Plugged In at HomePlug

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Viodi View Newsletter - October 12, 2005

Indie Telco Local Content Workshop Advertisement

Plugged In at HomePlug

By Ken Pyle, ken.pyle@viodi.com, Managing Editor, Viodi View

HomePlug is the industry alliance that is forging ahead with standardization of communications over power lines. This seems to be one of two standardization efforts, the other one being led by DS2, a Spanish integrated circuit manufacturer. HomePlug seems to have the momentum as they have heavyweights such as Intel, Cisco and Motorola in its camp.

Barry James Folsom of Motorola provided a keynote speech at the HomePlug conference. What impressed me is that his message of "seamless mobility" was the same as what Bruce Swail had provided to the IP Video @ Supercomm attendees last June. Motorola sees the need for wireless/wireline convergence that is in invisible to the consumers. One of the HomePlug benefits that Folsom touted was that it requires no change in consumer behavior to start using.

Richard Goldstein, CEO of Current Technologies, LLC said that one of the advantages of the Broadband Power Line network they have installed is that a router is not required at the residence, so self-installs are very easy and take less than three minutes. Current, a Liberty Media-backed company, has partnered with Cinergy to provide high-speed Internet over Cinergy’s power lines. For residential application, Current’s pricing ranges from $19.95 to $39.95 for 512kb/s to 3 Mb/s, respectively. They plan on boosting these speeds by three to four times in the first quarter of 2006 and do not plan on changing the pricing.

One of the smart things that Current does is that they survey their customers on a monthly basis. They have found that 94% of their customers are willing to recommend their service. 96% of their customers had Internet service prior to Current’s offering with 50% of those customers coming from dial-up, 30% from cable and 20% from telcos. The scary thing for telcos is that 16% of Current’s customers do not have landline telephone service, which, coincidentally, matches the percentage of people without cable television.

Goldstein pointed out that 70% of the time when a people move, the power utility is called before the telco or the cable company, so the power utility has a great opportunity to upsell communications services. Gary Steubing of Duke Power suggested that they are looking at telecommunications add-ons, such as security cameras, high-speed Internet, when they are in competitive situations to win industrial power projects. They are partnering with Earthlink for residential applications.

Bill Moroney, United Telecom Council and the United Power Line Council, President and CEO, estimated that there are approximately 50k premises being served by HomePlug devices today, but these estimates are still rough estimates. Both he and Steubing from Duke Energy made the argument that BPL can be justified just on power distribution and operations savings. Moroney indicated that utilities will deploy BPL due to pressure from PUCs to be squeeze more efficiency from the power grid.

Revenue from wholesale and retail communications services offer the potential to be pure profit. It is easy to dismiss the limitations of this technology and the challenges monopoly power utilities will face in marketing communications services, but this market share erosion, coupled with erosion from other competitors, could be significant. It will be interesting to see whether Echostar and DirecTV jump on the BPL bandwagon, as this could provide a low-cost pipe to interactive television.

There are definite opportunities in the HomePlug market for independent telcos. According to Goldstein of Current Technologies, the average house has 45 electrical outlets, so it does offer potential as a home networking solution. HomePlug 1.0 seems to be a solid networking solution for Internet application, but is not effective for handling MPEG-2 quality video. HomePlug AV promises 100 Mb/s of throughput, enough to handle several MPEG-2 High Definition channels. And that may be a requirement, as Folsom of Motorola indicated that 10% of High Definition households have two or more HDTVs.

The demonstrations in the HomePlug exhibit area were pretty impressive. There were devices that served as wireless backbones (HomePlug with a wireless router) as well as CPE that had integrated HomePlug technology. One such device with integrated HomePlug was a $199 Windows XP terminal. This device is clever as it uses the multi-user feature of Windows to subtend low-cost terminals off of one PC. Thanks to the HomePlug technology, it is literally plug and play.

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