PLC in Latin America

Sergio Angeli, CTO PLC Ventures

July 2007

2

1. About PLC Ventures

2. PLC opportunities in Latin America

• Telecom

• Smart Grid

• Government

3. Case Study: PLC Proof of Concept Guatemala

• Description

• Challenges

• Results

4. Conclusions

Table of Contents

3

About PLC Ventures

4

Corporate structure

(Mexican Operating Company)

(Territory: Cono Sur, Br, Ar, Chile) (Territory: Cono Norte: Mx, Central America, Caribbean, Andean Region)

(Brazilian Operating Company) (Peruvian Operating Company)(Guatemalan Operating Company)

99.99% 99.99%

(Technological Assets, licensees, software) (Supply Agmts with related and 3rd parties)

1.0% 99%

100% 100%100%

0.01%

(PR Operating Company)

Local Partner

75% 25%0.01%

Local Partner Local Partner Local Partner

99.99%

Local Partner

0.01%

Campollo Group

5

ODM Manufacturer

Service Provider Utility

Co.

Local Partner 2

Local Partner 1

Price and Delivery Guarantee

License and Support Contract

Manufacturing and Technical

Support Contract

Last Mile Access

PLC Assets Admin/Opp Software

Development

Customization Scalability

Price, QoS Cost Guarantee

Voice & Data Strategic Contributions Capital Investment

Chipset Supplier

Accessories Suppliers

Partner Agreement

Cost

s S

tru

ctu

reP

rofi

tab

ilit

y

Local Operating

Co.

Utility

IRU

Fiber ProviderOutsource Install.& Maint.

I&M Contract

Backbone Contract

Development Institutions

Smart Grid Connectivity National Security

11

PLC Operator Model

6

Backbone

SP 1 SP 2

CarriersInternational connections

Service Providers(ILEC, CLEC, ISP)

PLC OperatorIntegration, deployment,network operation and management

MV MV

LV

LVLV

FO

NMS

End Users

PLC Operator Model

Electric UtilityInfrastructure provider

Smart Grid user

7

Facts

PLC Ventures is technology “agnostic”.

PLC Ventures has manufacturing agreements and commercial arrangements with leading manufacturers/ODMs of PLC equipment and accessories. In addition we developed a proprietary PLC Network Management System for remote and real time network administration.

PLC Ventures has offices in 6 countries and a team of 20 professionals. We have installed PLC technology test pilots in different electrical grids in America and Europe.

In Latin America, our strategic market, we have developed a model of PLC Operator whereby we lease electric grids and develop PLC networks, to provide voice and data service to final users, with one or more telecom carriers.

To date, we have executed 2 exclusive IRUs: with EEGSA (Iberdrola) in Guatemala y LDS (PSEG) in Peru, totaling 1.5 million electric clients as potential market.

PLC Ventures has deployed two commercial test pilots, in Guatemala and Peru, for Proof of Concept of the technology and its commercial viability. These pilots include the participation of the electric companies, telecom carriers and final telecom subscribers.

The results have been conclusive: PLC as access technology offers an economic alternative for last mile transport of voice and data services with excellent quality of service (QoS).

8

PLC in Latin America

9

Telecom Solutions

Home Network/Triple Play

Access Network/Triple Play

Utility Solutions

Smart Grid

Government Solutions

Digitalization

Market drivers / limitations

Triple play initiatives

Limited by broadband penetration

Limited offering by incumbents

Lack of access to incumbent last mile

Technical and non-technical losses

Regulatory dependant

Digital divide

Access to economic support

PLC Applications in Latin America

10

PLC presents competitive advantages for Telecom in Latin America :

Limited availability of alternative “last miles” for telecommunication services, as incumbent operators normally do not open their network for third party service providers.

Market growth opportunity given by low penetration of broadband services, data and voice.

PLC enables solutions to crucial problems to electric companies in Latin America:

Technical and non technical losses, ranging in the region from low single digits in countries like Peru and Chile to higher than 20% in countries like Honduras and some electric distribution companies in Brazil.

PLC is the most efficient alternative for a mass deployment of social digital programs:

High penetration and capillarity of electric networks compared to other telecommunication networks, including traditional telephony, wireless, and cable.

