I wanted to update you on a news item from last week regarding a Request for Information, or “RFI,” - issued by Google that could have interesting implications for the smart grid. As always, Google has a plan, and this one has to do with delivering 1 GB broadband service into the home. That’s a lot of broadband, but rest assured, Google has its reasons.
This is actually an experimental venture, and the RFI seeks input from municipalities who are prepared to partner with Google. The application process is open until March 26, and I’m writing about how one municipal utility in particular views this opportunity. Silicon Valley Power is the municipal utility serving Santa Clara, Cali, and they issued a
press release about the RFI last week. The announcement is a bit short on detail, and to fill in the blanks, I spoke with Larry Owens, their manager of customer services.
Why should SVP be interested in partnering with Google, and why should Google partner with SVP? There’s a good story on both sides, and I’ll touch on each one briefly, at which point this will all make more sense. Followers of this portal will know about Google PowerMeter, and possibly about
their recent foray into wholesale energy. While they may not be looking to compete directly with DSL, fiber or coax cable for control of the broadband home, the prospect of 1 GB service is pretty enticing, and this RFI is a relatively low risk, low profile way to see if this is a good idea.
Eventually, 1 GB will be a very good idea, but today most of us can get by on a fraction of that bandwidth. On the other hand, Google is well aware how quickly the demand for mobile broadband has outstripped supply thanks to smartphones, and the pattern is destined to repeat itself in the home. As powerful as smartphones are, it really isn’t that big of a stretch to imagine how a home full of smart devices could ramp up to 1 GB.
When you start looking beyond today’s broadband-enabled endpoints to what the smart home will eventually support, the smart grid story becomes more central. Think about being able to monitor real time energy consumption for all your appliances, heating and cooling. Add to that charging your fleet of battery-powered cars and bicycles. Eventually, some homes will generate their own power using wind or solar panels, and they’ll want to feed that back into the grid to offset their energy costs.
Not only is there a smart grid story here, but a green energy story as well, all of which puts Google in a very good light. While they already have a toe-hold into the home with PowerMeter, its value is constrained by the limited amount of throughput smart meters can currently support over the utility’s network. This is simply no match for Google’s broadband service over fiber, and with 1 GB, a whole world of possibility opens up, not just for them, but the utility as well.
While the future hasn’t been invented yet, Google is betting that this venture will spawn new services and revenues, and with their track record, I wouldn’t bet against them. Nobody really knows if the market can effectively make use of 1 GB, or how much they’ll be willing to pay, so Google is testing the waters carefully. The RFI is fairly open-ended about how homes will get hooked up to a fiber network, but it seems clear Google is banking on their partners doing most of the work here. This way, they spread the risk and cost around, and once eager partners are on board, the trials can be deployed fairly quickly.
SVP believes they are one such partner, and if successful, may well create the business model for tomorrow’s municipal utilities. They seem to have all the right elements in place, and that’s what makes this a good story. SVP already has an extensive dark fiber build out, not just to connect their substations, but also campuses and business parks across the greater Santa Clara area. This backbone essentially provides fiber to the node, or “FTTN,” with the last mile connection to the home being the missing link. To the extent they can provide this, their odds seem pretty good for being selected by Google.
It is also worth noting that SVP has two basic elements working together that make them a strong candidate. First is the above-mentioned fiber backbone, which means they already have most of the infrastructure along with expertise to run such a network. Second, as the municipal utility, they own the above-ground infrastructure, and control rights-of-way and permitting. This is a more manageable partnering scenario for Google, which makes the process of rolling out these trials easier, faster and cheaper.
Once this trial is in place, SVP would be well positioned to benefit from 1 GB service in their own way. This capability would allow them to monitor many more data flows in near real time, which is well beyond what is possible today even with smart meters. Business customers in particular want real time data flows to manage their energy usage, and now SVP can provide this. By collecting data this way across all their residential customers, SVP can do more proactive demand response planning, which should lead to less reliance on costly energy supplements to meet peak requirements.
All told, there is a payoff here for both SVP and Google, which makes this a good smart grid story. If Google can demonstrate there’s a viable market for 1 GB broadband, some strong synergies will emerge among their various initiatives mentioned earlier in the article, and this will in turn open up some attractive partnering opportunities with utilities. While it goes without saying this could add even more disruption for telcos and cablecos, the focus here in on utilities, and that’s enough to digest for now.
