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Using Electricity Infrastructure to Roll Out Broadband

The FCC proposal in its recently launched National Broadband Plan to share infrastructure is a very smart initiative indeed.

Sharing infrastructure makes a lot of sense. Without it the business model for universal high-speed broadband will not stack up—the costs of infrastructure is one of the most critical elements in any national broadband plan. Australia is following an identical course with the rollout of their National Broadband Network. In all six current rollout sites utilities are either already involved or are negotiating to become involved.

There is certainly no uniform approach to smart grids among utilities, but at the same time many energy companies are fully aware of their need for much better communications requirements in relation to their network efficiency. They also acknowledge the need for the management of renewable energy and electric vehicles within their network and the increased demand for home automation networks (HANs). So a significant number of electricity utilities understand the strategic benefits associated with a combined smart grid/broadband rollout.

The fact that these two developments—broadband and smart grid—are happening at the same time is certainly viewed by the visionaries within both industries as a unique source of synergy.

The more strategically oriented utilities don’t consider this to be just an opportunity to make money by leasing the use of their poles. They understand the negotiating power they have to secure the best possible communications deal for their smart grid requirements.

Even without a cooperative infrastructure strategy, ensuring that broadband companies will use utility poles to install the street fibre should be high on the strategic agendas of the utilities. This would at least give them a seat at the table in the discussions relating to the NBP infrastructure, and it would also allow them, at least potentially, to negotiate a reasonable (that is, non-wholesale tariff) deal with the broadband companies.

Skilled and readily available workforce

Utilities are far more skilled in the actual rollout of infrastructure—most telcos outsourced this kind of work several decades ago. Utilities have a readily available and suitably skilled workforce and they could certainly provide the telcos with advice, skills and resources in this respect.

Combined ONT/smart meter

The ultimate prize of this level of cooperation and synergy would be a combined smart electricity meter and the ONT (Optical Network Terminator). While this is an extremely ambitious goal it is, at the same time, perhaps the greatest opportunity to make this trans-sector operation work.

Cooperation between these two industry sectors could see the broadband infrastructure provider locating the ONT close to the meter. Through the meter connection the electricity company would be able to provide the broadband provider with a power supply and thus enable an always-on supply that could not be turned off (legally) by the homeowner. Such an arrangement is absolutely critical for the delivery of reliable and secure essential services, particularly in the context of future trans-sector uses of the ONT for services such as e-health, public safety, etc.

There is also the potential to leverage the in-home wiring to reticulate high-speed broadband into the house so that retail services can be accessed from any powerpoint within the residence.

If cooperation cannot be achieved the utilities should still try to ensure that the ONT is located adjacent to the meter box. Anywhere else and it will be too costly for the energy companies to later use the broadband networks for their smart grid requirements, as the installation costs afterwards would be too high.

Even if, despite positive cooperation, an ambitious ONT/meter combination cannot in the end be achieved, in the process of trying to do so the industry will set the bar, lowering it to arrive at a still beneficial outcome. Nevertheless, the minimum result should be that the ONT is powered on the supply side of a customer’s mains switch—this would at least leave the door open for future synergies.

The above is a continuing major problem for the electricity and broadband companies as they have not yet worked out a good solution on how to do this. It is both a wiring rules issue and an electricity revenue issue. The communications handoff to the utility should be at layer 3 so they can most flexibly manage the networking aspects.

In Australia indications are that the ONT/meter combination can be done without impacting each other’s programs and responsibilities, if a standard interface can be defined and manufacturers can build to that standard.

Smart Grid Australia—a sister organisation of Gridwise in the USA—is working on joint industry issues. There certainly still are other problems (e.g. space in the meter box, physical housing, the HAN chip is currently in the comms module etc., different lifetimes of equipment, and no doubt many more serious challenges) but there is also a feeling of: ‘Yes, we can’.


There has been a lot of discussion about the comms requirements for the utilities. If it were to be limited simply to meter-reading the good old powerline communication system (invented in 1897) would be sufficient; however, if you start looking at a transformation of the utilities industry then we can probably expect a range of new applications that haven’t even been thought of so far. Some people are even talking about a totally new element of the economy (the so-called green economy) and smart grids could become key infrastructure in such a development—the major conduit for a range of new economic activities in this sector. Similar to the digital economy, which was fueled by broadband, economists have already made extremely positive job creation calculations for the green economy.

Energy and environmental applications are in great demand and the fact that companies like Google and Microsoft are very active in this market is an indication that more can be expected. The utilities could become facilitators in this market and through the retail companies they could also, either directly or indirectly, become players in the emerging Apps market.

Keeping the options open and not being locked out or ending up in a dead-end street (e.g., with not so mart meters) should be a very important consideration. Furthermore, fibre-based broadband networks are not just about capacity—they are also about security, reliability and low ongoing maintenance costs.

Broadband would add the benefits of an unlimited ‘pipe’ for utility and future energy management purposes.

It would not make sense for utilities to roll out their own fibre networks for last-mile smart grid connections, whereas piggybacking on a broadband rollout certainly would make sense.

Social and economic problems

Both smart grid/meters and national broadband infrastructure developments suffer from a public relations problem, especially in relation to the costs of access to these new technologies by low income families, who perhaps might not be able to benefit from this massive national investment because they cannot afford to buy the new services and the new equipment needed for it.

The costs of access will only increase if there were to be separate infrastructures for broadband and smart grids. As well as this, the business case for each one of these infrastructure projects, on its own, is certainly not yet proven. Combined, however, it begins to make business sense.

So if the industries were to seize the opportunity and force an alignment of the timing of these infrastructure rollouts (for instance, through NBP and stimulus incentives) they might actually both be rolled out according to an economically viable business model and within a reasonable timeframe.

At the same time, not combining forces could hamper both industries so substantially that a lack of cooperation might actually constitute a real threat to future business opportunities in the emerging green and digital economies.

In Australia the cost to the country of both projects could be conservatively cut by between US$1.5 and $2 billion. These are mainly savings from a duplicated comms network and double installation, and don’t include the opportunity benefits for new business activities that will flow from this. From a business perspective these are maybe not large enough to worry about in the overall scheme of things, but these savings and these opportunities are strategically, economically, socially and politically attractive and therefore warrant a national effort.

By Paul Budde, Managing Director of Paul Budde Communication

Paul is also a contributor of the Paul Budde Communication blog located here.

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