PLC Opportunity in Latin America

11

Telecom Penetration in Latin America

12

Quality of Service Maintain levels of quality between stipulated thresholds

» Monitoring of Transients, Flicker, Voltage Surge, Faults» Harmonic and Inter-harmonic Analysis

According to feedback gathered by PLC Ventures, Utilities in Latin America have particular needs that can be addressed through Smart Grid solutions:

Operations Reduce service down time, improve efficiency

» Quickly detect, identify and locate problems Faults detectors, Re-closers, etc.» Remote network operation RTUs, Capacitor banks automation, load balancing, etc.

Smart Grid Applications

Billing Efficient reading and collection, reduce non-technical losses

» Targeted automatic reading,» Fraud detection

13

Digital Divide

Electricity grid penetration: 90 %

Total of Homes with Internet Access in Brazil (%)

15%

85%

YES NO

0% 20% 40% 60% 80% 100%

SOUTHEAST

SOUTH

MID-WEST

NORTH

NORTHEAST

Homes with Internet Access per Region in Brazil

YES

NO

Several initiatives exist today in Brazil to breach the “Digital divide”GESAC (Barrerinhas, etc.), change in FUST use policy, etc.

Source: Atrlas de Energia Elétrica do Brasil – 2a Edição - ANEEL

Source: Comitê Gestor da Internet no Brasil (July / August 2006)

Source: Comitê Gestor da Internet no Brasil (July / August 2006)

14

PLC Risks

• Standards under definition

• Competing technologies (ie. WiMax)

• Regulatory status

15

Case Study: PLC Proof of Concept in Guatemala

16

Introduction

• Commercial Project Guatemala– Broadband Internet Access and Fixed Telephony for end users

• Business and residential users• 750.000 electric customers, 80% of grid enabled with PLC

– 100.000 forecasted telecom end users in 2 years, 200.000 in 5 years – Smart Grid applications for the utility

• Project Plan– 1st Stage: Lab tests and small field trials – DONE– 2nd Stage: Proof of Concept – 95% completed

• A. Prove the technical feasibility of PLC as an Access Medium in the electric grids of Guatemala.

• B. Prove the commercial feasibility of PLC in a business model of “Carriers’ Carrier”.– 3rd Stage Commercial roll out – end 2007 / beginning 2008

Participant Role

EEGSA •Infrastructure (electric grid)

•Technical Support (electrical instalation) – outsourced

COMCEL •Internet Service Provider – ISP

•IP Telephony Services Provider – VoIP Provider

EBA Guatemala PLC Ventures Group

•PLC Technology – access network infrastructure equipments, management

software, integration, CPEs

•Project Management

End Users •Personal Computer, service use, feedback.

17

PoC Footprint & Status

Home Passed 800

PLC Infrastructure units 42

CPEs (existing customers) 100

Underground transformers 4

Overhead transformers 32

18

Logical Network Diagram

ISPVoIP SP

NPL NOC

PL

C A

cces

s N

etw

ork

– Z

on

e 15

FOBackbone

1 .Service Providers’ links converge to the Backbone

2 .BPL Access network is remotely managed from the NOC.

3 .Transport links connect NOC to last mile BPL network clusters

4 .Telecommunications signals are transmitted through the electric grid using BPL technology

5 .Clients connect their CPEs to the electric socket to gain access to services.

Service Providers’ Gateways and NOC

Key PLC Access Network Components

PLC Nodes Coupling Units CPEs NMS

MV Grid

MV Grid

MV Grid

LV Grid

LV Grid

LV Grid LV GridLV Grid

*Diagram for reference purposes only, actual number of deployed units NOT reflected.

19

LV PLC Coverage & Frequency Planning

20

Challenges

• PLC Network– Network planning– Deployment procedures– Signal instability in overhead lines (noise)– Equipment Prices

• Integration with 3rd parties’ platforms– Backbone (traditional FO backbone and alternatives: WiMax)– Internet servers– VoIP servers– Smart Grid applications– End users

• Network Operation and Maintenance– Network Management– Operations support: Logistics, inventory, schedule– Customer Support: Troubleshooting and tracking of client’s problems

• QoS evaluation– How much application traffic can the network handle?– How many VoIP calls can be supported?

