PPL ending trial of 'broadband over power lines'

Internet access method it helped pioneer proved unprofitable.

By Sam Kennedy
Of The Morning Call

October 4, 2005

PPL Corp. is abandoning the futuristic technology that provides high-speed Internet access, or broadband, through electrical wires and power outlets.

The Allentown power company announced Monday it is terminating its ''broadband over power lines'' trial because the technology proved unprofitable. Its subsidiary, PPL Broadband, will cut Internet access to 300 residential customers in the Lehigh Valley at the end of the month, the company said.

The decision is a rejection of a potentially market-shifting technology by one of the companies that has pioneered its use.

The head of the Federal Communications Commission said in 2002 that broadband over power lines could compete with other sources of high-speed Internet access — the cable modem and the digital subscriber line, DSL.

The technology promised to bring high-speed Internet access to many computer users for the first time, particularly those in rural locations, and spur competition with cable and telephone companies, leading to cheaper prices and better service for all consumers.

Former FCC Chairman Michael Powell described broadband over power lines as ''within striking distance of becoming the third major broadband pipe into the home.''

That's exactly what seemed to be happening last year, as PPL progressed from technological to marketing trials. The company, which first offered its service in Whitehall Township and Emmaus, expanded to parts of Bethlehem, Upper Macungie Township and Hanover Township, Northampton County. It launched an advertising campaign, mailing postcards that offered high-speed Internet access for about $40.

One of the methods PPL has used allows customers to connect to the Internet anywhere in their homes by plugging a portable modem into a power outlet. The other works like the wireless hot spots common in airports, hotels and cafes: The Internet signal — sent from a transmitter attached to a medium-voltage power line outside — is carried to the computer on radio waves.

Customers, including homeowners and apartment dwellers, have given the services mostly good marks. For many, it was the only high-speed Internet access at their disposal; cable modem and DSL service are unavailable in some areas.

About half of Lehigh Valley Internet users rely on a dial-up connection, according to a survey by Scarborough Research.

But in the end, PPL decided broadband over power lines was not viable, company spokesman Jim Santanasto said. He gave two reasons.

First, PPL couldn't charge a high enough price in the face of stiff competition from cable and telephone companies. Second, its pool of potential customers — 1.3 million Pennsylvania electricity customers — was too small.

''The economies of scale wouldn't work,'' Santanasto said.

Other power companies have not yet come to the same conclusion. More than a dozen electric utilities nationwide are experimenting with the technology.

But PPL's experience in Emmaus serves as a cautionary tale.

When PPL first launched the technology in Emmaus, the borough was an untapped high-speed Internet market — virtually passed over by the cable and telephone companies. That opening, however, proved short-lived.

Today, Service Electric is stringing new fiber-optic and coaxial cable, which will provide high-speed Internet access throughout the borough, and Verizon Communications has launched its own ''fixed wireless'' broadband.

PPL said terminating its broadband over power lines trial will have no material financial impact on the company.

Only a handful of PPL employees worked for PPL Broadband, and they will continue to be employed by the company. Most of the work, from installations to customer service, was done by contractors.

PPL said it will give customers a $50 credit to ease the transition to a new Internet service provider.

sam.kennedy@mcall.com

610-820-6517