Manassas Pulls Plug on "Broadband Over Powerline" Service

The Manassas City Council unanimously voted to discontinue offering its municipal broadband over Powerline access service. The Manassas service had been touted in the past as an example of how municipally-provided broadband service could succeed, as well as a proof of concept of the idea of using power lines as the access mechanism.

The shutfown affects about 520 residents and businesses who currently subscribe to the service, which will end in three months.

The council cited three reasons for the decision. First, customer penetration had been declining. Also, the service was costing more than it took in as revenue, and a determination that meter reading services do not require broadband access.

Observers note that the business case never proved as robust as expected. "It's costing a little more to maintain the system than we projected in the budget," Manassas Director of Utilities Michael Moon said. "The original projections were that the customer base would be double this."

The city has been running the service since the private operator, COMtek, found it also could not make a profit on the system.

In January 2009, there were 637 residential and 51 commercial BPL subscribers in Manassas. In February 2010, those numbers had shrunk to 457 residential and 50 commercial subscribers.

 The Utilities Commission said that the total revenue brought in by BPL for fiscal year 2010 was almost $186,000, but the expense of keeping up the City-owned system was costing the ratepayers a little more than $351,000, resulting in a net loss of almost $166,000.

"In October 2003, the Manassas City Council was told that it could expect as much as $4.5 million in revenue from awarding a 10-year BPL franchise," said American Radio Relay League CEO David Sumner. "Instead, six months later, BPL had turned into a money pit for the City of Manassas. Anyone thinking of investing in BPL would do well to learn from the Manassas experience."

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DirecTV Adds Broadband Over Powerline

DirecTV will wholesale broadband over powerline broadband access services from Current Group no later than the beginning of 2008. The move gives DirecTV the ability to create a triple play bundle of voice, video and high-speed data access in the Dallas/Fort Worth area, reaching 1.8 million homes and businesses over the next several years.

The move shows the necessity of providing a triple play offering in the mass market, whether one approaches that market from the legacy voice or legacy entertainment video business. Both DirecTV and EchoStar have been weighing their terrestrial options for some time, though both have marketing deals with the leading incumbent telephone companies as well.

DirecTV might have additional concern about those relationships since at&t bought BellSouth, which had been a DirecTV partner. It isn't clear yet whether EchoStar or DirecTV will continue to be at&t's partner in the future, but EchoStar's longer history with at&t (formerly SBC) should carry weight.

Interesting bit of trivia: The just-launched Hughes Network Systems Spaceway satellite was originally supposed to be the third bird in the fleet of IP-enabled spot beam satellites. But when DirecTV was sold off to News Corp. by the holding company that still owns HNS, the first two birds went to DirecTV.

Perhaps sadly, those two birds are used for conventional TV broadcasting rather than the mesh networking applications the satellites originally were designed to support. Linear TV, including the high-definition sort, obviously is the foundation for businesses consumers consider important.

For some of us, though, broadband Internet access is the most important application, if one could only choose a single service remain available (and that includes landline voice, mobile phone, television and fax). The spot beam and on-board router capabilities of the first two of three "Spaceway" birds wound up in the dustbin.

I don't know that the owners of those two birds would have made more money, or garnered more strategic advantage, if all three Spaceway satellites could have been used for their original intended purpose. I will say that given a choice between devoting scarce spectrum to television, when it can be used for communications (including IP and Web applications), seems like a suboptimal choice.

That said, there's little question but that DirecTV has used the capacity provided by those two former "Spaceway" satellites to shore up its competitive position in the high-definition TV area, compared to its cable competitors. "Highest and best use," I believe property assessors call it.