[EIDXA] NYT--F.C.C. Clears Internet Access by Power Lines

[Jim Spencer]

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      October 15, 2004
      F.C.C. Clears Internet Access by Power Lines
      By STEPHEN LABATON

     WASHINGTON, Oct. 14 - Clearing the way for homes and businesses to
receive high-speed Internet services through their electrical outlets, the
Federal Communications Commission adopted rules on Thursday that would
enable the utility companies to offer an alternative to the broadband
communications services now provided by cable and phone companies.

      As a further spur to the rollout of broadband Internet services, the
F.C.C. also ruled that the regional Bell companies do not have to give
competitors access to fiber optic lines that reach into consumers' home - a
decision that prompted two of the Bells, SBC Communications and BellSouth,
to announce that they would move quickly to build new fiber optic networks
in residential neighborhoods. The ruling was criticized by rivals of the
Bells and consumer groups, which called it anticompetitive and said it would
lead to higher prices.

      For the electric companies' part, broadband Internet service is more
than a year away from becoming widely available. But the agency's ruling is
expected to increase significantly the level of investment and interest by
the utilities, which had been stymied in previous attempts to offer new
services over power lines. They reach more American homes than either
telephone lines or television cables.

      So far, the technology has been limited mainly to experiments around
the country, although a commercial version recently became available in some
communities near Cincinnati.

      "Today is a banner day, and I think years from now we will look back
and see it as an historical day for us,'' said Michael K. Powell, the F.C.C.
chairman. "This is groundbreaking stuff.''

      Known as broadband over power lines, or B.P.L., the technology uses a
special modem that plugs into electrical outlets. So far, it has been
offered at speeds of 1 to 3 megabits a second, which is comparable to
broadband service over cable modems or conventional phone lines - though not
as fast as the 5 megabits a second achievable through the residential fiber
optic lines just now being introduced by the Bell companies.

      An obstacle to the use of power lines to carry communications traffic
has been the electromagnetic interference the technology can cause to
various types of radio signals. The commission ruled that it would tolerate
a small amount of radio interference in certain areas by the new service in
exchange for making the broadband market more competitive.

      Amateur radio operators and public safety officials had asked the
commission to move slowly in the area because of the interference created by
the service. The agency responded by setting up a system to monitor
interference and restricting the service in areas where it could jeopardize
public safety, like areas around airports and near Coast Guard stations.

      Officials noted that there have already been field tests in 18 states
of the B.P.L. technology. One company, Current Communications, has recently
begun to offer broadband service near Cincinnati in a joint venture with
Cinergy, the Midwest power and energy company. The service is priced at
$29.95 to $49.95 a month, depending on the speed.

      While some regulatory and technical issues remain, the technology
offers enormous promise because the power grid is ubiquitous. The costs to
the industry to offer the new service would be comparatively small, and the
possible returns on those investments could be high. If the utility
companies do begin to offer the broadband service more widely, they would
also be likely to enter the telephone business by offering phone services
over the Internet, just as phone and cable companies have begun to do.

      Mr. Powell, the F.C.C. chairman, said that the new technology would
not only offer greater competition in the broadband market, but would also
allow consumers to easily create networks in their home through electrical
outlets. And adding communications abilities to power lines would permit
electric companies to better manage the power grid, he said.

      Mr. Powell and three other commissioners voted to approve the rules.
The fifth commissioner, Michael J. Copps, dissented in part. He noted that
the agency had pushed aside a number of vital issues for another day,
including questions of whether utility companies would have to contribute to
the telephone industry's universal service fund and provide access to people
with disabilities, and whether measures would be put in place to ensure
market competition.

      He also said that regulators would need to determine whether it would
be fair for electricity customers to pay higher bills "to subsidize an
electric company's foray into broadband.''

      "We just have to get to the big picture and confront the challenges I
have mentioned if B.P.L. is going to have a shot at realizing its full
potential,'' Mr. Copps said.

      But industry executives praised the decision.

      "This is one of the defining moments for the widespread adoption of
broadband by Americans,'' said William Berkman, chairman of Current
Communications, a private company in Germantown, Md., which hopes to have in
place a B.P.L. Internet network passing by 50,000 homes by the end of the
year. The future also grew brighter for the regional Bell companies with the
F.C.C.'s decision to grant BellSouth's request to exempt the Bells from any
requirement that they lease their new fiber lines to the home to rivals at
low costs.

      Mr. Powell said that the exemption would "restore the marketplace
incentives of carriers to invest in new networks.''

      Prompted by the decision, the Bells said they would move more rapidly
to build fiber networks to homes. So far, the nation's biggest Bell, Verizon
Communications, has been the most active in building residential fiber
networks. But on Thursday, SBC said it now planned to provide 18 million
households higher speed Internet services in two to three years, rather than
five years as previously announced.

      "The shovel is in the ground, and we are ready to go," said SBC's
chairman and chief executive, Edward E. Whitacre Jr.

      But rivals, consumer groups and Mr. Copps criticized the decision as
anticompetitive.

      The F.C.C. majority seems unable to restrain its preference for
monopoly over America's consumers, business users, and investment, said Len
Cali, a vice president for AT&T.

      Mark Cooper, director of research at the Consumer Federation of
America, said the decision would tighten the already powerful grip that the
telephone and cable companies have on broadband services.

      "This stranglehold will stifle innovation as these duopolies
discriminate against unaffiliated applications and services that in the past
have driven the growth of the Internet and the boom in information
technology,'' Mr. Cooper said.



      Copyright 2004 The New York Times Company