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DirectTV turns focus to power lines for broadband

Change of heart a blow to WiMAX

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DirectTV CEO Chase Carey said at a conference this week that the largest US direct to home satellite provider will try out broadband over power lines in a few cities later this year.

And in that simple statement he may have delivered the biggest body blow to WiMAX in the US that he could have, and in particular to Craig McCaw's Clearwire and any of its suppliers. A test would be tried later this year in one of the top 50 cities in the US and would need to cover an area of at least half the city, Carey said.

The head and shoulders certainty for DirecTV to take its one way pay TV service and turn it into a two way triple play, was a deal with Clearwire and there is no question that such a deal would have been the making of McCaw's new baby. He recently signed a deal with AOL to get the marketing muscle of AOL behind the Clearwire broadband push, but would have loved even more to get the DirecTV marketing engine on his team.

So either DirecTV really believes that broadband over power is the way to go, and has an economic model of it which is secure, or it just could not come to terms with Clearwire. Our own view is that DirecTV could reduce churn so dramatically by offering a triple play, that its savings would have paid for the US rollout of Clearwire. With that understood, DirecTV would have sought ownership or part ownership or eventual control at Clearwire, and that may have been a sticking point.

We have known for the past 18 months that DirecTV has been visiting broadband over power line companies and that in order to gain any kind of foothold in this market it would take a long time, because it would need to bring sufficient power companies to the table, who were ready to take the plunge and take on what some see as a risky technology for them, which takes them out of their comfort zone. By picking up deployment costs DirecTV may have provided the comfort they needed.

The way power line works in the US is by using the mid-voltage circuits that span a city. A high voltage segment acts as a back bone and the low voltage segments that feeds a home reaches too few homes for it to be used for the final delivery platform, as low voltage segments are in Europe.

In large apartment buildings in Europe, termination equipment can feed up to 500 homes with a single or multiple 200 Mbps links which brings broadband straight out of the plug socket with the right adaptor. But in the US, where the average number of homes on a low voltage segment is more like 15, the economics of that kind of deployment just isn't viable.

Instead, the mid-voltage segment reaches within 200 feet of every US home and wi-fi can make the last hop from the power pole across the road to inside the home. The broadband backhaul is usually a wireless fiber operating in a line of sight to multiple high points in the power network.

Companies like Amperion in Lowell, Mass, are perhaps the favourites for picking up a deal like DirecTV, while smaller operations like Ambient have been testing similar systems at Con Edison.

It has always been considered vital that utilities are given a better way of running their business to justify the installation cost of broadband equipment onto their networks.

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