Technology companies are coming from all directions to capitalize on $4.5 billion in federal stimulus money earmarked for enhancing energy efficiency.

They all are looking to enhance the power grid, turning it into a digital technology-based "smart grid" that combines "smart meters," communications technology, sensors and software so customers and utilities can monitor energy use and taper usage when the availability of electricity is limited. The IP-based smart-grid model ultimately will help consumers understand the economies of their consumption patterns, so they can make changes in the home. Utilities can use it to improve energy reliability and efficiency, while reducing power-line losses.

"The government is pushing to enhance the capabilities of the electricity system, which can be likened to a rotary dialing telecom system," said William Ablondi, director of home systems research with Parks Associates.

The firm forecasts that the market for residential energy management will increase exponentially during the next four years as utilities want better efficiency, consumers are becoming more conscious of energy consumption and government money is providing the incentive. The firm says the number of U.S. households with a smart meter will grow to more than 6 million by 2012. More than 1 million smart meters have been deployed in the United States already, with the vast majority in large industrial companies.

Utility companies have several choices when it comes to technology that ports the smart meter information back to the home office. Do they partner with commercial mobile operators or resellers with industrial capabilities? Or do they build their own transmission networks?

A tipping point could be the ramp-up of commercial mobile operator initiatives that call for wireless connections beyond the consumer. As penetration rates reach higher than 90%, operators are looking for new ways to gain revenue and are now touting "open" networks as a way for third parties to develop applications to run on the network. At the same time, the price of machine-to-machine, or M2M, modules is being pushed down by more competition and data service prices are falling.

Traditional M2M reseller companies such as Aeris.net and Kore Telematics have been focusing on areas such as utilities for the past several years and have been successful, but now operators are making more aggressive pushes into the space, as evidenced by AT&T Mobility and Verizon Wireless — now the largest mobile operator in the United States — inking smart grid partnerships. As a result, a plethora of competitive options now exist for utilities.

During last month's Cellular Telecommunications & Internet Association (CTIA) trade show, Verizon Communications CEO Ivan Seidenberg said the next generation of wireless will be one that ushers in penetration rates for the wireless industry of more than 500% — driven by M2M communications.

"In this model, there is literally no limit on the number of connections that can be part of the mobile grid: cars, appliances, buildings, roads, sensors, medical monitors and someday even inventories on supermarket shelves," Seidenberg said. "All of these have the potential to become inherently intelligent — perpetually connected nodes on the mobile web."

Specifically, Seidenberg said Verizon Wireless' choice of all-IP long term evolution (LTE) technology in the 700 MHz band will enable this connected world.

Verizon Wireless, along with other major players in the industry such as AT&T Mobility and Sprint Nextel, already is pushing this connected concept through its 3G network initiatives, including an open development lab it launched in 2007. To date, the operator has certified 36 devices, including a smart-grid device that monitors energy consumption and a wireless tablet for the health-care industry that serves as a portable medical chart, Seidenberg said.

Last October, AT&T Mobility announced its own initiative to bring wireless connectivity to new consumer electronics devices and applications, ranging from personal computers to cameras and M2M communications solutions. The operator recently announced a relationship with SmartSynch to provide electric utilities with a smart-grid solution for individual homes. The two are combining a suite of wireless service plans from AT&T designed specifically for M2M communications with SmartSynch's smart grid.

The two companies already have a partnership whereby AT&T's GSM network is being used to connect smart meters at commercial and industrial locations to 100 different utilities' back offices across North America. This most recent initiative is an expansion of their partnership into the residential market.

"Billions have been invested in GSM technology, the modules are less expensive and the equipment AT&T uses enables us to provide lower cost per kilobyte," said Henry Jones, chief technology officer with SmartSynch.

Moreover, AT&T is able to price specific to utility needs, which is for very small amounts of data but often for millions of users, Jones said.

