Broadband over Power Lines Offers Unique Business Models and Niches

Broadband over Power Lines Offers Unique Business Models and NichesBy John L. Guerra - March, 2005

The world knows broadband can be delivered to residential subscribers via DSL or through coaxial cable to a DOCSIS modem. Telecom industry insiders occasionally admit that some people—because they live in remote regions where broadband isn't otherwise available--rely on satellite to get e-mail. Bring up the practice of delivering broadband services and voice over an infrastructure owned and operated by the neighborhood electric company, however, and you'll get the kind of response reserved for discussions about a mentally challenged cousin who's housed somewhere out of state. "We don't deal with that," says a spokesman of a well-known telecom billing vendor. However, broadband over power lines (BPL) is quickly gaining ground as a viable alternative to the other terrestrial delivery platforms. The idea that the same PC power cord one plugs into the wall socket can also deliver the broadband data is far from intuitive, but it works. It works so well, in fact, that a growing segment of BPL providers is grabbing a larger share of the market, primarily in hotels, motels and large apartment complexes, but also a growing number of single-family homes and businesses. The BPL Technology Moving data over electric lines has been around for years; power companies run low-frequency signals across their wires to remotely manage equipment and track power distribution. Telecom equipment manufacturers like Nortel and Siemens began to experiment with sending IP packets over power grids in the 1990s but soon ran into technical issues. The biggest problem was how to keep packets rolling when they encountered highly disruptive banks of transformers on power poles; that problem has been solved by installing a physical coupler that lets the data bypass the transformers and move on down the line. That can also be accomplished by installing Wi-Fi boxes on the poles to send the data signal on to the customer's equipment, when possible, rather than around the transformers. Wi-Fi points on the network, however, can create bottlenecks. Data flow comes off medium-voltage lines at 18-24 Mbps; most Wi-Fi equipment is only capable of 2 Mbps, which creates the chokepoints. Network engineers hope that newer variations of 802.11G under development will solve that problem. Other issues, such as the interference of BPL signals with ham radio operators and other users of the low-frequency spectrum, were recently addressed by the FCC in a set of guidelines. Other regulatory issues surrounding BPL aren't going to be solved so easily. The emergence of BPL is becoming more evident each month. Companies like Amperion, Telkonet, Current Communications, Maine.net and Fonix lead the way in implementations around the country. Energy company Synergy and BPL provider Current Communications rolled out high-speed service to some 60,000 utility customers in the Cincinnati area. Current's business plan offers three different speed tiers of 1 Mbps for $29.95 a month; 2 Mbps at $34.95 per month, and 3 Mbps for $39.95 a month. Current and Synergy also announced plans to go after 24 million homes served by smaller municipal and co-op power companies in rural areas neglected by cable and DSL broadband providers. Maine.net, Prospect Street Broadband and the city of Manassas, Va., launched service to an eventual 15,000 residences and businesses in Northern Virginia at the end of 2004. Telkonet, with headquarters in Germantown, Md., recently announced that it had won contracts to install BPL in several of the largest Trump properties in New York City and elsewhere. BPL providers boast of the ease of deploying their service—the infrastructure is already in place in the form of the power grid, and users need only buy and utilize a HomePlug-compliant IP modem at the wall socket. HomePlug is the industry group that sets standards for the plug-and-play BPL wall-socket devices. Numerous Business Models But the responsibility for monitoring network performance and QoS is a bit stickier. That's because BPL offers several business models that are still being worked out, and the job could fall to two or three partners, depending on the arrangement. Power companies, for instance, can lease their poles and lines to third-party BPL providers who install the gateways and routers and act as the ISP; or the BPL provider can lease its equipment to a third-party ISP that provides content. At other times, the utility can be all three: the power company, the BPL provider and the ISP. This raises questions about who's responsible for customer complaints and requires cooperation when running down network problems. Is it a power outage at the electric company, a failure of an upstream BPL router or Wi-Fi component on a pole? That has to be worked out between the utility, the BPL network owner and the ISP. "You have several players in a BPL implementation," says Brett Kilbourne, director of regulatory services and associate counsel for the United Power Line Council (UPLC), a consortium of BPL providers, ISPs, utility companies and municipalities involved in the BPL industry. "You've got utility companies that own the power grid that build their own BPL networks and act as the general contractor for the ISP that wants to launch BPL service—the market development model," Kilbourne says. "Then you have ISPs that go out and buy the BPL equipment and rely on the utility to mount it, then pay the utility for use of its infrastructure—a sort