No New Wires

By Khali Henderson

Posted: 06/1999

No New Wires
Fulfilling the Promise of Power Line Telecom
By Khali Henderson

Competitive telecommunications service providers currently are handicapped at the last
mile as only the incumbent local exchange carriers (ILECs) have wired access to the end
users’ premises. For competitive LECs (CLECs) to reach the end user, they have to lease
ILEC lines or, at great cost, deploy their own digital subscriber lines (DSLs) or cable
modems. What’s missing is a truly ubiquitous competitive local loop infrastructure. Some
think they may have found it in power lines.

Like the ILECs, electric utilities have wired access on a mass-market basis to all
residences and businesses in their territories. And, as it so happens, these wires are
capable of delivering 1 megabit per second (mbps) of symmetrical communications for voice,
data and Internet communications. Such speeds are 20 times faster than current modems
being used with traditional telephone lines, making broadband delivery possible. In fact,
it is believed to be scaleable to 10mbps.

"The power line is the most distributed carrier system around the world, enabling
consumers everywhere to take advantage of the exciting communication capabilities in the
very near future," says Rick Thompson, vice president of Redmond, Wash.-based
Microsoft Corp.’s Hardware Division. Microsoft last September became the first licensee of
high-speed power line carrier (PLC) technology from Intellon Corp., Ocala, Fla.

Table: The Addressable Market for Power Line Telecom

"The installation of dedicated wires is expensive, disruptive and very time
consuming," says Intellon President and CEO Horst G. Sandfort. "A low-cost
solution, as targeted by Microsoft in cooperation with Intellon, aimed at the existing
power line network can bring success and support for the No New Wires concept in the
marketplace."

PLC communications was first developed by Richardson, Texas-based Nortel Networks and
Manchester, U.K.-based NORWEB Communications, part of United Utilities plc, which
announced the breakthrough in October 1997. NORWEB is widely recognized within the power
sector as a leader in research into broadband communications over power lines, having
started work in the area in 1990. In March 1998, Nortel and United Utilities formed a
joint venture company, NOR.WEB DPL, to develop and market Digital PowerLine solutions on a
worldwide basis. NOR.WEB announced agreements with energy interests in Europe and
Asia-Pacific regions representing a potential market of 35 million customers.

The United States curiously is absent from this list of trials, but not for lack of
interest. The U.S. electrical infrastructure is set up so that very few (eight to 10)
homes are served by a single transformer. In contrast, some 200 homes are served by one
transformer in Europe. While this seems a simple difference, it makes the economics of
deploying PLC technology unattractive. Here’s why, explains Bill Moroney, president of
UTC, the utilities telecommunications association based in Washington: For PLC to work,
the transformer must be "bridged" by a pricey signal injection unit. While this
same requirement exists in Europe, there are many more potential consumers served by each
one to absorb the cost of deployment. Additionally, the U.S. system relies heavily on
over-ground lines, which are subject to radio interference; PLC works best in short-haul
underground distribution networks.

UTC has formed the Power Line Telecommunication Forum (PLTF) to work with the United
Kingdom’s International Power Line Telecom-munications Forum (IPLTF) to facilitate
information-sharing between the United States and Europe on PLC technology and making it
viable in the United States.

The opportunity in the United States, Moroney says, is inside apartments or office
buildings or remote locations where telephony services are delivered via personal
communications services (PCS) and PLC is used for the last mile. And while power lines
could serve as a principal delivery mechanism, Moroney says many service providers may
look at them as an entry vehicle, migrating later to fiber to the home or some other
delivery mechanism.

"There’s going to be a collection of technologies that might be delivered by
different companies," he says. "The customer is not going to care what
technology is used as long as they get high-speed access."

Khali Henderson is editor-in-chief of PHONE+ magazine.