21

PLC deployment process, network planning and procedures:

M

SM

T T

S S

TM

SSMM

S S S S

M

S S

S S S S S S S S

M

S SSM

S S S S S S S S

TM

S SSM

S S S S S S S S S S

SM

SM

S S

MT

Edificio

BT

1

2 3 4 5

6 7 8 9 10 11 12

M

S S

Down Up Down Up Down Up Down Up Down Up Down Up

Latency (ms) - - 6,3 7 9,6 9,7 12,2 12,1 18,2 17 21 19Throughput (%) - - 100 100 100 100 100 100 100 100 100 100Active Clients

Latency (ms) - - 7,3 8 10,5 12 13,8 14 19 18 23 21Throughput (%) 100 100 100 100 100 100 100 100 100 100 100 100Active Clients

Latency (ms) - - 8,7 10 10,5 15 14,8 16,5 21,5 22 26,5 24Throughput (%) 100 100 100 100 100 100 100 100 100 100 100 100Active Clients

Latency (ms) - - 10 14,5 14 18,5 18 20,5 28 26 32,5 31,5Throughput (%) 100 100 100 100 100 100 100 100 100 100 100 100Active Clients

Latency (ms) - - 16 19 19,5 23 23 26 35 30 39 35Throughput (%) 100 100 100 100 100 100 94 98 89 95,2 84,2 93,9Active Clients

Latency (ms) - - 19 25 23 30 24 30 39,5 37 43 40Throughput (%) 98,4 100 73,1 100 69,9 97,5 63,5 94,5 61,2 85,6 58,1 84,4Active Clients

Latency (ms) - - 22 27 23 32 28 35 43,2 40 45,9 42Throughput (%) 86,6 100 60,6 98,1 58,8 94,1 56,3 87,7 55,3 79,3 50,9 77,7Active Clients 37 40

22 27 32 37

27 3221

16 18

6

6

4 6

6

21 23

3

VoIP Calls

112

16 2111

Internet StreamsNumber of CPEs: 40 0 2

Internet BW: 512k/256k

12

0

1

4

8

16

20 25

22

28 33

14 19

10 15

12 14 18 23

1

2116

8 24 2910

12 17

-

1. Area Selection 2. Grid Analysis 3. Network Planning 4. Software simulation 5. Deployment 6. Network Management

Challenge: PLC network

Signal instability in overhead lines:

Alternatives:• Line Conditioning

– Eliminating the noise source

• Firmware improvement– Intensive research work done withchipset providers to improve system stability

• Differential signal injection– Sometimes useful, but not always effective

• Line separation = 70 cm• Wavelength (λ = c / f) = 10 meters (@ 30MHz)

– Not always possible• Single phase circuits

– Twice the cost• Two coupling units required

Lámpara electronica - 40 ms

-0.6

-0.5

-0.4

-0.3

-0.2

-0.1

0

0.1

0.2

0.3

-0.0

046

-0.0

018

0.00

09

0.00

36

0.00

64

0.00

91

0.01

18

0.01

45

0.01

73

0.02

00

0.02

27

0.02

54

0.02

82

0.03

09

0.03

36

Segundos

Vo

ltio

s Chan1

60Hz

Percentage of noise sources types found in Zone 15

Dead-end line79%

Top-pin7%

Vertical7%

Unidentified7%

22

• Backbone, QoS– Packets tagging and prioritization– Same configuration used in backbone, ISP NOC and PLC network

• SIP parameters

• Internet configuration

Challenge: Integration

PLC

VLAN Info Management

Data 1

Data 2

Voice

RADIUS

FTP Server

SQL DB

Management Server

EBA NMS

SP1

SP2

SP3

VLAN Switch

Administrators, Operators

23

Challenge: Network Management

NMS main functions:

•Trouble Tickets

•Inventory

•Task Scheduler

•Elements auto configuration and monitoring

24

PLC Network

Real-time Monitoring Traffic Simulation

Challenge: QoS Evaluation

QoS evaluation platforms: IxChariot – Console & EndpointsJDSU* - Appliance & Capture Agents

25

Results

26

Link Transformer LV HE to Dr. Girón

Clinicas Medicas building HE to client Dr. Otto Reyna

MV HE to TRD5 (MV Repeater)

TDR (MV Repeater) to Multimedica building HE

Voltage LV – 220 V LV-220V MV – 13 kV MV – 13 kV

Topology LV Overhead Underground Overhead Overhead and Underground (with intermediary transition)

