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The power to deliver broadband

1 November 2007

So Telecom is going to spend $1.4bn to deliver the kind of broadband we've been demanding for years.

Good on them for that. When this uber-fast connectivity arrives I'm sure we'll all blow our data caps in days rather than weeks, something that will raise a whole new set of issues and potentially see Telecom able to earn significantly increased revenues from over-cap data charges.

But I'm wondering whether laying all that fibre-optic cable and expense might be really necessary.

The reason for my pondering is the (still) latent potential for broadband over power-lines (BPL) technology to provide the most cost-effective interim solution to the nation's broadband distribution woes.

And, even if Telecom do rollout their bold broadband plans, I'm thinking that there's still an opportunity for other ISPs to come in with a slower but more cost-effective product using this technology.

The great thing about BPL is that virtually every house in the country is already connected to the power grid in some way.

What's more, the lines that join us up to the national grid are a whole lot more consistent and well-maintained than most of the copper that makes up the last mile of our phone network.

There's a very real opportunity here for the power companies, either on their own or in partnership with another technology provider, to set up a very competitive telephone and data service using their already installed network of cables.

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Okay, so we're not talking tens of Mbps here like Telecom are -- but it should be remembered that a fairly sizeable chunk of Kiwi Net users are only really interested in email and the occasional bit of light websurfing.

These are the same folks who currently have one of those $29.95 a month DSL plans with a small cap. They don't really care if their broadband is 500Kbps rather than 20Mbps -- just so long as their email downloads and they can get to TradeMe for a quick browse every now and then.

A decent BPL system would also have plenty of bandwidth for such things as a VOIP telephone system and, in this deregulated market, that could see our power companies setting up a very viable alternative to the existing PSTN.

So why don't we see this happening already?

Well there are a few problems with BPL.

Due to the fact that these lines were only ever designed to carry current at 50Hz, they tend to be very leaky and lossy at the higher frequencies needed to carry broadband signals.

This means that they tend to act more like a piece of damp string and an a good antenna rather than a good conductor when you try to push fast data down them.

But hey, modern electronics can overcome a lot of those issues and it's only a matter of time before getting broadband and telephone services from your power provider is simply a matter of plugging a BPL modem into one of the many power outlets around your home.

Of course there will have to be quite a bit of additional infrastructure added to the power networks -- but the payback on this investment could be very rapid and the profit margins could be significant.

So maybe Telecom's recently announced move to toss $1.4bn into broadband infrastructure has not been motivated so much by an altruistic desire to make up for bad deeds of the past or to help hike our international ratings -- but by an awareness that until they do this they're becoming increasingly vulnerable to an assault by the power companies.

If your power company turned around and offered you a VOIP and broadband service via your mains connection, would you consider it as an alternative to Telecom?

Okay, so maybe 500Kbps-1Mbps doesn't spin *your* wheels, but what about your parents, your "occasional surfer" friends? Is this the kind of thing they might find more convenient and affordable than Telecom's DSL offering?

And could power companies get into the mobile phone market by simply putting WiFi/WiMax nodes atop various power poles throughout town and selling dual-mode (WiFi/Cellular) mobile phones to the eager masses?

You've got to admit that there's huge potential here -- so why are these power companies sitting on their thumbs? Maybe it's because they've already got a license to print money?

Why innovate in order to make more profit when you can do the same thing by simply hiking prices for your existing offerings?

Sadly, I think this may be the answer.

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