the following article appeared in today's Wall Street Journal. Perhaps the
suits in Newington believed their own BS. Not a single mention of the
interference issues and a whopping endorsement by the FCC's chief engineer.

The Web's New Outlet
Utilities Plan to Send Internet Service
Over Electric Lines, Challenging
Cable Modems and DSL
By KEN BROWN
Staff Reporter of THE WALL STREET JOURNAL


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 is joining 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," says 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
says 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," says 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."

The issue is whether customers will sign up for the service, either by
stepping up from dial-up connections or switching from DSL or cable. On the
positive side, the power line service is easy to use -- plug in the modem
and run a wire to your computer and you're online. But there has been little
switching by consumers so far from one broadband service to another, and the
growth of broadband has been slowing.

Matt Davis, an analyst with Yankee Group, a Boston-based technology
consulting firm, says power-line broadband services lack key features of
cable and DSL offerings, such as bundled packages of phone, TV and Internet
access. He adds that more than 80% of American households can get high-speed
access and that figure will rise to 90% in the next few years. "People
continue to say that broadband is unavailable in a lot of places, but that's
just not true," Mr. Davis says.

Mr. Berkman says his group has already had discussions about bundling its
services, and plans to offer Internet phone service and either video on
demand or videogames by the third quarter of this year. He adds that in many
places that theoretically can get high-speed access the quality is poor.
Cinergy and Current, which tested their offering on 100 homes in the
Cincinnati area, say they will target areas where broadband connections are
spotty and hope to sign up 20% of homes they pass.

GETTING CONNECTED



Cable modems dominate high-speed Internet access, but some utility companies
hope to break into the market by providing broadband connections over their
power lines.

Average Cost per Month U.S. Subscribers
(in millions) Growth 2004
(estimate) Pros and Cons
Cable $35-40 15.7 29% Fastest but most expensive
DSL $30-35 6.6 41% Slower but cheaper, especially when bundled with
phone services
Power Lines $30-40 N.A. N.A. Fastest for the price, can connect anywhere
there's a plug; service is unproven in wide use.
Dial-Up $15-22 39.5 -9% Cheap, but slow and not always on.

Sources: Morgan Stanley; Current Communications



In addition, the partners say they believe they have some cost advantages
over DSL service and cable modems, in part because they don't have to send a
technician to a customer's house to start service. Instead, customers are
simply given the modems, which look like big cellphone chargers. If
customers want to work in another room, they plug the adapter into an outlet
there. Wireless adapters that broadcast a Wi-Fi signal are also available.

"Now it's up to us to prove the economics," Mr. Berkman says.

This effort appears to be the largest rollout of such power communications
to date. Cinergy will start with two neighborhoods in the Cincinnati area
and hopes to offer the service to 60,000 of its 1.5 million electricity
customers by the end of the year.

The two companies have a second venture to bring high-speed Internet access
to 24 million customers elsewhere served by smaller municipal and
cooperatively owned power companies, often in rural areas where cable and
DSL are not available.

The executives say their service will beat high-speed cable and phone
connections on price, convenience and speed. Current and Cinergy plan to
sell their service for $29.95 to $39.95 a month, depending on the connection
speed. Cable connections typically go for $35 to $40 a month, while DSL
lines are $30 to $35, with discounts for bundled services. Most dial-up
connections range from $15 to $22 a month.

"We believe we are now the last-mile solution," says Bill Grealis, executive
vice president of Cinergy and president of Cinergy Broadband Inc., speaking
of the issue of getting high-speed lines to homes. "We are cheaper and
faster than DSL or cable."

Several other companies also are in trials of power-line Internet service
involving dozens to hundreds of homes and hope to begin commercial service
in the next year. The systems have an added benefit for utilities: They can
alert them to power outages by monitoring the lines, and can read electric
meters automatically and let the utilities manage the use of power during
peak demand periods.

These power-line services, if they take off, could be a boon to Internet
service providers such as EarthLink Inc. and long-distance companies such as
AT&T Corp., both of which are desperate to get direct connections into
consumers' homes rather than relying on lines owned by local-phone or cable
companies. AT&T demonstrated a voice-over-Internet phone service using power
lines at an analysts meeting last week.

This is the second effort by the Berkman family, which made millions as an
early investor in cellphone systems, to provide an alternate broadband
service. The family, led by Myles Berkman and two sons, William and David,
started Teligent Inc., a once high-flying company that hoped to use
high-speed wireless connections to provide broadband services to businesses.

The family sold its stake in Teligent as part of a deal to sell its company,
the Associated Group, to Mr. Malone's Liberty Media for $3 billion in 1999.
Teligent collapsed two years later after it tried to expand too quickly.

With that in mind, Mr. Berkman has focused on keeping costs low and will
roll out the power-line service slowly. "Looking at the lessons we learned
in the whole telecom boom and bust, we have to be conservative and drive the
cash flow," he says of the investment. "We don't do this often, we do this
every five or 10 years."

Write to Ken Brown at 1