Competition: Power Play

Once Lynn Huffman lifted his new modem out of the box, it took less than a minute to get online at the computer he keeps in the den. And it took just a few minutes more for Huffman, a retired great-grandpa who recently discovered e-mail, to decide that his new high-speed Internet service was fast, simple to set up and, best of all, cheap. At $26.95 a month, it beats the $42.95 a month he would have had to pay to get broadband from his cable company.

But here's the real shocker: Huffman taps into his new fast pipe through a wall socket--any old socket in the house will do. "Now if I could just figure out a way to get rid of all these pop-up ads," he says, settling down to clean the spam out of his In box.

The folks who freed Huffman from his old dial-up connection--the one that hogged his phone line while he was online to check sports scores or read the news--work for the publicly owned utility of the city of Manassas, Va. They are the people who make sure that the 15,000 homes and businesses in this quiet suburb 30 miles southwest of Washington have electricity, water and sewer service. They were never interested in getting into the broadband business--in fact, officials are keen to franchise the operation to an outside investor--but that's exactly what they did when they deployed broadband over power lines, or BPL, on the Manassas grid earlier this year and made accessing big bandwidth as easy as plugging in a toaster.

The concept of transmitting data across a power grid isn't new, but until recently the technology could handle only tiny streams--enough to monitor a few substations but not enough to support high-speed surfing by multiple users. Now new modems and other advances are prompting dozens of utilities around the country to start testing BPL in earnest. Manassas was first out of the gate with Zplug, its commercial service, but others aren't far behind. Cinergy, a utility based in Cincinnati, Ohio, started enrolling BPL customers in late April; the service should be available to 50,000 Ohio homes by year end. Progress Energy has a commercial trial under way in North Carolina with Internet service provider EarthLink as its partner. Idacomm, a subsidiary of Idacorp (which also owns Idaho Power), hopes to be live in Boise and a few other markets by next spring. "The BPL market," Idacomm president and CEO Chris Britton says, "is going to be hot."

These days most broadband subscribers use either a modem from their cable company or a digital subscriber line (DSL) from their phone company. The first wave of BPL roll-outs doesn't pose much of a threat to the Comcasts and Verizons of the industry, which boast millions of customers and have been selling high-speed access since the late '90s. Some 22 million U.S. households already subscribe to a broadband service, according to Forrester Research analyst Jed Kolko, making it one of the biggest hits of the digital age.

But a huge chunk of the market is still up for grabs: namely, the 40 million-plus homes using dial-up to connect. For some of these users, a 56K modem is plenty. But budding BPL providers are betting that a significant number of consumers really do want broadband service but are simply holding out for a better offer.