***CITI Powerline III
March 20, 2003
by James Sneeringer
Columbia University
New York, NY
Powerline communications (PLC), the transmission of high-speed
data across the electric power network, has achieved several
important milestones since we covered the United PowerLine
Council (UPLC) annual meeting last year (see WAVE issue 0237).
Some of these milestones are positive, such as the first approval
of PLC affiliate transaction rules by a state PUC (public utility
commission), and some are potentially negative, such as the
announcement of an FCC Office of Engineering and Technology (OET)
proceeding to investigate PLC interference. On the whole the
industry seems to be progressing quickly, with at least two
vendors expecting to begin commercial roll-out within six months.
But questions still swirl around the business case for wide-scale
industry success.
This conference was notable as the first PLC event we have
attended that did not kick off with a general tutorial. The
organizers assumed that attendees understood the basic
technology, and jumped right into updates from the vendors. Also
notable was the inclusion of two operational support systems
(OSS) vendors in the presentations. These companies provide
suites of back-end services such as marketing, provisioning,
customer service, and network management. Here was a clear
indication that the industry is beginning to seriously consider
the implications of rolling out an entirely new network and set
of offerings. Because PLC uses existing wires, capital expenses
are expected to be low, with operational costs driving
expenditures. Controlling those operation costs with good OSS
will be the key to a successful roll-out.
During the closing discussion session, Michael Noll, Director of
Technology Research at CITI, asked for benchmarks--when should we
check back with PLC, to see how it is doing? The panel members
agreed on the following benchmarks for the industry:
18 months -- Widespread commercial deployment has begun, to
significant numbers of people.
36 months -- PLC acquires its 1 millionth home.
Regulatory
Some of the most important recent PLC developments have been in
the regulatory sphere. For the most part PLC has had a low public
profile, and with little to no commercial activity yet most
regulatory agencies are content to let it develop freely. But
now, the FCC is beginning to look closely, as are some states.
At the federal level, the FCC has stated that PLC is a top
priority for the OET in 2003, and they continue to be excited
about the potential to provide facilities-based competition for
the consumer broadband market. The biggest news from the FCC is
the OET announcement that they will begin a proceeding this year
to investigate any potential for interference by a PLC
deployment. This caused enough of a stir that the two major PLC
industry groups, the UPLC and PowerLine Communications
Association (PLCA), jointly filed a report with the FCC before
the proceeding was formally announced. They ask the OET to
proceed with as much speed as possible, since such an open
regulatory issue will likely create uncertainty that could hamper
industry growth. Utilities, risk-averse by nature, are unlikely
to commit to a large deployment until regulations are stable.
At issue is unintentional radiation created by the PLC signal as
it travels over powerlines. PLC vendors have been vigilant about
FCC Part 15 certification of all their equipment. As an
industry, PLC has held that existing Part 15 standards are
sufficient to regulate any interference that may be caused. But
Alan Scrime, Chief of the Policy and Rules Division at OET, posed
this question:
If you are doing everything right, and existing regulations
are sufficient, why am I up here asking you questions?
Brett Kilbourne, Director of Regulatory Services for UPLC, had
the answer:
Because there are incumbent users [of that spectrum] that
you have a duty to protect.
In the PLC band of spectrum, there are established broadcast
uses, including amateur radio and military applications such as
radar, with which unregulated wireline services such as PLC may
not interfere. And while Part 15 explicitly sets limits for
point sources of radiation such as pieces of equipment, it does
not address interference caused by a network of overhead or
underground wires.
Speaking with Alan Scrime after the presentation, he made it
clear that the FCC does not know of any PLC interference
problems, has no wish to obstruct the growth of the industry.
Yet, there is no denying that the heterogeneity of the power
network makes it possible that some lines will unintentionally
radiate the PLC signal, the cumulative effect of which is
unknown. The FCC has no established procedure for measuring this
radiation, and no limits to protect incumbent spectrum users. For
months, said Alan, PLC vendors and organizations have promised to
set up testing sites and report measurements. It has not
happened, and with the industry progressing toward commercial
deployment the FCC felt compelled to act. The proceeding is
expected to begin this month, but has not yet been announced.
At the state level, a regulatory issue that continues to create
uncertainty reached a milestone when the Pennsylvania Public
Utility Commission (PUC) approved the affiliate transaction rules
proposed by Pennsylvania Power and Light (PPL) and their
subsidiary PPL Telecom. This was the first PLC proposal to be
approved by a PUC. Since most electric utilities are regulated
monopolies, there are state regulations governing their
relationships with affiliate or subsidiary companies. State PUCs
must rule on proposed agreements to ensure that the affiliate
compensates the utility for the use of its assets--and that the
utility passes any savings to consumers through its rates. While
the regulations and disposition of the PUC will vary widely from
state to state, this initial positive result will likely have a
stabilizing effect as a kind of precedent.
