US utilities face challenges on BPL as regulators mull policy suggestions: study

While there are still questions about the regulatory treatment of broadband over power line (BPL) service at the state level, both US federal and state regulators are going out of their way to say they do not intend to stifle broadband deployment with restrictive regulations.

"We're all excited about BPL and we don't want to impede it," Laura Chappelle of the Michigan Public Service Commission said at the beginning of November. Similarly, the Federal Communications Commission (FCC), issuing its final rule on BPL service Oct 28, said its ruling "will promote the development of BPL systems by removing regulatory uncertainties for BPL operators and equipment manufacturers while ensuring that licensed radio services are protected from harmful interference."

Where the wires meet the home, however, there are challenges utilities face in convincing customers that BPL service is something they should be interested in, according to a new study by Platts' research group (Broadband over Power Lines: The Voice of the Residential Customer).

Based on a survey of 1,000 residents in the US and Canada, the study found customers eager for BPL service only if it is offered below the price of other broadband alternatives. But given a price of $29.95/month, a price that is below the typical charge from cable or digital subscriber line (DSL) broadband providers, the saving was apparently not enough: Only 9% of the respondents were very interested in BPL service.

 

"The utilities interested in BPL will have to get the message out about what's distinctive about this service." — Platts' analytics group research director, Michael Reid

The study shows that customers are also skeptical about their utility being able to offer broadband service at a competitive price. Customers gave their utilities moderate to low scores on attributes such as service, technical support and reliability, meaning utilities will need to strengthen customer confidence in their ability to deliver BPL efficiently, the survey found.

"There's a challenge to overcome. The utilities interested in BPL will have to get the message out about what's distinctive about this service," compared with other broadband services, said Michael Reid, research director at Platts' analytics group, which is based in Boulder, Colorado. BPL service allows utilities to provide Internet access over their power lines, enabling every outlet at a customer site to become an Internet portal or enabling broadband "hot spots" in a community through wireless BPL technology, often at speeds higher than cable or DSL service.

So while price is an important factor in winning customers, utilities should "highlight the other advantages of BPL," including the convenience and user-friendliness for customers, the download and upload speeds and the increased reliability that can result from having a "smart" power grid, Reid said.

Almost 75% of the respondents said they were either somewhat satisfied or very satisfied with their Internet service provider. Price was the number one reason people have switched providers and speed was second. Forty-seven percent of the respondents have switched providers at least once, according to the survey figures.

So in the broadband market, "it's not going to be easy for utilities to walk in and claim market share" simply by offering BPL service, Reid said. "They'll have to earn it by proving they can be as reliable as other providers at a lower cost."

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Created: Nov 22, 2004