Power line broadband and the competition matrix
We've documented numerous times before (such as here and here) how the telephone and cable industries have shifted the competition matrix, and how companies like Verizon and Comcast, AT&T (ex-SBC) and Time Warner are suddenly fierce competitors for the so-called "triple play" of telephone, television, and broadband Internet. As it stands, most households have both phone lines and cable lines coming inside through local monopolies, and both types of companies are battling over who survives.
Now a third source of the triple play is, after lots of talk, becoming a reality - the local electric monopoly. Recently, US-based Current Communications Group LLC (a software company) and TXU Electric Delivery, a unit of TXU Corp. (the #1 electric utility in Texas) have announced that they are rolling out a service to make high-speed broadband available to customers over standard power lines, a service called "BPL" or broadband power lines.
The pilot plan will involve giving access to two million customers, both in urban and rural areas, including many with no access to broadband through any other service. According to a Wall Street Journal article (High-Speed Internet Over Power Lines Could Serve Millions", 12/19/05):
Customers who subscribe will be able to plug a device about the size of a cellphone into an electrical outlet and connect a cable from their computer for Internet access that is capable of speeds that are faster than some popular Internet plans from cable and phone companies.
BPL service eliminates the need to install new cables. That's especially critical in rural area where cable and phone companies don't want to put in fiber optic lines, due to the expense per foot. TXU is not starting what the price we will be. It also can eliminate the need for in-house networking. Even more interesting may be the ability to connect TVs, DVRs, and even ovens and directly to the Internet.
We recently wrote about the way in which cable and phone companies are starting to focus on how they can make big money by charging tolls on their pipelines to the Internet. The electric companies are far more local and tend to be heavily regulated. It's not hard to imagine them providing broadband service, but hard to see them exploiting the pipeline. As with wireless, this alternate delivery may help to keep the Internet open and basically free, other than linkup costs. That may explain why Google is one of the key investors incurrent.
Of course, US electrical companies look likely to go into a frenzy of mergers not unlike those that have made oligopolies of the phone and cable businesses. More lenient regulations have sparked a major US power merger already this month, namely Florida Power and Light's acquisition of the Constellation Energy Group. Nevertheless, it's instructive to see a disruptive new technology thwarting the plans of would-be cornerers of the market. The competition matrix is about to shift again.
