IBM and broadband-over-powerline company International Broadband Electric Communications have brought broadband service to 20,000 of the 340,000 rural American homes they hope to have wired to the Internet by 2010 – and smart grid trials are part of the project.

Broadband over powerline, or power line networking, is a means of bringing Internet connections to homes over existing electricity transmission and distribution lines. While more popular in Europe, it has played a minor role in U.S. utilities' push to bring smart meters and other "smart grid" functions to their customers so far (see Will Smart Grid See a Push for Power-Line Networking? and Smart Meter Installations Grow Nearly Fivefold).

But Huntsville, Ala.-based IBEC is now doing smart grid trials with three of the seven rural electric cooperatives it has signed up for broadband over powerline (BPL) services.

The Washington Island (Wisconsin) Electric Cooperative now has 25 homes hooked up to smart meters through BPL in a pilot project intended to eventually include the 1,100 homes the utility serves, he said. The project also includes voltage and amperage monitoring and load management for the utility, IBEC CEO Scott Lee said.

Two other utilities – one in Alabama and one in Virginia with a collective 72,000 homes served – are hooking up older, one-way communicating meters via substations to bring their data back to the utilities, he said (see Tendril Moves to Link Up Old-School Meters).

Those aren't as big as other BPL smart grid projects, such as the 27 million homes with smart meters that Echelon Corp. hooked up for Italian utility Enel, or the 58,000-smart meter project Echelon is undertaking in Ohio.

But when it comes to the roughly 18 million rural homes and businesses that are served by America's 870 electric cooperatives, BPL may be the best way to deliver both broadband and smart grid applications, Lee said.

And that, combined with some federal incentives, has caught the attention of IBM, said Ray Blair, IBM's head of advanced networking.

Utilities in more densely populated urban areas that tried to sell broadband over powerline services in the past found their markets saturated by existing suppliers, Blair said. But many rural areas still lack high-speed Internet service, he said.

That means "rural cooperatives have a business model that works" to sell broadband to customers, he said – "and if you've got the network in place, you can read meters, you can do fault detection, you can do demand management – all the things the major utilities want to do, but have to fork out a ton of money for the network that supports it."

Of course, IBEC and IBM – which in November inked a $9.6 million agreement to work on the rural BPL project – have had the help of the federal government. IBEC has received $68.4 million in loans from the U.S. Department of Agriculture's Rural Development Program to bring BPL to 350,000 homes by 2010 with IBM's help, Lee said.

So far the two companies have contracts with seven electrical cooperatives serving about 200,000 homes. IBEC owns and operates the networks, and IBM provides its project management and BPL technical expertise, Blair said.

But he thinks that a $2.5 billion chunk of the $7.2 billion in funding to promote high-speed Internet contained in the stimulus bill signed by President Barack Obama on Tuesday could be a big boost to the business (see Obama Signs Stimulus Package).

Why? The $2.5 billion is to be dispensed by the USDA's Rural Utilities Service, which may look favorably at electricity cooperatives seeking to serve sparsely populated areas, he said.

Blair called it the "five-per-mile to 15-per-mile" market. Those are cooperatives that have between five to 15 customers per linear mile of transmission lines – too few to be served by incumbent broadband providers, but enough to make IBEC's BPL business model work.

About 200 of the 870 or so co-ops in the country have a customer base that fits that description, he said. And if part of that $2.5 billion is dispensed as grants rather than loans, electricity cooperatives may be able to make a case for serving fewer than five customers per mile of transmission line, he said.

Blair also pointed out that many of the problems that have stymied BPL efforts in the past have been solved. Certainly the technology has had a mixed track record to date. Several utilities have tried BPL deployments, and Google invested in BPL efforts earlier in the decade, but so far the technology hasn't really taken off.

According to the United Power Line Council, an industry trade group, there were about 35 BPL deployments in the United States at the end of 2007, of which 10 were commercial deployments. BPL served about 5,000 U.S. subscribers in mid-2007, according to the most recent data from the Federal Communications Commission.

Part of the slow pace of deployments had to do with the opposition of ham radio operators, who complained that older versions of BPL interfered with their frequencies.

In April 2008, in a lawsuit brought by the American Radio Relay League ham radio association, a federal court ruled that the FCC had to rewrite its BPL regulations to solve that problem. BPL companies solved that problem by "notching" the frequencies they used to avoid those that interfered with ham radio, Blair said.

Likewise, glitches that have plagued the technology in the past have been worked out, he said. He pointed to Texas utility CenterPoint, which has been operating an IBM-designed BPL network for the past two-and-a-half years, as an example.

IBM has been making a big push in smart grid of late, working with utilities to run pilot projects and research new technologies (see IBM Snags Another Smart Grid Deal and IBM, EDF to Research Smart Grid Tech).

With equipment compliant with the new FCC rules and with federal incentives in place, IBEC and IBM are hoping that BPL can start catching up, both in bringing high-speed Internet to the 45 percent of American homes that still don't have it in the push to make America's electricity grid smarter.

In terms of just providing Internet service to homes, about 14 percent of those IBEC has brought BPL to so far have signed up for it, Lee said. The company will need 20 percent "take rates" to make the effort profitable, he said.

Still, when it comes to linking smart grid efforts with BPL, the two companies could have a long road ahead to catch up to the millions of smart meters now being deployed with other communications systems.