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