It's no secret that the smart-grid market is heating up, and several companies are positioning themselves to benefit from the billions in federal stimulus dollars that are expected to flow into the utility sector.

Ashish Sharma, vice president of corporate communications with WiMAX vendor Alvarion, said his company is seeing more RFPs and RFIs issued by U.S. utility companies for smart-grid applications. The smart grid — which comprises smart meters, communications technology, sensors and software — is envisioned to let customers and utilities monitor energy consumption and taper usage when the availability of electricity is limited. The IP-based smart-grid model ultimately also is expected to help consumers understand the economies of their consumption patterns, so they can make changes in the home. Theoretically, utilities will be able to use the smart grid to improve energy reliability and efficiency, while reducing power-line losses.

As noted in today's news story, "WiMAX for the smart grid is heating up," WiMAX technology is beginning to gain traction as a possible technology enabler for the smart grid. GE Energy and Intel have developed a WiMAX-based smart meter. But Wi-Fi and commercial cellular technology are vying for a piece of the market too. As a result, a technology Holy War may be brewing.

Last week, smart meter networking startup Trilliant announced it acquired Wi-Fi mesh network provider SkyPilot Networks, whose initial focus was to capitalize on the now-defunct muni-WiFi boom. SkyPilot, however, has been holding its own through municipal and public-safety deployments. But it has also developed a long-range version of Wi-Fi that allows a greater range than conventional Wi-Fi--up to 10 miles or more. SkyPilot does this via sectorized antennas operating in conjunction to avoid interference. Another Wi-Fi player, Tropos — which also has a significant public-safety wireless mesh business — also has announced its intentions to pursue the smart-grid market.

Then there are the commercial mobile operators. Smart-metering company SmartSynch and AT&T recently teamed up to provide electric utilities with a smart-grid solution for individual homes. The two are combining a suite of wireless service plans from AT&T — which are designed specifically for machine-to-machine communications — with SmartSynch's smart grid. Verizon also has made similar announcements, and virtually all commercial operators are eager to enter this space as it offers a new avenue of growth for them.

Of course, pros and cons exist for each approach. Building a network requires extensive upfront capital and utilities run the risk of deploying technology that could become obsolete in the future. Accordingly, the Trillium/SkyPilot combination offers quite a compelling argument. Wi-Fi has matured so much that the chips are very inexpensive, capex is low and, with SkyPilot's interference mitigation, the range is adequate enough for smart-grid applications.

On the other hand, WiMAX has an open platform and the promise of enabling a host of other data-intensive applications on top of it — but the technology is not as mature as Wi-Fi. It remains to be seen how fast equipment and chip costs can fall given WiMAX's deployment schedule. Clearwire is aiming for a nationwide rollout of the technology, but its chief strategy officer, Scott Richardson, recently revealed during the company's first-quarter conference call that WiMAX equipment pricing isn't declining very dramatically — if at all. For example, Clearwire USB modems have increased from $49 in January to $70 today, and WiMAX-enabled laptops are still selling at a premium price — about $60 to $80 higher than a conventional Wi-Fi-enabled laptop. Richardson said that once Clearwire rolls out in more markets, hardware prices should begin to fall.

The outsourcing model offers advantages in terms of reducing upfront costs, and utilities can ride on the coattails of technology innovation as operators like AT&T and Verizon spend billions on upgrading their networks and enhancing data speeds. That in turn drives down chip and hardware costs. Still, the utility sector is beholden to the operator in terms of speed of innovation and coverage. There also are recurring expenses to deal with, as utilities pay a regular fee to use these networks.

Most analysts believe that the market will see a combination of all of these approaches. What would be most compelling, however, is the marriage of some of these technologies. A WiMAX/Wi-Fi or cellular/WiMAX combo, for instance, might solve some of the coverage issues that always plague wide-area networks. And anything with Wi-Fi included should help drive down costs for utilities. I'm betting we'll see a host of interesting bedfellows enter the smart-grid space this year.

What do you think? Tell us in the comment box below.

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