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     business case

This page considers questions about the business case for BPL (are powerline technologies commercially viable), BPL as a marketing phenomenon and access to networks.

It covers -

• an uncertain business case - is BPL an interesting technology without a sound business case?
• BPL as a marketing phenomenon - a closer look at the PLC spin cycle

The following pages discuss trials and regulatory exploration of broadband powerline communication in Australia, New Zealand and overseas

     an uncertain business case?

A 2004 US Electric Power Research Institute report (PDF), in asking 'can BPL consumer services be profitable?', commented that

Making the business case by just selling fast Internet access may be difficult. Bundling of broadband consumer services - and perhaps utility-related applications like direct load control - will likely be needed. ...

However, DSL providers have already started lowering their prices to be more competitive with cable. And as BPL becomes a serious threat, both cable and DSL providers are likely to compete aggressively. Although faced by their own funding limitations and debt, these companies are not likely to be complacent about losing market share. Any company offering BPL in the consumer market and competing only on the basis of price of internet access could find profitability elusive. ...

The strategy of leveraging infrastructure investment for both a consumer communications service and for utility applications has appeal. But it also has considerable risk. Many factors key to the business case - regulations, technology costs, revenue per subscriber, and the advent of alternative technologies - are all areas in which electric utilities have little ability to exert control. This has been reflected in the modest investments seen so far in BPL.

That is consistent with a range of industry studies, such as the 2005 US National Association of Regulatory Utility Commissioners Broadband Over Powerlines report (PDF) and upbeat Powering the Broadband Market in 2005 & Beyond: Views on the Emergence of Broadband Over Power Line Technology (PDF) from US lobbyists the New Millennium Research Council.

There is little doubt that that longline and inhouse BPL can be made to work. One correspondent waspishly commented that internet by carrier pigeon and by bongo drum is also technically feasible.

The major questions are instead whether BPL can be made to work on a large-scale commercial basis in competitive marketplaces and without undue impact on other RF users.

     a marketing phenomenon?

It thus unsurprising that some observers have characterised BPL as a marketing phenomenon rather than a technology that will gain global acceptance by domestic and business users in the near future.

That phenomenon features -

• upbeat reports from particular solutions vendors (sometimes promoted as commissioned by government agencies)
• media releases (often uncritically assimilated by newspapers and magazines) that "accentuate the positive, elide the negative" - major benefits for consumers and utilities, no substantive technological or regulatory concerns, optimistic projections - when trials are launched
• the absence of detailed public analysis - or even reporting - when trials are curtailed or cease on schedule without subsequent commercial adoption
• little international comparison, with non-specialist media for example obligingly reporting initial commercial support for some projects in other countries but not reporting that commercial backers withdrew from those projects
• the 'internet fridge effect', with utilities and manufacturers trying to escape a stodgy image through association with "the technology of tomorrow"
• what has been cruelly characterised as 'smoke and mirror' business modelling, with projections that assume a very significant reduction in hardware costs in the near future (none of the optimistic forecasts have been substantiated), appear to understate 'real world' deployment and maintenance costs, and inadequately identify ROI from other technologies
• difficulties for non-specialists in determining what is actually going on, with claims and counterclaims by vendors and advocacy groups (ham radio operators have typically been dismissed as "luddites", although their criticisms of some BPL claims are echoed by a range of government/commercial RF users) and liberal use of bureaucratic weasel words such as "if", "might", "possible" and "may be" in official reports
• disillusionment over dot-com bubble forecasts that utilities will easily morph into more profitable utilicoms that supply connectivity and services along with the electricity, water, gas or sewerage.

Joe Barr of NewsForge succinctly commented that

BPL today is like the very worst of the dot com era: mythological, deliberately misstated, and majorly overhyped technology that is being used in ways it was never designed to be in the first place.

One of the stronger responses to criticisms of BPL came from Austrian power company Linzstrom, which sued a group of radio enthusiasts for publishing criticisms about its activity. Linzstrom lost the case in court and the offending document was mirrored across the world, with the company scoring a People's Choice award in the Austrian civil liberties Big Brother Award 2004.

US promoter Comtek proclaimed in January 2006 that after it "voluntarily adjusted" the network in Manassas (Virginia) there remained no "documented basis for further ham radio operator concerns"

Manassas is the first and also the best full-scale commercial deployment of BPL on a meaningful scale in the United States and we take great pride in the system, which has operated with virtually no hitches to date. In fact, we know of fewer than half a dozen ham radio operator complaints, each of COMTek has gone to truly extraordinary lengths to address. ... The facts are that we have done everything necessary - and more! - to address any genuine ham radio operator concerns.

In July the FCC ordered Manassas to "take immediate steps to eliminate all excessive emissions" and resolve ongoing concerns. ARRL representative David Sumner commented that

Clearly, the FCC has lost patience with COMTek's reliance on misleading news releases as a substitute for meaningful solutions to the ongoing interference.

Sumner noted a COMTek April 2006 media release that characterised Manassas as "a real success story" with testing supposedly indicating "an almost identical" level of interference whether or not the system was in operation.

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