BPL's 80-Pound Gorilla. (Yes, I said 80.)

We've been BPL skeptics for quite a while here at SGN. We love the concept of broadband over powerline, but we don't believe in the broadband-to-consumer business model. (See our May feature article about the BPL sector.) We think BPL will only fly as a Smart Grid enabler, with consumer access as a bonus.

Guess what? That's exactly where the U.S. industry is headed, as confirmed recently when Executive Editor Jesse Berst spoke with Jim Dondero, Vice President of Marketing at Current Communications. Here is his report.

Current Communications Group is the 80-pound gorilla of the broadband-over-powerline (BPL) market.

 

As a startup still far from profitability, the company isn't up to adult weight. Even so, it is so far ahead of most rivals it can fairly be called the sector's dominant player.

 

Current is both the market- and mind-share leader. The market share comes from its previous trials with Cincinnati-based Cynergy (a part owner) and its $150M deal with Dallas-based TXU. The mind share comes from a recent investment by media darling Google, which – along with partners – dumped $130M into the company last May.

 

Insider insights

I spoke recently to Current's Vice President of Marketing, Jim Dondero. In a wide-ranging conversation, I gained five insights I want to pass along to you.

 

Current's weight-gain program. Current is up front about its strategy to grow to full 800-pound status. You may have heard of the "triple play" of Internet access, phone service and cable TV. Current hopes to go one better with a quadruple play of Internet access, phone service, video on demand and Smart Grid applications for utilities. The company's official party line goes like this:

·         Transform power networks into communications networks

·         Integrate scalable applications for utilities (and then for consumers)

·         Future-proof (translation: competition-proof) the system with regular incremental upgrades

·         Evolve to an integrated customer portal that delivers utility services and then consumer services such as video on demand

 

Quality of service as secret sauce. Dondero helped me understand the competitive advantage of being a full-scale service provider – that is, being the company that actually runs the broadband service. (As opposed to a company that simply sells gear and installation services that others use to provide broadband.) Current has invested a lot of money into network management tools for day-to-day control, operation and optimization. That allows them, among other things, to guarantee quality of service. Ultimately, it will allow them to wedge in challenging, high-bandwidth applications such as video on demand. As the network operator, they can prioritize operations to get those applications the quality of service they require.

Partners are key. Current is building some of its applications in house, but it realizes it must have powerful partnerships to sustain its lead. On the consumer side it is working with Earthlink. (One assumes Google will ultimately be a consumer partner as well.) On the utility side, it has formed a "Smart Grid Development Network" in concert with companies such as Comverge, Landis+Gyr and Sensus. Dondero reports that advanced metering, outage management, power quality monitoring and demand-side management are at the top of utilities' wish lists.

 

Don't forget the in-building market. While we're waiting the utility market to sort itself out, there's plenty of money to be made selling in-building solutions. For apartment buildings and office complexes, BPL is often the quickest, fastest way to add high-speed Internet that's available from any wall plug.

 

Europe is next. In many ways, Europe may have more BPL potential than North America. For one thing, most European governments have a greater appreciation for BPL's social and economic development value (and, therefore, a greater likelihood of friendly policies). What's more, the European infrastructure is more "dense," with many more customers connected to each transformer. That density greatly reduces the initial cost of deploying BPL. (It also reduces the data rate, but Dondero claims throughput is less important overseas than in North America.)

 

Current acquired a European company late last year and expects to be much more visible there going forward.

 

What's next?

Dondero is accurate when he says "utilities around the world are watching the TXU demonstration. Nobody else is doing it at this scale." Ironically, even Current's competitors need to hope for the success of the TXU project. Failure would set back the entire category, even if it did make a monkey out of Current.

   SGN article about the BPL market

   SGN news item about the TXU project

   Current Communications Web site

   Email Jesse with comments