of landlord model." In Manassas, Communications Technologies Inc. (ComTek) of Chantilly, Va., runs a BPL network constructed of equipment and network know-how from Maine.net, while the town of Manassas supplies the power grid. ComTek runs the ISP, handles customer service and takes part in a revenue sharing agreement with the utility. Maine.net charges Manassas for building the network as well as further repairs and maintenance of the network. Meanwhile, in Evergreen, Colo., Maine.net, in partnership with a company called Hometown Connections, will shop BPL systems to member utilities of the American Public Power Association (APPA). Members get a group rate. Maine.net can match them with ISPs or leave it up to the utilities to make their own arrangements. Another variation is Current Communications, a company that "was created to enter the BPL business," says Jay Birnbaum, vice president of Current. The company's founding employees hail from familiar corporate edifices in telecom, including Hughes Network Systems, Teligent, Global Crossing, Choice One, and CLECs such as Frontier. Primarily begun as a developer of BPL equipment, Current is also an ISP; it plans to roll out VoIP commercially in the first half of 2005. "Current is the ISP as well as the developer of the network pipe," Birnbaum says. "We design and build out the physical infrastructure, then provide the services to the end-user," Birnbaum says. Who Handles Network Monitoring? Each business arrangement has a unique network management setup—power companies are responsible for their portion of the network, the power grid, while the BPL network engineers or the ISP have the job of maintaining the health of the telecom network. Power companies are usually blessed with good communications systems. Right now, by and large the utilities have a lot of fiber connectivity, primarily for critical infrastructure communications and monitoring the substations. Power companies use them for voice, too. "There are highly reliable circuits, running back and forth along their power grid, telling network managers in a moment's notice what the problems are before a blackout occurs," Kilbourne says. Current's NOC is in Germantown, Md., and relies on its custom-built network monitoring system called CT View. By measuring radio frequency levels within its BPL network, Current can determine whether its equipment is malfunctioning when network troubles occur. If the equipment is working properly, Current notifies the power company that the electric grid may be having problems. "We have a state-of-the-art network operation center; we can actually see down into the customer's modem," Birnbaum says. "We know if the BPL components are not affected, there must be something wrong upstream of that and that it's on the power grid." If Current engineers can't see into the modem, it indicates a problem with Current equipment. Using CT View, the company measures traffic flow to spot bottlenecks or look for jitter or dropped packets—traditional QoS determinants. Birnbaum says power companies are slow to learn of power outages on their own. "The only way the power company knows [there's a power outage] is when its customers call in. And how do they know when the power comes back on, if no one has called them to let them know? They have to wait around for the sun to set and see which lights come on. It's an expensive proposition to keep those trucks and line personnel waiting around idle while on the clock. Right now it's more of a manual process." Birnbaum's interpretation of a power company's abilities aside, it's true that BPL providers can help power companies get to problem points faster. Pinpointing problems on large power grids often requires "windshield time," a tongue-in-cheek term for driving around in a bucket truck looking up at power poles to spot burst switches or burnt wires indicating a downed network. By working closely with BPL providers, "devices such as automatic alarms on the BPL equipment or the power grid side eliminate the need for a phone call to alert the power company," Birnbaum says. "We monitor our network and in doing so the corresponding portions of the utility network. Some utility network attributes are measured directly, like the voltage at a given location. Others are derived by what happens to our network components, such as outage information." Kilbourne of the UPLC agrees. "With BPL [monitoring] you can see where that outage has occurred and when it occurred," he says. "The other neat thing, because BPL uses the wire itself, you can predict outages before they happen, because you notice variations in the power signal—clear signs that a failure is about to occur." OSS and Inventory The traditional functions of the back office are taken care of in traditional ways; Current's back office, for instance, is located in Rochester, N.Y., and staff can handle preordering, ordering, provisioning, and trouble-ticketing via phone or online. It plans to sell VoIP as well as the usual value-adds such as three-way calling, conference calling and caller ID. Enterprise customers can order and provision additional bandwidth for specific dates and times for Webinars or other online streaming communications. BPL delivery is a last-mile service; that is, transport of Internet content as well as internal OSS functions occur on traditional fiber or T-1 lines as close to the customer as possible and are then moved onto the BPL platform. It makes technical sense, too, in that you don't want to have too many repeaters between the T-1 data interface and the customer farther down the row