March 6, 2000 2:30 PM PST

Internet access over power lines nears reality

Your average electrical socket could prove to be another competitor in the high-speed Net access sweepstakes.

Following years of skepticism about the technology's future, German energy conglomerate Veba, working with U.S. home networking firm Enikia, says it is close to launching a service offering high-speed Internet access over power lines.

Under the auspices of a new communications company dubbed Oneline AG, the service is scheduled to go into European market trials this summer, with a full commercial release by the end of the year. The company also hopes to launch a trial project in the United States this summer, says Enikia vice president David Healey, who until recently managed Veba's Oneline project.

In the one-step-forward, two-steps-back world of powerline communications research, this is the farthest any company yet has come. Oneline and Enikia announced their joint deal late last month, agreeing to create a joint system allowing a user to plug a computer into any power outlet and be connected to the Net over the power lines. Bringing their system to the commercial market would mark a validation that powerlines backers have sought for years.

If the service works as Oneline says, and can be offered at a price that competes with telephone and cable company services, the world's telecommunications giants could find themselves with a powerful new set of competitors in utility companies. That's the argument Oneline and other backers of the technology are making to power companies, as well as the telecommunications giants, around the world.

"Most utilities don't understand that they're sitting on a gold mine," said Phil Hunt, a powerline communications expert and senior manager at Cisco. "They have a great business. We're trying to show them that."

The promise of powerline communications is enough to draw the interest of some of the biggest firms in the world. Electricity wires are the most common form of home connections, more prevalent than cable TV lines or even telephones. If these could be used efficiently as an Internet and telephone connection, a vast new communications infrastructure--and the financial valuation that now comes with that--could be born virtually overnight.

The idea of sending information over power lines isn't new. Utility workers have long had rudimentary radios they could clip to the wires and use to communicate with each other.

Turning that idea into a stable high-speed, or broadband, system of data transmission has proven difficult. Power networks around the world were built for efficient distribution of electricity, and contain hurdles such as transformers and network interference from hair dryers and microwave ovens.

The experience of Nortel, for years one of the biggest backers of powerline technology, serves as a warning. In 1997, the equipment maker launched a high-profile joint venture, dubbed Nor.Web, along with British energy company United Utilities.

That venture ran into trouble. A trial project in Manchester, England, found that the transmissions worked. But there was a snag. Nearby lampposts were acting as antennae, picking up users' downloads and effectively rebroadcasting the data as radio waves.

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After several years of research and development, the venture finally closed its doors late last year. None of the partners involved are now pursing a powerline strategy, said Nortel spokeswoman Michelle Murray.

"It was technologically feasible, but the economics never proved (itself)," said Murray.

Oneline and Enikia think they can do better, however.

Oneline and its predecessor incarnations have been running tests of the technology in Germany since early 1999. Those have been working well, although download speeds have averaged only a little faster than the speediest dial-up modems, Healey said.

That's largely due to the limitations of the cable modem equipment used for those early tests, Healey added. With hardware designed specifically for the powerline network, those speeds could be boosted by tens or hundreds of times, powerline researchers say.

Even if the system does work in Europe, it could prove to be a difficult transition for it to work in the United States, where the electrical system presents more hurdles. A trial project in the United States would substantially solidify the company's market position, Healey said.

"We'd like to get a smaller trial off the ground in the States," Healey said. "It should be simple to demonstrate, so people understand this is a viable technology."

The company is now talking to telecommunications providers in the United States looking for partners, and at least one of the large long-distance companies has expressed an interest, Healey added.

Also working in the United States is dark horse Media Fusion, a Texas start-up that says it has done the basic science on a radically new kind of power line communications technology allowing transmissions on the scale of 2.5 gigabits per second, or about a thousand times faster than a cable modem.

The company was recently awarded a patent on its technology, and says it is looking to demonstrate the transmission of high-definition television signals (HDTV) over the electrical network by early summer along with Dallas, Texas-based TV conglomerate Belo. Belo senior vice president Skip Cass said today that his company is in talks with Media Fusion, but that plans for the test have not been solidified.

The industry will be watching the results of the tests. The company has not yet publicly demonstrated its technology, leading some in the industry to view its claims with considerable skepticism.

 

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