Slower data transmission technologies such as GSM/GPRS and EDGE are being used today in SmartSynch's monitoring systems, primarily because of the vast economies of scale that come with these technologies and the fact that the monitoring taking place today doesn't require a lot of speed, Jones said. Going forward, however, utilities will be able to take advantage of higher-speed technologies such as high-speed packet access (HSPA) and LTE, the latter of which has been selected by both Verizon and AT&T for their 4G broadband networks.

Meanwhile, AT&T has been working with value-added resellers to push its M2M initiative and also has aligned its internal structure to capitalize on emerging opportunities, said Abhi Engle, vice president of industry and mobility solutions with AT&T Mobility. "We are developing specific security architecture and real-time pricing," he said. "We also have the world's largest IP backbone with hundreds of millions of end points."

However, the challenge for AT&T and SmartSynch is convincing utilities to move away from building their own monitoring networks to using commercial technology from AT&T. SmartSynch's Jones said the economics of utilities building their own mesh networks don't make sense, as an operator such as AT&T can use vast economies of scale to keep pricing low while continuing to invest in R&D and pushing into the next generation of technologies.

But Ablondi points out that utilities are pursuing a variety of transport options, including leveraging commercial technology to build their own networks. WiMAX technology is increasingly being touted as a viable option for private networks as it gives utilities control and allows them to use their networks for other automated functions, including broadband access.

"The economies of scale of WiMAX allow utilities to build and own their own networks at a reasonable cost," said Avi Shabtay, vice president and general manager of private and alternative networks business activity with WiMAX vendor Alvarion. "They don't have to deploy proprietary solutions anymore. It makes it much more compelling."

General Electric, one of the top smart-meter makers in the United States, recently announced that it would install a network of its WiMAX-based MDS Mercury 3650 radios that operate in the 3.65 GHz band to connect Texas-based utility CenterPoint Energy's backhaul system to collection points that will aggregate data from smart meters. CenterPoint is installing smart meters for its 2.4 million customers in Houston using a self-contained WiMAX network.

Shabtay said the 3.65 GHz band will be one of the most popular frequencies in the United States for WiMAX deployments as the licenses are practically free and are protected from interference. Entities must apply for the license with the FCC and pay a nominal fee. Once the license is granted, that licensee must register each site. While the license is non-exclusive, another entity with a similar license must demonstrate that its license doesn't interfere with the first licensee.

Still another transmission option is resurfacing in rural areas. Just when it appeared broadband-over-powerline (BPL) technology was going to die off, IBM and rural Internet service provider (ISP) International Broadband Electric Communications — with help from a $9.6 million cash infusion from IBM and $70 million in government loans — are deploying BPL networks for almost 200,000 rural customers served by seven electrical cooperatives in Alabama, Indiana, Michigan and Virginia.

The move comes months after two of BPL's highest profile deployments died out and as many BPL vendors have begun focusing on smart electrical networks rather than consumer broadband delivery. The technology, which modifies radio signals to transmit voice and Internet data over electric utility power lines, was extremely hyped early this decade, when it was billed as a way for power companies to become the third alternative in the broadband market, competing against cable and digital subscriber line (DSL) operators in urban areas.

But the technology has been slow to take off, as technical limitations and interference problems with amateur and local emergency radios kept it from widespread adoption. Moreover, power companies realized they just couldn't compete with cable and high-speed telco offerings in urban areas.

However, BPL has improved from a technical standpoint, according to Ray Blair, advanced networking executive with IBM's global technology services unit. BPL has found its niche in the rural market, where access customers have no wireline broadband alternatives and utility co-ops want to incorporate smart metering and energy-outage monitoring.

"The intelligent grid, by nature, is filled by a lot of devices that need to communicate with each other back to a centralized location, and that drives a lot of bandwidth — a lot more than what utilities can handle today," Blair said.

Last May, DirecTV and Current Communications sold a flagship BPL deployment in Dallas to the local utility, which is using the network for smart-grid monitoring. In this case, using BPL technology as a broadband offering and for the electric cooperatives' smart grids increases the chances of success, experts say.

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