Powerline: The future of broadband?

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But Media Fusion's Stewart says Nortel and others made the early mistake of trying to replicate telephone systems, which use radio waves to transmit information through copper wires.

Stewart's system instead manipulates the magnetic field created around any moving stream of electrons, essentially coding an analog signal on top of the field. The information is then--in theory--carried around the entire power grid at the speed of light, accessible anywhere on the grid.

Media Fusion's system will use a set of "nitelight" modem-like devices that plug into household electricity outlets. Outfitted with a jack for phone lines and cable TV lines, these devices take an analog signal from the power grid, decode it, and send it to a television, computer, or telephone.

Under this system, the power grid itself could substitute almost completely for the traditional Internet's web of phone lines and fiber optic cables, Stewart says. To communicate with users off the grid, the system would also have to connect to the ordinary telephone network, he adds.

The practical limiting factor of any computer's online connection would be the ability of its processor to spit out information--not a scarcity of bandwidth, Stewart says.

"It's not really a congestion issue," he adds. "There are plenty of electrons to piggyback on."

The company has spent much of the last two years trying to convince telephone companies, utilities, academics, and political figures that the technology works. Bringing financial partners on board has been a battle, says their investment banker, MG Securities' Greg Moore.

Stewart himself--who Moore calls "a 'Good Will Hunting' kind of figure"--has done contracting work for Microsoft, the U.S. Navy, and other defense department projects, but doesn't have "50 published papers and prizes" to assure backers of his credentials, Moore says.

But with funding for their first steps now seemingly assured, and the promise of government backing to fill in the gaps, Blair and Stewart now are optimistic that early trials will prove their credibility.

For their first live tests, scheduled within the next three months, the company will transmit seven simultaneous streams of high-definition TV signals over power lines, the company says. This is intended to prove the electric grid's bandwidth capabilities, rather than illustrate consumer applications or security issues, according to Stewart.

Later in the year, Media Fusion will join with at least one utility in trials of its prototype "nitelight" device, and expects to go into commercial production of the devices next year, Blair said. The entire system will likely cost between $70 and $150, the company adds, though final production costs and market demand will affect these prices.

Drumming up support
Meanwhile, Media Fusion has spent the last year looking for political support in Washington, hoping to ward off any future regulation.

Not everyone has been receptive. The company has talked several times to representatives at the Federal Communications Commission, but was not invited back for a recent seminar on powerline communications.

Traditional telecommunications companies also declined to invest, even though the telcos' own scientists said the idea was feasible, Moore says.

But the networking is paying off. Former House speaker-elect Bob Livingston recently joined the board of directors, and is helping the company pursue overseas investors.

Inside Congress, Media Fusion has won the support of several influential telecom legislators, including senate communications subcommittee chair Conrad Burns (R-Montana) and House telecommunications subcommittee chair Billy Tauzin (R-Louisiana). These lawmakers say they will seek government funding later this year, in the form of defense department or other contracts, if the firm doesn't secure enough private funding.

"There is major potential to change the telecommunications industry here," says Leo Giacometto, Burns' chief of staff. "If this can get done without taxpayer money, we would prefer it. But the possibilities for saving taxpayer dollars down the road are tremendous."