Transmission Mode

10 (Max 85 Mbps) 10 (Max 85 Mbps) 5 (Máx 133 Mbps) 5 (Máx 133 Mbps)

PLC Performance

27

MV - OverheadMV - Underground TransitionLV access Tx RxMDUs 49 46Single homes 45 27

Down (**) Up (**)Data 1 512 512Data 2 1024 1024

Data (512) + VoIP (G711) 700 512Data VoIP

1 1

MOSPacket Loss

JitterLatency

Prioritization802.1p

VLANs per Cluster

4.2 + (*)0.15% (*)

30ms (max)

ToS

PLC

Avg. Bandwidth (Mbps)4045

1.7 - 2 ms

Avg VOIP Quality

VoIP

Data

Throughput (kbps) - w/ BW limitation

*Tests done with IXChariot platform** Upstream and Downstream rates are user configurable

QoS performance

-

10.00

20.00

30.00

40.00

50.00

60.00

Mb

ps

Rx Tx

Enlaces Infraestructura de Acceso

Enlaces Aereos Media Tensión

Enlaces Aereo-Subterráneo Media Tension

Acometidas en Baja Tensión

Enlaces Aereos Baja Tensión

-

20.00

40.00

60.00

80.00

100.00

120.00

Mb

ps

Rx Tx

CPE( Clientes) Internos Edificio -> Master

Clinicas Médicas Multimédica Maria del Alma

28

VoIP service statistics

Simultaneous calls

Calls per hour

29

User Satisfaction Poll Results

30

• Network characteristics:– Protocol: SIP– CODEC: G.711– Digital Services: Caller-ID, on-hold, transfer, redirect

• VoIP Quality measurement– VoIP traffic simulation – Stress test

• IxChariot software suite• 45 simultaneous calls in PLC Cluster

– 20 Real VoIP calls– 25 Simulated VoIP calls

– VoIP real-time traffic monitoring• Network Sniffer Appliance & Agents• Traffic Analyzer

– User satisfaction polls

• Results (average)– MOS: 4.2

• Recommended value: >3.5– Latency: 13ms (avg. one way, from CPE to Softswitch)

• Recommended value: < 100 ms– Jitter: 2.281 ms

• Recommended value: < 20ms– Packet loss: 0.1%

• Recommended value: < 0.2%– Total VoIP traffic in cluster: up to 4000 Kbps

Recommended values based on ITU Recommendations G.107 and P.800 and / or experiences from commercial VoIP deployments.

QoS evaluation

31

Business metrics

• Operations– CPE installation time– Installation time per transformer– Trouble Tickets: % open, average closing time

• CAPEX– CPE costs– Cost per User– Cost per Transformer– Cost per Home Passed– Cost per Home Enabled / Building enabled

• Market– Services penetration– Competition– Product Prices– Deployment strategy

• All parameters evaluated and validated in our Business Model to confirm commercial feasibility

SERVICE PENETRATION

Definitions

Year 3 Year 6 Year 8Penetration Rate Low Med High

15.00% 26.00% 30.00%

Client MixResidential 77.00% 78.80% 80.00%Business 23.00% 21.20% 20.00%

100.00% 100.00% 100.00%

Residential Product MixVoice only 60.00% 60.00% 60.00%Data only 20.00% 20.00% 20.00%Voice & Data 20.00% 20.00% 20.00%

100.00% 100.00% 100.00%Business Product Mix

Voice 2 Ports only 30.00% 30.00% 30.00%Voice 4 Ports only 30.00% 30.00% 30.00%Voice 2 & Data 13.33% 13.33% 13.33%Voice 4 & Data 13.33% 13.33% 13.33%Data only 13.34% 13.34% 13.34%

100.00% 100.00% 100.00%

Guaranteed Bandwidth Per POT [Kbps] 30 30 30 CODEC G.729 [Kbps]

Voice Oversuscription Rate - Residential 9 11 12 Voice Oversuscription Rate - Business 4 5 6

Data OversubsriptionResidential Oversuscription Rate 23 27 30Business Oversuscription Rate 12 14 16Data Upstream / Downstream Ratio 0.5 0.5 0.5 = Upstream bandwitdh is half of Downstream

