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Powered Up: How One High-tech Startup Plans to Electrify the Marketplace: Knowledge@Wharton
( http://knowledge.wharton.upenn.edu/article.cfm?articleid=1706)
in the New Telecom Era" -- executives from leading players such as Verizon, Time Warner Cable,
Visage Mobile and Cisco never once mentioned BPL technology in a wide-ranging, 75-minute
discussion of the ways that cable, phone, Internet and mobile services are increasingly bundled and
already luring millions of potential subscribers.
That mountain standing in the way did not seem to scare off Herron, who is Current's vice president for
corporate development & strategy, nor co-panelists Richard Goldstein, a managing director of key
investor Liberty Associated Partners who has also become a vice president of Current, and Scott
Ungerer, a co-founder and managing partner of EnerTech, the firm that pioneered venture capital for new
tech solutions in the energy industry.
A Winning Combination
The participants agreed that the involvement of major investor EnerTech has been critical to the growth
of Current, because Ungerer's firm has a unique ability to interest electric utilities -- one of the most
stable and non-innovative industries in America -- to look more closely at what the startup is offering.
"A great idea is simply the price of admission," Ungerer told the panelists, noting that the big utilities
look at the quality of the management team and the other investors, and also at whether a new type of
technology can create real monetary value. He said that in the case of Current, its ability to team up with
experienced industry hands has been essential for attracting investors.
"The hardest thing to do is learn from other people's experience," said Ungerer, who has seen startup
companies focus too often on their idea and not on building alliances, sometimes with disastrous results.
In the case of Current, it's clear that a mid-course correction in its strategy has also helped considerably.
Goldstein, from Liberty Associated Partners, said his firm played an active role in creating Current at the
start of the decade, as Liberty looked for the next new thing after some successful investments in cable
and other communications-related ventures. "The best wire that exists in the world is the power
company's -- because it's so pervasive," Goldstein said.
Indeed, Current sees several advantages to the consumer with BPL Internet access, which is competitive
with high-speed cable and telecom DSL lines when it comes to price. One is plug-and-play Internet
access, in which computer users can tap into broadband with a simple modem that also makes wi-fi
unnecessary, since every room has electrical outlets. Also, Herron noted that the system allows users to
send out large files, such as PowerPoint presentations, just as easily as downloading them -- a capability
other types of broadband do not have.
That said, Herron and the Current investors readily acknowledged that the later development of the
Smart Grid features, and the improved metering and power-flow regulation ability that comes with them,
were what made Current more attractive to utilities that just weren't initially excited by broadband.
"When the power goes out now, the only way an electric utility knows that is if somebody picks up the
phone and calls," pointed out Herron, who said utilities proved more receptive to the energy-saving
benefits of the program than to offering web access. Current, he added, believes that smart-grid
technology can reduce overall electrical demand by some 5% to 10%, and that, in turn, could make as
much as $125 billion in new plant construction costs unnecessary.
As a result, Current is finally seeing some hard results. This month, Current and its Texas partner, TXU
Electric Delivery, began installing the first of some 300,000 new high-tech meters in the Dallas-Ft.
Worth metroplex, which will allow the utility to offer time-of-day electric pricing while phasing out its
workforce of meter readers. As for its broadband service, Herron said the company has attracted about
10% of potential customers in the Cincinnati market where Smart Grid is in place, which translates to
roughly 5,000 homes.
The problem, of course, is that for broadband, Current is seeking to enter a wildly competitive
marketplace, as was made clear at a separate conference forum on the telecommunications industry.
There, executives from top cable and telecom systems insisted that the future lies in connectivity, but in
ways that seem to go well beyond BPL, at least in the number of services offered.
Losing Sight of the Customer?
All materials copyright of the Wharton School of the University of Pennsylvania. Page 2 of 3
Powered Up: How One High-tech Startup Plans to Electrify the Marketplace: Knowledge@Wharton
( http://knowledge.wharton.upenn.edu/article.cfm?articleid=1706)
The telecom leaders, including Verizon's vice president of video network services, Nicola Palmer, and
Richard Cho, director of voice product management for Time Warner Cable, both spoke of their
aggressive efforts to bundle services with "Triple Play"-style combinations of television, voice and
high-speed Internet, with mobile phones also ready to join the mix.
But moderator Martin Kon -- the head of media, entertainment and customer analytics for Mercer
Management Consulting -- noted that getting to this point was not so easy. A number of similar bundling
efforts in the 1990s crashed after tens of millions of dollars were spent to land a handful of customers,
such as an initial $100 million flop by Time Warner. The picture improved when the technology for
connecting to home and business users became more advanced and also more cost effective.
"Our ability to bring that pipe into your home is cheaper than it was yesterday," said Kon, who noted
that just a few years ago, technology companies like Microsoft were complaining that homes didn't have
enough broadband capacity to handle all their apps, while today the broadband providers are begging
companies like Microsoft for new apps to match their expanded access.
One of the biggest problems for the fast-growing telecom industry, the panelists agreed, is that with the
focus on adding so many new features and technology, it's easy to lose sight of the customer's actual
needs. Said Ed Paradise, the vice president of Cisco who deals with the mobile wireless and broadband
industries: "People just want to be able to do what they want. It's very simple."
For more than an hour, the telecom executives outlined some of the ways that they plan to meet those
needs, with enhanced Internet capabilities over mobile phones, for example, or greater use of devices like
Slingbox, which lets customers watch their home television programming on any device that's hooked up
to a broadband connection by using routers and software to redirect cable or satellite TV signals over the
Internet.
On the one hand, it may sound extremely difficult for a new player like Current and its BPL technology
to cut through all that clutter, but the telecom executives also found substantial room for any type of
improvement. Said Time Warner's Cho: "Are we fully connected yet? No, not when I go home and my
phone rings and I can't find it."
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