of utility poles. In other words, provisioning and traffic flow decisions are made before the traffic hits the power line layer. "We have all the OSS capabilities," Birnbaum says, "but it's not attached on points along the power line system; we use traditional, automated communications on a network separate from that. We perform full QoS management and have upgraded our network for QoS prioritization of voice traffic. Everything in the back office is done normally." When a BPL signal interferes with other low-frequency electronic devices in a neighborhood or office building—such as garage door openers, ham radio operators and even CD players—finding the owner of that equipment becomes important. To that end, the BPL industry and the FCC are working on a database that lists each installed BPL device, unit or box on a given pole in each state of the union. That way, engineers who come across questionable BPL equipment can key in a ZIP code, building address or other identifying information, and learn the name and address of the company that owns the equipment. "It would include information such as the set of frequencies the devices use and the name and phone number of a contact at the BPL provider," Kilbourne says. Birnbaum at Current underscores his point that his company's network devices don't operate in the spectrum that interferes with ham radios or other devices. "Current has chosen a system that precludes us from using any frequency that's been allocated to ham radios. None of the frequencies are in the ham and amateur radio bands," he says. "The radio frequency that leaks off the wires won't include any ham radio frequencies." In addition, "As to QoS, the utility network has no effect on the voice or data packets," he says. "Our traffic runs at different frequencies than the 60 hertz on which electricity travels." Managing Multi-Unit Residences Telkonet doesn't consider itself a BPL provider, says Al Diehl, executive vice president of sales engineering for vertical markets. The company is a builder of commercial power line networks, a power line communications (PLC) provider. Those who manage those power line communications networks provide the BPL service to third-party ISPs. The difference in definitions is important when it comes to educating customers about the partners' roles. Telkonet's market consists chiefly of hotels, motels, apartments, condominiums and other multiple-dwelling units (MDUs) that install PLC networks. Its installations make a lot of sense to apartment management companies, Diehl says, because every wall socket throughout the large apartment buildings becomes a data port, whether the power socket is in the building's atrium, lobby or poolside—which gives residents almost the same flexibility as a Wi-Fi network, but with the security of a wireline data connection. Telkonet's installations consist of three main elements, Diehl says.
"Our PLC gateway is the control center that can support up to 1,024 users; each of those users' connections is isolated and encrypted."
The second component is a coupler device that's connected to the gateway via coaxial cable connection in a building's power cage, usually in an electric closet or basement. The coupler consists of four electrical wires attached to the meter bank or breaker panels of a commercial building; once hooked in, "every electrical outlet serviced by that meter bank or breaker panel becomes the equivalent of a data port," Diehl says. "The building is ready to go."
The end-user gets a HomePlug-compliant wall-socket modem resembling a fancy power cord plug. Telkonet's version of HomePlug is called Intelligent Bridge, or iBridge for short. "At the front side of the iBridge is an Ethernet connection," Diehl says. The end-user simply plugs the adapter into the wall and the Ethernet cable on the other end into the PC or other IP enabled device, and it's good to go. "The user is able to move from outlet to outlet within the building (apartment), outside on their balcony, or poolside or common area plugged into the power," Diehl says. Doing Business with MDUs Telkonet is earning Federal Information Processing Standards (FIPS) certification so it can compete for federal contracts—it's eyeing the Navy, for instance, where it wants to install its technology aboard ships having only a few Internet hookups for thousands of sailors. ("There's a digital divide on aircraft carriers," Diehl says. "While officers have their own Internet access, sailors have to wait in line for hours for access to a few Internet stations.") The 5-year-old company has been successful in the hospitality industry, including among its customers such hotel chains as Choice Hotels, Historic Hotels of America, Best Value Hotels and Hospitality International, a group of 150 hotels in 38 states, including Alaska and Hawaii. Telkonet also installs its BPL networks in the Sandman Group of hotels in Western Canada. Not only that, but Telkonet has grabbed a healthy portion of the apartment business—some "35 apartment communities," Diehl says. In Bethesda, Md., for instance, the Whitney apartments, made up of old and new buildings, are already served by Comcast and Verizon, but the apartment managers wanted to give residents a third choice for Internet access and considered BPL to be that alternative, he says. In early January, MST—Telkonet's ISP partner in New York City—won contracts to deploy PLC/BPL technology in the Trump organization's buildings in New York, including the Trump Place along the Hudson River, Trump International and Trump Plaza in Manhattan. MST, which brands its