Broadband over Power Lines (BPL) and Utilities Were Born to Be Together....So Why Aren't They?

Few people outside the Telecom world have any idea what broadband over power line (BPL) communication technology is. Since I'm not going to write an entire thesis here, I'll keep it simple (better explanation is available here how-stuff-works BPL page) BPL involves using existing power lines to carry data, in much the same way (conceptually) as dsl uses existing copper phone lines.

The primary reason though why so few people are aware of BPL, let alone know anything about the business case (or lack thereof) for its development is that simply for residential/business broadband service, BPL really lacks the economic advantage to give it the edge over dsl and cable. And that is without even acknowledging the ever-increasing popularity of wireless broadband access such as WiFi, ev-do/hsdpa/other cellular, and eventually, WiMAX. At least that has been the case up until the past year or so. This past summer, Google, Goldman Sachs, and Hearst Media poured $100 million into BPL play Current Communications, a move some analysts, in my opinion, never saw comming.

I'm not going to focus here on BPL however for residental/commercal service, as I'll leave that for another post. In my opinion/analysis the real value in BPL technology exists in the realm of the many benefits it stands to deliver for electric utilities in various applications like SCADA (Supervisory Control & Data Acquisition) for load balancing, real-time distribution/transmission network monitoring, real-time demand management, outage monitoring, and the like. Basically, the utilities already own/have access to the wires, and the capex needed to implement the software and minor system upgrades necessary for BPL should definetly be offset by decreased truck-rolls and efficiency improvements, which in the end, boil down to, you guessed it, increased profitibality!

(Side Note: Many utilities margins' are capped by state regulations, however if they were implementing a system which would provide better QoS so-to-speak, its likely these margin limits would be increased accordingly.)

Why then have the big operators shyed away from adopting such a potentially beneficial technology? Well for anyone who's the least famaliar with the Utility industry well knows, Utilities are about as fast-moving as blob of molasses at the north pole. A bit of complacency here? You bet. And what eventually happens to complacent businesses, when, inevitably the market obeys the rules of survival of the fittest (and that darwin guy never even stood on the floor of the NYSE!)? Companies that are complacent, that for whatever set of reasons become stagnant will eventually loose out to faster-moving competitors.

Look at the airlines for example. United is coming out of bankruptcy for the what, second time in three years? The domestic carriers are getting slaughtered by faster moving, more nimble competitors with better business plans such as Southwest, who embrace innovation, who are constantly striving for operational and financial performance.

I'm not saying that the Utilities are in any grave danger of getting burned anytime in the near future. I'm merely pointing out the necessity for businesses, in all industries, to embrace innovation and change as a fundamental driver of increased profitability. Seldom, if ever in history has a firm thrived in the long-term without doing so and there is no evidence to suggest that this trend is likely to change.

Now more than ever it is absolutely imperitive for a company to be ever more nimble than its competitors. Those that aren't consistently and consciously trying to do everything in their power to improve efficiency and increase sales, while simultaneously reducing costs (among other actions/subactions obviously) are sheep, and sheep, as we all know, get slaughtered.