By Ken Brown
The Wall Street Journal
Posted March 7 2004

In an age when consumers can choose from 500 TV channels and nearly a dozen phone companies, most who want high-speed Internet access have at best two choices: the local phone company or their cable operator.

Now, another choice may be emerging. Giving new meaning to the phrase "plug and play," a big Midwestern utility has joined with a start-up to offer high-speed Internet access over power lines.

The service promises lower prices and more convenience: Consumers can tap into the Internet anywhere they have an electrical outlet in their house.

The new service, announced Tuesday, comes from Cinergy Corp., a Cincinnati-based utility, and Current Communications, a private company controlled by the Berkman family, which made millions on wireless ventures and counts John Malone's Liberty Media Corp. as an investor. All told, the three are putting $70 million into the venture.

The idea of using power lines to send Internet signals to homes has been around for years.

It is based on the fact that electricity travels at a far lower frequency than the Internet signal, so the two generally don't interfere.

But earlier efforts were disappointments, mostly due to the cost of the equipment needed and technical issues.

Two years ago, a pivotal breakthrough occurred when the industry improved the speed and lowered the price of the modem that plugs into wall sockets to bring the Internet into the home, thanks to advances in semiconductor chips.

The new modem is based on an industry standard called HomePlug, and costs about $30 wholesale. Cinergy will be handing out the modems to customers free of charge.

"The modem being there is what drove us to launch this business," said William Berkman, co-founder of Current Communications.

Another technical issue has been how to get the Internet signal through the transformers that step the power down from medium voltage, which runs along the street, to low voltage, which goes into homes.

Current Communications said it has solved that problem with a "bridge" that skips the transformer, allowing the signal to go through uninterrupted. It won't say what the bridge costs.

Top officials at the Federal Communications Commission support such power-line services because they could expand the availability of high-speed, or broadband, Internet access and give consumers more choice of providers, perhaps lowering prices. Last month the agency issued proposed rules for broadband over power lines.

"Is the technology ready for prime time? The answer is yes," said Ed Thomas, the FCC's chief engineer. "The second part of the question is, is the business ready for prime time? The answer is you have to wait and see."

Continued @ Sun-Sentinel