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Add one more contender to the list of broadband providers: electric utilities. Like cable providers and telcos, they're looking to wring additional revenue from their existing infrastructure and customer relationships. Using technology that sends data over power lines — including the wiring in customers' homes — electric companies such as Cinergy are grabbing market share from established rivals.

“More than 50% switched from cable modem or DSL,” says Kathy Meinke, a spokesperson for Cinergy, whose BPL systems currently pass about 50,000 homes in metro Cincinnati. “More than 40% have switched from dial-up.”

Cinergy won't say how many of those 50,000 homes are broadband customers, but the number of BPL-ready households pales compared to the 1.5 million that get electricity from the company. Cinergy also is mum about its expansion plans, but it's safe to say that it's bullish on BPL — if not for itself, then at least for other utilities. In August 2004, the company's subsidiary, Cinergy Broadband, formed a joint venture with Current Communications Group to market BPL technology to municipal utilities and rural electric cooperatives.

That's optimistic, considering that most analysts expect BPL to remain a niche play in the North American market through the end of this decade. Yankee Group, for example, lumps BPL into the “other” category through 2008. On a bar graph, others' share of the broadband market is a eye-straining sliver compared to broadband wireless and satellite, let alone cable and DSL.

Even so, BPL has at least one thing going for it: The technology works just about anywhere. “We haven't found a place where it doesn't work,” says Craig Newman, next-gen access product manager at EarthLink, which has conducted trials in North Carolina and the upper west side of Manhattan. “The issue is more the business case.”

The electrical grid's design is a major part of BPL's business case. Like DSL, BPL is partly at the mercy of the existing copper infrastructure over which it runs. That's why BPL is much more widely deployed in Europe.

“We have a geography problem compared to the rest of the world: 7 to 10 homes per transformer, while in Europe and Asia, you have 200 to 300 units,” Newman says. “It's difficult to deploy in the U.S. from a business case standpoint.”

That dark cloud has a silver lining: Fewer users sharing the same pipe means more bandwidth for each user. “Since you're sharing that bandwidth [among] only seven units, you have a very interesting product,” Newman says.

Today's BPL networks run at about 45 Mb/s. Depending on factors such as how many households are sharing that pipe, each user gets under 3 Mb/s. That's competitive with cable and DSL, but it won't remain that way for long, and it's woefully inadequate for triple plays. (The BPL industry is putting the finishing touches on a video-friendly BPL standard, HomePlug AV.) At a BPL trade show earlier this year, 22 Mb/s was held up as the new benchmark for all access technologies.

“That included high-definition television, voice calling and Internet service,” says Jay Johnson, president of JMA Consulting, which specializes in BPL. “BPL will bring that much two-way bandwidth to homes well ahead of cable, DSL, satellite and WiMAX. The Home Plug 1.0 standard allows for 14 Mb/s today for in-home use, while the access equipment on the grid passes data significantly faster.”

Another way that a utility company can bolster the business case for BPL is to leverage it for tasks such as automated meter reading (AMR). “It's not just an access technology,” says EarthLink's Newman. “It's a great backhaul for video cameras, alarm companies, AMR and demand control for thermostats.”

BPL's business case also could leverage events outside of telecom, particularly Sept. 11-induced concerns about the vulnerability of the U.S. electrical gird. “BPL allows the utility to monitor and manage every node on the network: transformers, circuits and meters,” Johnson says. “A security network [could] use BPL to backhaul cameras or other devices placed at strategic utility facilities.”

Although higher population density helps BPL's business case for technological reasons, it also makes sense to focus on urban areas for the same reason that cable and DSL do: a bigger pool of potential customers. But Cinergy's decision to target rural electric cooperatives points to another opportunity: underserved areas where Internet access often is limited to dial-up connections with long-distance charges.

That's why in April, Texas legislators began considering a bill that would let electric utilities lease their power lines to ISPs that want to offer BPL. “It is especially important to rural Texas, where high-speed Internet service is not readily available,” said the bill's author, Senator Troy Fraser, in a press release.

BPL also could target niches in urban areas. “BPL is ideal for places that can't retrofit with traditional cabling means and are unable or unwilling to utilize wireless solutions,” Johnson says. “We can use an inner-city's school power distribution to bring broadband where re-cabling is cost-prohibitive. Many hospitals don't have broadband capabilities and are concerned about wireless interference with their telemetry equipment.”

Declining equipment prices also should help make BPL viable for a wider range of applications, particularly on the consumer side. Johnson says prices of customer and network equipment have fallen by half over the past 14 months. Those types of reductions in overhead costs give BPL providers a better shot at pricing their services at a level that's competitive with DSL and cable in markets where they go head-to-head.

Users aren't the only ones who'll have to decide how BPL stacks up against cable, DSL and broadband wireless. The electric companies are asking the same questions when deciding whether it makes more sense to go with BPL or alternatives such as fiber and WiMAX.

“For some utilities, wireless is going to be tough, depending on where you are,” says EarthLink's Newman. “If they don't have a lot of fiber already in place, it's a very good alternative. Others have lots of fiber, and that's all they want to do.”

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