The tiny town of Peshastin, Wash., seems far away from everything.

It’s tucked deep within the craggy Cascade Range, 132 winding miles from Seattle. Many of its residents get their television and Internet via satellite dishes and dial-up modems.

Heavily wired, it is not. But, oddly enough, that’s exactly what makes Peshastin the perfect place to test a cutting-edge communications technology that has the potential to make Internet access ubiquitous and drive down the cost of broadband cable modem and DSL.

Since October, 30 Peshastin residents and Chelan County Public Utilities District customers have been getting high-speed Web access through their electrical outlets. Known as broadband over power lines, or BPL, the technology uses a special modem that can plug into any household outlet. Users link the modem and computer with an Ethernet cable or wireless connection. For about the same price as broadband cable modem or DSL service, the Peshastin residents are receiving Internet service at a comparable speed.

“The technology is awesome,” raved Bob Shane, who is spearheading the Chelan PUD pilot project. During a recent walk-through of a rural woodworker’s property, Shane told the carpenter he could order inventory online from any outlet in his home or adjacent shop – no cables necessary. “That’s where this technology really hits home,” Shane said.

Chelan PUD and other Northwest utilities taking a closer look at BPL underscore that they don’t consider it as a replacement for fiber optic, which is widely regarded as the more mature and versatile technology. But where broadband has lagged – notably rural areas, BPL is intriguing to some. “There are some areas that we’ll get to sooner than later with our fiber-optic build-out, so we’re looking at other options,” said Shane, whose utility is testing wireless Internet service for another 40 customers and building about 5,000 fiber-optic drops to homes this year.

Broadband over power lines technology has been around for about a decade, but until recently, the Federal Communications Commission (FCC) limited it mostly to small areas while it studied concerns of critics, including amateur radio operators who feared the technology would interfere with their signals. Last October the five-member commission adopted rules supporting wider commercial BPL deployment and limiting radio interference. Commissioners heralded BPL as a way to foster greater competition and lower prices among high-speed Internet providers.

“The pervasiveness of the utility grid means almost every home in America can be accessed by this type of service,” FCC Chairman Michael Powell said at the time. “Moreover, the presence of a third universal broadband connection will mean a robust choice for consumers and strong, healthy competition.”

The FCC’s decision elevated BPL into more utility company boardrooms, industry officials say, but it’s still unclear whether it will result in a new wave of deployments.

About 40 utilities nationwide provide BPL to customers on a permanent or test basis, according to the United Power Line Council, an alliance of electric utilities and technology companies that promotes BPL deployment. So far, Current Communications Group and Cinergy Corp. have the nation’s only large-scale rollout of BPL. The companies provide at least 5,000 Cincinnati-area customers with high-speed Internet and voice-over-IP (VoIP) services for $30-$50 a month, depending on the customer’s connection speed.

Jay Birnbaum, vice president and general counsel for Germantown, Md.-based Current, said technology improvements to BPL will make it increasingly competitive with cable companies that can bundle high-speed Internet with video and telephone service in big markets. “They talk about having a triple play with voice, video and data,” he added. “We sort of have a quadruple play with video, voice, data and utility applications.”   

Utility applications – such as the ability to spot the source of a power outage or monitor a home’s electricity meter remotely – are especially appealing to Avista Corp. (NYSE: AVA), which has about 325,000 electricity customers in eastern Washington and northern Idaho. The Spokane, Wash.-based utility is amid final discussions with an unnamed vendor with which it plans to test BPL for six months starting this spring. Avista would offer up to 5,000 of its customers a phone/Internet package for a price determined by the vendor, said Dave Heyamoto, Avista’s marketing manager.

Avista wants to test automated meter reading on its system as well as learn whether customers would be willing to switch to BPL from competing technologies, Heyamoto said. “Any opportunity where we can use our existing assets to further serve our customers we want to consider,” he added.

For Avista and other Northwest electric utilities, BPL is appealing because most of the wiring for the network is already in place. Data must be routed along the electricity grid to prevent signal degradation or interference, but there is no need to dig up streets or rewire homes.

Roseburg, Ore.-based Douglas Electric Cooperative hopes to test BPL later this year with rural customers. The utility has delayed such testing thus far, choosing instead to devote resources toward building out the utility’s 17-mile fiber-optic network in Roseburg.

Mark Doty, the utility’s operations superintendent, said fiber optic is still preferable because of its long reach and superior data, voice and video possibilities. But because of the high cost of running fiber-optic cable, Doty said BPL could help fill the digital gap in rural communities at a competitive price. “It’s not the one-beats-all; it’s the complement to the menu,” he added.

Still, some of the Northwest’s largest – and most wired – utilities have so far bypassed BPL for more mature technologies.

Seattle City Light, a municipal-owned utility with about 350,000 electric customers in and around Seattle, has opted to use wireless instead of BPL technology on two new automated meter reader projects. In a densely built city such as Seattle, BPL would fight radio interference and require a major build-out of fiber-optic links to help broadband signals travel between power stations, medium-voltage power lines and homes without getting disrupted by high-voltage power lines, said Bill Schrier, the city’s chief technology officer. Still, a city task force is looking at how BPL, coupled with other technologies, could make sense for the Seattle utility’s customers. The task force plans to report its findings to the Seattle City Council in April.

Brett Kilbourne, the United Power Line Council’s director of regulatory affairs, conceded BPL is not being deployed widely in downtowns because many buildings are already served by fiber-optic lines. However, he said there are still pockets in Seattle and other urban areas where BPL would make sense: There is an emerging market for in-building BPL that feeds off of the fiber (or some other backhaul technology) nearby.

Bonneville Power Administration, a Portland-based federal agency that produces and markets wholesale power, does not have plans to offer BPL because there is no consumer demand for it, said Ed Mosey, a BPA spokesman. The utility has about 2,000 miles of fiber-optic lines laid throughout its grid. About 90 percent of the network’s capacity is used to transmit data, Mosey said, and the utility gets more than $15 million in lease revenues annually from rural communities that tap the network.

In terms of market penetration, BPL is nowhere close to cable or DSL/wireless technologies. According to the FCC, there are about 32 million high-speed lines in the country. Less than 10,000 customers get BPL service now, UPLC’s Kilbourne said.

Still, from technical and price standpoints, BPL is already competitive with cable and DSL/wireless technologies, Kilbourne contended. Current-generation BPL chipsets are capable of delivering 3-4 megabits per second (Mbps) to the home, and next-generation chipsets will yield a four-fold increase in capacity with true multi-channel video. BPL costs customers an average of $30 per month, which is comparable to competing technologies.

“We’re optimistic that customers will be happy with BPL service and adoption will accelerate as more utilities deploy it on their networks this year,” Kilbourne said.