We have Powerline technology, even third generation systems, we have a better understanding of the regulatory situation, but what about the business propositions of Powerline?
A sort of “food chain” has established where Powerline technology chipset vendors deliver to system packagers or integrators, who market to a range of customers, utility network operator based ISPs, telecommunications companies, even private customers for in-house systems.
The combination of access and in-house applications with the diverse information applications provides a rich option space for business models. Business models are indeed the most important concept. If a company wants to enter the Powerline business, they need a business model first and foremost.
For companies who come from the electrical utility sector, this may represent a significant first hurdle. These companies do not have the necessary expertise inside their own organization. Their culture, their way of thinking is different from that of a Telecommunications Company or ISP. Commercial viability depends on the skill and dedication of the future operator to embrace the necessary change process.
A PLC operator business must be developed; that requires the application of business development. Business Models will lead to a Business Plan, which in turn will lead to the Business. The uncertainty has actually increased for operator candidates, because of the lack of required skills.
Even for those operators who have already successfully started a business based on Powerline, the situation remains critical, since the business plan made often unrealistic assumptions about the market. Some large players have come and gone.
The accepted practice is that a Business Consultant accompanies the Operator Candidate for analysis, goal formation, and establishment of a suitable business model and elaboration of business plan. Business Development is an essential tool to bring about the necessary adjustments. That process does take time, a year at least in our experience. There are only a few companies that managed that transition, over the past year. Not all have been able to sustain the momentum.
One example is Sydkraft, from Malmö, Sweden. It set out about four years ago, built up an organisation that could deal with the issues, employed Business Development methods and are very successful in becoming a Powerline operator company.
The learning process should not be underestimated. It may be necessary to secure outside help, as a rule, because the professional expertise is rarely at hand. With the regulatory smoke clearing a bit, one large company after the other is entering the field.
In Germany, RWE wanted to deploy 10,000 units in 2001. Their actual deployment stayed far short of the goal, in 2002 the company exited the business again.
In Austria, EVN was also was talking about 10,000 end customers connected IN 2001. Here again, the target could not be reached, PLC is no longer one of the priorities of the company.
The examples mentioned highlight the fact that it continues to be a challenge to make a viable business case in the segment of PLC access systems, at least in the European markets.