services as New Vision Broadband, is marketed to new residents as they move into the exclusive addresses. "As residents move in," Diehl says, "iBridge is distributed with the welcome pack when each new resident enters his apartment." The resident goes up to his new apartment, fills out the application for the BPL service, and can immediately plug the iBridge device into any outlet and get online, Diehl says. "There's instant gratification," he says, "as opposed to cable and other ISPs, where you have to wait for the cable modem to be shipped." Billing with Third Partners The billing relationship between Telkonet and hotel chains is based on the number of rooms—each is considered a "subscription" regardless of who's in the room. "We provide the backbone; the hotel pays for installation and the use of a licensed electrician—which is required by law," Diehl says. "After that we charge a monthly, per-property subscription fee to the hotel." As for getting the Internet to the hotels for conversion to the BPL system, most hotels already have some form of broadband connectivity, often a T-1 for their reservation systems and other communications between the chain's corporate offices and individual hotels. The customer base is nomadic, with some staying a single night up to a week in the case of hotel rooms. BPL service is automatically available as a room amenity; that is, it's accounted for in the hotel chain's existing billing system for booking rooms, charging room service and other amenities, based on room number and the customer's credit card information. BPL can be included in the price of the room ("free Internet service"), while the BPL provider charges the motel chain a flat monthly rate based on the number of rooms hooked up in that hotel or throughout the chain. When the motel charges for Internet use, the billing systems used for charging for the Internet are often separate from the hotel's reservation and credit card billing system used during check-in. "When hotels do charge," Diehl says, "they use hotel Internet subscriber management systems such as IP3 and Nomadix for those services." According to Nomadix, its system can converge with a hotel's telephone call accounting programs for tracking long-distance calls from hotel room phones with Internet access billing. In apartment complexes, management companies pay Telkonet for installing the PLC system; the Internet delivery agreement is between the ISP and the resident. "In the case of apartments, ISP providers provide the billing, and almost every solution provider has an online billing system that uses credit card billing," Diehl says. Customer account management is trickier, too, for apartment hookups, he says. Owners of single-family homes might sign long-standing contracts, but apartment residents often move on after a year. Tracking these "nomadic" subscribers, who may or might not pay their final monthly bill, is problematic. "The ISP doesn't have long- term contracts in apartment communities," Diehl says. "They're often offering service on a month-to-month basis." Managing Data in the Hotel Room Telkonet performs its billing manually for the time being, Diehl says, though it has a SalesLogix system on hand that can automatically deduct Internet charges from a subscriber's credit card. The daily or monthly Internet billing is performed by the ISP. As for collecting from hotels for the installation in each room, Telkonet can handle that manually for now, Diehl says. For QoS, Telkonet relies on its NOC. "We can manage any facility from our location, as can our ISP partners," he says. "We can see any iBridge that's connected; we have a GUI interface as part of our system to see into our system all the way into the hotel rooms. We can turn the service off right away if somebody's not paying their bill or if their device is infected with a virus. It comes in handy, especially when a subscriber tries to set up an ISP in his apartment." Great Opportunities Await So far, it seems as if the future of BPL is assured; there are no gray clouds on the horizon. It's just a matter of selling an "off-the-wall" Internet technology to the public and municipalities. It's less expensive for CLECs looking for a way to deliver voice. "Instead of buying the entire loop, they can save a lot of money doing it over the electric grid," says Kilbourne at the UPLC. "You can run data over BPL, you can run voice over BPL, anything." Towns and cities such as Manassas are starting to rely on the power line technology to manage their infrastructure. BPL gives Manassas access to its traffic lights, so it can change traffic flow at different times of the day to avoid backups. Ed Thomas, chief engineer in the FCC's Office of Engineering and Technology, says that BPL technology can be used to control just about anything with a transducer in it. "You can tap into street lamps to light up public areas," he says. "You can install it in train stations, along the power lines that run along the tracks, so people can work on their laptops in the terminals. "Anything that consumes electricity can be given an IP address. Those transducers, when linked to the IP, can do almost anything—from turning on the air conditioning in one's home from a distance, to informing a homeowner that his heating back at home has failed while he's at the office. It can be used to control machinery on a shop floor without a physical LAN. The only thing that's limited is the designer's imagination." All that's required is to convince the unwashed in the telecom industry who remain nonchalant about this much-ignored technology.