Technology and Trials Updates
These sessions began with a revealing survey of the audience as
to what type of company each person represented. The majority
were from companies already involved in the PLC industry in some
way, as a vendor or consultant. Small handfuls were from the
press, government agencies, cable and telecom companies, and the
smallest number, two, were there representing utilities
interested in PLC. Perhaps the academic setting of the
conference had something to do with it, but there did not seem to
be a strong indicator of utility interest.
Amperion
Previously focused solely on providing backhaul over MV
(medium voltage) powerlines, Amperion now has developed and
is trialing a Wi-Fi based consumer home solution. The data
signal is injected into the MV powerline from fiber, then
passed from the MV to the LV (low voltage) lines via Wi Fi
signaling. This satisfies the safety requirement of
American Electric Power (AEP), one of Amperion's customers,
that there be no wires connecting the MV to the LV lines
around the transformer. This avoids any fault path between
the high voltage of the MV regime, and low voltage of the LV
regime.
Since, according to Amperion, 95% of people in the US live
within 100s of meters of a transformer, they feel that they
can use Wi Fi, rather than powerlines, to get the signal
into the home. In this way the CPE can be any Wi-Fi
certified receiver.
Amperion currently is running trials with AEP in Dublin, OH,
PPL in Allentown, PA, and a third utility whose name they
haven't released yet. Results include MV data rates of 15-
24 Mb/s, powerline signal propagation good for around 2000
feet before a repeater is necessary, and 3-4 Mb/s per end
user (Wi Fi throughput). They claim little latency, even
with multiple receivers on the powerline.
Install times are between 20 minutes and an hour for the
powerline equipment. However during the talk Jeff Tolnar,
VP Marketing and Business Development for Amperion,
mentioned that in the process of installs they had found
anomalies in line performance, often requiring some
troubleshooting. As the trials develop they are trying to
develop the ability to pre-characterize lines. Jeff stated
that so far their cost per house passed is between $50 and
$150.
Main.net
Main.net is in trials in the US with the utilities Ameren,
PPL, in Allentown, Pennsylvania, and APPA, in Manassas,
Virginia. Main.net stated that during the last year they
have expanded the size of the trials, signed an evaluation
agreement with Southern Company, and released their second
generation equipment.
Main.net has been very active outside the US as well,
reporting activities in more than 40 countries, some with
small commercial deployments. In Germany, their Manheim
commercial offering with utility MVV now has 2000 homes,
with 22,000 predicted by 2005. They expect to have
infrastructure in place for 120,000 homes by end of this
year. Main.net is also active in several South American
countries, as well as India and Indonesia.
The Manassas trial has been active since May 2002, passes
over 50 homes, and involves 15 users in homes and
businesses. Data rates for users are 300 to 500 kb/sec at
2500 feet of powerline. The Allentown trial with PPL passes
over 1300 homes and currently involves around 300 homes.
They estimated that the cost per house passed is around
$160. Main.net has also found inconsistencies and
attenuation in the power network, but stated that they are
able to deal with them simply by adding repeaters.
Main.net stated that a US customer (most likely PPL) will
begin offering commercial PLC service by the second half of
this year.
Current Technologies
Joe Cufari, VP of Business Development for Current
Communication Services, presented. Current actually has two
companies--Current Technologies, which produces the PLC
equipment, and Current Services, which creates joint
ventures with utilities, and acts as a service provider to
the consumers. In this way they hope to cover the range of
potential utility customers. They anticipate that some will
simply to purchase technology and act as their own service
provider, while others will want a turn-key operation that
is managed for them. Current also believes that acting as a
service provider will make it easier to introduce utility
services such as remote management, automated load
balancing, and outage detection.
Current has two active trials in the US, with PEPCO in
Maryland, and Cinergy in Ohio. Each trial passes more the
500 homes, with around 100 homes total signed up. The
bandwidth to each home is between 2 - 4 Mb/sec symmetric.
Since July have tested their technology, back office,
repair, and support service and feels they are ready to go
commercial.
Current has several "hooks" in its systems, looking to the
future. First, Joe stated that Current builds its networks
to carry voice, by limiting latency to less than 50 msec.
Secondly, they will be able to tier service, perhaps at 256
kb/sec, 512 kb/sec, or 1 Mb/sec. Joe predicted cost
parameters of $25.95 for 256kb/sec service, and $39.95 for
1.5 Mb/sec service, but they have not started charging yet.
Joe stated that the economics work with 1.1 customers per
transformer at first, 0.7 customers per transformer as
capital costs decline over time.
PPL Telecom
This company provided a utility telecommunications
subsidiary point of view. Like most utility telecom
subsidiaries, PPL Telecom was built to leverage the
extensive investment in fiber that PPL made along their main
power networks. PPL Telecom offers fiber-based service to
businesses. They believe PLC may be a way for them to
leverage the fiber into the consumer market.
