Open Access on States’ Regulatory Radar for BPL

Mich. PSC Comr. Laura Chappelle, who heads the task force, and Tex. PUC Comr. Julie Parsley wanted to know why open access requirements would “kill” BPL, as industry officials have claimed. Financial markets would be “reluctant” to invest without exclusivity on the wire, answered Richard Keck of the Power Line Communications Assn. Mandating open access for BPL service providers could trigger bandwidth problems, other officials said.

Bruce Franca, deputy chief of the FCC’s Office of Engineering & Technology, asked state regulators to keep in mind when considering open access requirements that BPL had limited spectrum to use. He said the FCC’s recent order had excluded certain frequencies and required to operators to notch, or shut down, operations when interference with amateur radio was shown. That will limit BPL systems, Franca said, saying advent of a 3rd provider into the home would mean better competition “than we have today.”

Some commissioners didn’t seem to buy the argument that BPL should be treated on par with cable and DSL on issues like open access. Comr. Parsely said cable modem and DSL are funded entirely by private investment, whereas utilities enjoy a guaranteed rate of return. State regulators have an obligation to protect the public interest, she added. Current Communications Vp Jay Birnbaum said access requirements weren’t needed because there’s enough competition in the market. But if state commissions did regulate access, he said, every broadband provider -- including cable and DSL -- should be included.

Birnbaum compared BPL operations to DSL, saying only investors’ capital was going into the broadband business. “We are not taking revenues from electric ratepayers,” Birnbaum said. He added that in Cincinnati, where Current is teaming up with Cynergy to provide commercial BPL service, “we are paying fully allocated costs.” To the extent that BPL operators use utilities’ poles and other infrastructure, “we are paying fully allocated costs,” he said: “In that sense, we are like the other 2 businesses [cable and DSL] because our success or failure is premised upon investor capital, not regulated utility capital.”

Urging regulators to lay off open access and see how the technology works, Precursor Group CEO Scott Cleland said regulators shouldn’t choose winners and losers. They should try not to predetermine the outcome, he added. BPL has reached a tipping point on technology, competition and regulation, Cleland said. Regulators should be excited about a 3rd broadband entrant the size of the nation’s electric utilities, he said, and the fact that utilities had only to tweak their existing networks to offer BPL. He said the “biggest question mark that investors have is not the technology, but potentially investment-hostile state cost allocation regulation.” Investors, Cleland said, know that cost allocation regulation could be a backdoor regulatory tool to economically regulate BPL. Widespread BPL deployment will take time even with a procompetitive state policy approach, he added.

Franca said the FCC had focused on technical issues to provide some regulatory certainty to the industry. “The main focus of our efforts was interference questions. If there are things that we need to go back to, we can go back,” he added. He said Comr. Copps had wanted the Commission to expand its proceedings to look into issues such as universal service and 911, but the majority of the commissioners didn’t agree. FERC attorney David Tobenkin said the agency hasn’t started any proceeding on BPL, but Chmn. Pat Wood didn’t want the technology to be squashed by overregulation. Markets should help govern the technology and regulations should be kept to a minimum, he said. But he added that FERC couldn’t dictate to the states how to go about their business: “We think they [state regulators] are quite diligent.” FERC could come into the regulatory picture if utilities use transmission lines for BPL, he said. The concern is that placing BPL equipment on high power lines could increase the danger of outages, he added.

Industry officials said other possible issues for state regulators were pole attachments, cost allocation and provision of service to rural areas. One area of concern was that municipalities could look at BPL as a revenue opportunity through rights-of-way fees and requirements. Some local regulators have talked about bandwidth set-aside, one official said. One industry executive told us he got the impression from the meeting that a lot of regulators still don’t fully understand BPL as a business or a technology. Many had the “misconception that it’s an open technology, that all BPL technology is all the same, that it’s utilities and utility money that’s behind BPL. But it’s not,” the official said. He pointed out that private companies such as Current, Ambient, Amperion and Mainnet used private money and not utility money to develop the technology and put it in the market. “As commissioners understand that we are more like cable and DSL than a regulated utility they would understand the nuances of these issues.”