BROADBAND MIX ResidentialBroadband @ 256 Kbps 32.0% 12.9% 0.0%Broadband @ 512 Kbps 32.0% 27.9% 25.0%Broadband @ 768 Kbps 21.0% 29.3% 35.0%Broadband @ 1024 Kbps 15.0% 30.0% 40.0%

100.0% 100.0% 100.0%BROADBAND MIX Commercial

Broadband @ 256 Kbps 35.7% 14.3% 0.0%Broadband @ 512 Kbps 25.0% 25.0% 25.0%Broadband @ 768 Kbps 18.9% 28.6% 35.0%Broadband @ 1024 Kbps 20.4% 32.1% 40.0%

100.0% 100.0% 100.0%

PHY LevelsMV PHY 40%LV PHY 25%Alt. PHY 90% Alt. PHY Links Qty 10.0%

SERVICE PENETRATION

Definitions

Year 3 Year 6 Year 8Penetration Rate Low Med High

15.00% 26.00% 30.00%

Client MixResidential 77.00% 78.80% 80.00%Business 23.00% 21.20% 20.00%

100.00% 100.00% 100.00%

Residential Product MixVoice only 60.00% 60.00% 60.00%Data only 20.00% 20.00% 20.00%Voice & Data 20.00% 20.00% 20.00%

100.00% 100.00% 100.00%Business Product Mix

Voice 2 Ports only 30.00% 30.00% 30.00%Voice 4 Ports only 30.00% 30.00% 30.00%Voice 2 & Data 13.33% 13.33% 13.33%Voice 4 & Data 13.33% 13.33% 13.33%Data only 13.34% 13.34% 13.34%

100.00% 100.00% 100.00%

Guaranteed Bandwidth Per POT [Kbps] 30 30 30 CODEC G.729 [Kbps]

Voice Oversuscription Rate - Residential 9 11 12 Voice Oversuscription Rate - Business 4 5 6

Data OversubsriptionResidential Oversuscription Rate 23 27 30Business Oversuscription Rate 12 14 16Data Upstream / Downstream Ratio 0.5 0.5 0.5 = Upstream bandwitdh is half of Downstream

BROADBAND MIX ResidentialBroadband @ 256 Kbps 32.0% 12.9% 0.0%Broadband @ 512 Kbps 32.0% 27.9% 25.0%Broadband @ 768 Kbps 21.0% 29.3% 35.0%Broadband @ 1024 Kbps 15.0% 30.0% 40.0%

100.0% 100.0% 100.0%BROADBAND MIX Commercial

Broadband @ 256 Kbps 35.7% 14.3% 0.0%Broadband @ 512 Kbps 25.0% 25.0% 25.0%Broadband @ 768 Kbps 18.9% 28.6% 35.0%Broadband @ 1024 Kbps 20.4% 32.1% 40.0%

100.0% 100.0% 100.0%

PHY LevelsMV PHY 40%LV PHY 25%Alt. PHY 90% Alt. PHY Links Qty 10.0%

32

Conclusions

33

Keys for a successful PLC deployment

ODM / OEM

Backbone

Utility

Subcontractor

•Viable IRU execution

•Clear O&M procedures definition

•Use the right technology

•Development of appropriate applications and solutions

•Appropriate Network design

•Efficient network management

Micro chips

ISP

VoIP

IRU

O&M Procedures

Technology

Products

Services

Interconnection

Support

Access Network

Software

I+DEngineering

Project Management

34

Conclusions: Value Proposition

PLC in Latin America: Telecom Market Opportunity• Most Competitive Alternative Last Mile, in terms of deployment time and cost

• “Industry disruptive” opportunity comparable to wireless plays of the 90s

PLC Ventures: Operator strengths• Electric Contracts (Irrevocable Right of Use of Electric Grids)

• Technology Assets (3rd party technology contracts, Proprietary Assets)

• Proof-of-Concept Deployments

• Negotiating with Electric Distribution Companies

• PLC Technology Know-how, Team and Field Experience

• Economies of Scale, from Regional Presence

35

Thank you

Contact information:

Sergio Angeli, CTO, PLC Ventures

e-mail: sergio.angeli@plcventures.com

USA: +1 305 365 0102

Guatemala: +502 2382 4040

Contact information:

Sergio Angeli, CTO, PLC Ventures

e-mail: sergio.angeli@plcventures.com

USA: +1 305 365 0102

Guatemala: +502 2382 4040