PPL Telecom uses both Main.net and Amperion technologies in
trials currently. They are now past 1300 homes with
Main.net, and several hundred with Amperion. Charles Boddy,
Manager of Marketing, stated that implementation of
Amperion's Wi-Fi solution has required significant
troubleshooting. "Service means in the house, not in the
yard."
PPL Telecom aims to provide total service--ISP as well as
connectivity. During recent trials, they have focused on
engaging their support systems more than testing the
technology any further. They feel that these systems are
more important than the technology for success, including
customer care systems such as customer service, billing,
support centers and systems, and fulfillment for equipment
orders.
Based on their early trials, the Pennsylvania PUC has
accepted their affiliate agreement and they will able to
begin paying trials. They will most likely go with
Main.net, starting later this year. PPL serves 1.3 million
customers with electric power, but technical and economic
issues will likely limit any PLC deployment to 700,00 to
800,000 of those.
Charles put it best:
Success is about availability, reliability, customer
service, and trust. It's not always about technology.
The Business Case for PLC
As at the last CITI conference, several industry consultants
presented analyses of the business case for PLC. Dr. Rahul Tongia
of Carnegie Mellon University, and David Shpigler, President of
the Shpigler Group, both presented analyses of the expected
prices and penetration rates of PLC, in the larger context of the
consumer broadband market. How much churn could PLC providers
expect? What amount of market share or local penetration will be
considered successful? While the numbers were fluid, and caused
some heated exchanges, several important points came out of the
discussions:
- Rahul pointed out that PLC may be suffering from what he called
the Parmenides Fallacy--comparing the expected future of PLC
service to today's offerings of cable and DSL. But, he pointed
that this was dangerous, since both cable and DSL are improving
even as PLC is developing. Cable and DSL are likely to have
higher performance for lower prices in the future.
- David stated that until recently, the PLC industry was being
driven by the vendors. Currently he sees that it is starting to
change, with some utilities and service providers beginning to
actively drive the development of the PLC industry. This is
essential, since it will be these two constituencies that will
drive consumer deployment and adoption.
- Both David Shpigler and Charles Boddy of PPL Telecom emphasized
the point that in PLC, operating expenses, not capital expenses,
will represent the greatest costs. Recurring fixed costs include
utility affiliate payments, upstream network costs, customer care
systems, and marketing, all of which must be managed closely to
achieve profitability.
The importance of strong management of operating expenses was
emphasized by George Grabowich, VP of Business Development at
Passport Corporation, and Antonia Townsend, VP of Marketing and
Corporate Development at Fine Point Technologies. These are two
companies that provide OSS systems to networks, and are looking
to get involved with the PLC industry. Both offer a suite of
services to utilities or their affiliate PLC service providers,
to help manage the ongoing costs involved with rolling out and
then managing a telecom network.
So what is the business case for PLC? As articulated during the
roundtable discussion that closed the conference, both vendors
and at least one utility subsidiary (PPL Telecom) believe that
there are significant opportunities for PLC:
- In areas that are not currently served, or are underserved by
cable and DSL;
- In 3rd and 4th tier markets where there may only be one option
for broadband;
- With people who are unhappy with their current Internet
service, dial up or broadband; and
- With people who are unhappy with the cost of other broadband
services.
Most felt that it was very possible for PLC to co-exist with
cable and DSL, and still succeed. As Charles Boddy stated:
I don't have to do it better than the incumbents, I just
have to do it profitably.
Standards
Oleg Logvinov, President and COO of Enikia, titled his
presentation "Lack of Standards Will Kill This Market." He
believes that for PLC to succeed on a large scale, a standard for
the interoperability of access equipment must be achieved. This
will:
- Eliminate uncertainty for utilities, by guaranteeing that they
will not get stuck with one proprietary vendor;
- Drive competition; and
- Help keep operating expenses low.
Currently the only PLC standard is HomePlug, which was designed
for in-home use only. Most the vendors are moving toward
compatibility with HomePlug on their LV solution, and Current
Technologies actually uses HomePlug for the whole LV side of
their technology. In a talk after the conference, Oleg
emphasized to us that sometimes specialization is good, and that
in his opinion the demarcation point should still be the door of
the house. HomePlug can provide for in-home interoperability for
home networking, and the industry should develop a separate
interoperability standard for access equipment. His model was
the DOCSIS or Wi Fi programs, including full interoperability
testing and certification.
HomePlug is not sitting still either, and the HomePlug Alliance
is currently working on the next standard, to be called HomePlug
AV. This is another in-home standard, intended to allow consumers
to use the power lines in their house to pass audio/visual
content around. Their goal is bandwidth greater than 20Mb/sec,
with QoS sufficient to pass video or voice without latency or
jitter.
Wave Issue 0310 4/11/03 Article 2-01