Subject: [NEXTEL-1] What's Next: Power Surge

From: [email-masked]
Date: Sat, 09 Aug 2003 21:38:29 -0400

What's Next: Power Surge

Inc. Magazine,
July 2003

By Robert X. Cringely

Thanks to new technology, your next Internet service provider could be the
power company.

When it comes to building a broadband Internet business, it is very hard to
compete with the phone and cable companies. Their advantage is location,
location, location, which is to say they're right inside your house. Both
companies have comprehensive local networks that were largely built and paid
for before most of us had even heard of the Internet. It has been almost
impossible, then, for any start-up broadband ISP to compete. But that may be
about to change, thanks to that other network in your walls -- the one
belonging to the electric company. Power-line Internet is coming.

Two power-line Internet companies -- Current Technologies LLC of Germantown,
Md., and Amperion Inc. of Andover, Mass. -- have started trials with electric
utilities. Their technologies vary slightly, but what they basically do is run
an Internet signal over the so-called medium-voltage wiring that's strung on
the pole behind your house. Medium voltage to the power company generally means
anything up to 10,000 volts. The power line is used as a network backbone -- it
can carry data traffic for something under a mile ( or further if a repeater is
installed in the line ) before it has to be converted to some other medium like
optical fiber or coaxial cable. So while the fingers and toes of the network
are carrying the current that powers your electric blanket, the arms and legs
of the network look like any other ISP.

Where the two companies vary is in how they connect the Internet to your home
from the utility pole or power line out back. Amperion makes the connection
using a short-range radio network ( an 802.11b Wi-Fi network ), while Current
actually jumps the utility transformer and carries the Internet right into your
home wiring. Amperion's solution is easier, but I think Current's solution is
better because it puts a network outlet in every wall socket and doesn't suffer
from wireless network blind spots like the one in the shadow of my
stainless-steel refrigerator. Customers of both companies use standard
networking gear that can be bought at places like CompUSA: Wi-Fi wireless
adapters in the case of Amperion, and HomePlug power-line adapters for Current.

These technologies are another benefit of Moore's Law, which has made computer
chips so inexpensive that it is now reasonable to use them for filtering the
noise out of electric lines, allowing the lines to be used for data service.
This is something that simply couldn't be done at a reasonable cost until now.

I am very excited about the idea of power-line Internet because it will lead to
more competition, innovative new services, and lower prices -- and because I
believe it is actually going to happen. This is an important part of the story
that many people outside the power industry ( and quite a few inside, too )
don't understand. Sure, the FCC still has to give final approval, and state
utility commissions have to approve rate structures that have not yet been
submitted, but those barriers will fall over the next couple of years. This new
kind of network is going to be implemented on a grand scale simply because now
that it exists the electric companies, which are hardly known for their
entrepreneurial flair, will come to understand that they can't do without it.

It isn't just that the utilities want the additional revenue; they need this
network for their own purposes. Utilities have discovered that it is much
cheaper to gain system capacity through power conservation than by building
more power plants. That's why they give rebates on new refrigerators that use
less energy. A megawatt hour regained through conservation is useful today,
while creating a new megawatt hour can take a decade of planning and
construction. The key to encouraging conservation is to find a way to monitor
electricity use second by second and vary rates accordingly. This means that
power could be made almost free at 4 a.m. but very expensive at 4 p.m.,
encouraging customers to run their dryers at night and rewarding conservation
at any time of day. To do this requires a smart electric meter and a way of
continuously linking that meter back to the power company. In other words, it
requires a network.

Right now San Diego County is running a pilot to replace 20,000 old electric
meters with intelligent ones linked back to the utility through a wireless
network that has nothing to do with the Internet. It would be even better if
those new meters could be paid for not just through electrical savings and
reduced power-plant construction costs, but also through revenue from an
Internet service. This fact turns power-line Internet from some venture
capitalist's dream to a near certainty.

Hardly known for entrepreneurial flair, utilities will learn that they can't
live without these new networks.
The people behind these new services are pretty substantial too. The founders
of Current Technologies, for example, once owned the 13th largest mobile phone
company in America, which they sold to SBC Communications, as well as a variety
of other communication and broadcasting properties that they sold to Liberty
Media for $3 billion. This is not an undercapitalized operation.

"This has the potential to be very disruptive technology," says Jim Mollenkopf,
director of systems engineering for Current. "The medium-voltage networking
equipment can be installed by the same utility linemen using the same tools
they are used to using. There is no special training required. Installing
service in the house requires no truck roll at all -- the customer just buys
adapters at Best Buy or Comp-USA and plugs them into the wall."

Both Current and Amperion plan to work in partnership with electric utilities,
leveraging not only the copper-wire power network but also the fiber data
network that utilities sometimes already have in place on the same poles. They
will begin with Internet service, and additional ser-vices like phone and even
video will eventually follow. And it is in those additional services where
opportunities lie for other entrepreneurs.

Take voice service, for example. At Current's demonstration home in Potomac,
Md., phone service is provided by Vonage, a company that links broadband users
into the regular voice network so they can make all calls over their Internet
connection at substantial savings. What Vonage can do, you can too, and it
really isn't that hard.

The Telecommunications Act of 1996 made competitive local phone service
possible, forcing the former phone monopolies to sell cheap access to the voice
network to their competitors. These competitive local exchange carriers ( CLECs
) haven't done that well because the incumbent local exchange carriers ( ILECs
-- the former monopoly carriers ) have made it as difficult as possible for
them. But a CLEC that offers local phone service through an Internet service
provider doesn't need to use the old phone company network. All it really needs
is a source of local phone numbers that can be assigned, and this often comes
from the state utility commission, not the ILEC. A CLEC that doesn't need local
network services doesn't need to pay for those ser-vices and therefore has a
lower cost structure. So power-line networking could create thousands of little
phone companies that have dramatically lower costs than the traditional phone
companies with which they'll compete.

Power-line Internet won't compete with cable TV in the same direct way it will
with phone service because television requires more network bandwidth than the
power-line networks will be able to provide initially. According to Mollenkopf,
Current Technologies will be able to deliver up to two megabits per second to
each Internet customer, which is fast for an Internet connection but too slow
to carry 40 channels of video. But the power-line network would be ideal for
video rentals, and the best way to do that is not over the Internet, but --
because it's much cheaper -- over the power-line backbone. Here, too, a local
operation with a local video server has a performance and cost advantage over
any national competitor.

With about 20 million homes already having broadband Internet service, there
are hundreds of start-ups building innovative new services that count on the
broadband market reaching some critical mass. Power-line Internet service will
make that critical mass come about sooner and will in the process destabilize
the phone companies. The parts are nearly all in place for this to happen.
Electric utilities will shortly have a great incentive to enter this business.
They already have reliable billing and customer-support systems in place, and
while customers are often angry with their phone or cable TV provider, most
people -- most people outside California, anyway -- don't hate their power
company.

Contributor Robert X. Cringely is a writer, broadcaster, and entrepreneur
specializing in technology.
Contact him at [email-masked]

Source: http://www.inc.com/magazine/20030701/25645.html

------------------------ Yahoo! Groups Sponsor ---------------------~-->
Buy Ink Cartridges or Refill Kits for Your HP, Epson, Canon or Lexmark
Printer at Myinks.com. Free s/h on orders $50 or more to the US & Canada. http://www.c1tracking.com/l.asp?cid=5511
http://us.click.yahoo.com/l.m7sD/LIdGAA/qnsNAA/61FxlB/TM
---------------------------------------------------------------------~->

Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/