Undeterred by the combination of telecommunications and energy industry financial meltdowns this year, an affiliate of San Diego-based Sempra Energy still expects a slow but steady growth in its seven-patent-ending “fiber links” technology for threading fiber optic cable through natural gas distribution pipeline mains and service lines in dense urban commercial and suburban residential areas. The president and several other senior executives with Sempra Fiber Links were in Portland, OR, Monday at a national meeting of state regulators, pitching their system as being a fast, safe, less costly and environmentally more benign means of bringing fiber optics to commercial and residential areas that are among more than 90% of the nation that is still dependent on copper phone wires.

“In the U.S. something like only 5-7% of the commercial buildings 100,000 square feet or larger actually have fiber today,” said Michael Clover, a former technology/engineering executive in the telecommunications industry who joined Sempra Fiber as its president a year ago. “The difference between fiber and copper networks is only two components — price and speed. If you have fiber you can pay only a quarter or fifth of what you pay today for telecom services, and the speed is 10 to 100 times faster. I think the pure economics of that will prevail in time.”

The key to the Sempra technology is the ability to install the fiber wrapped in a polyethylene conduit into the gas pipelines without interrupting the energy lines’ operation in lengths of 500 to 1,250 feet so the usually cutting into streets is reduced significantly. Natural gas utility system operators are embracing the technology, Clover said. “The gas companies have a tremendous asset they have in the ground,” he said. “Without any new capital requirements, they can make more money off of existing infrastructure. Going forward, that is going to have a lot of appeal as their shareholders demand more earnings/cash flow.”

Clover said that Sempra hopes to have an initial agreement among all stakeholders later this week for gaining approval from the California Public Utilities Commission this fall for pilot programs in its two major utilities — Southern California Gas Co. and San Diego Gas and Electric Co. Other programs are already in place with another small utility Sempra created in North Carolina and in Ft. Worth, TX, with telecommunications and gas utility interests.

Even with the economic downturn and the problems of finances and balance sheets, the growth in data nationally is still running about 20% annually, Clover said. The longer term need for the information technology infrastructure is basically going to drive the need for fiber, and Sempra thinks it has the most cost-effective, technologically sound means of installing that fiber.

Why hasn’t more of the market for fiber been tapped already? “It is just bloody expensive,” Clover said. “I think when a technology like ours comes along to change that price point, it will help accelerate the change to fiber. Our role is one of a classic facilitator to help change the price curves.”

The U.S. now has all of the long-distance fiber cable nationally, but Sempra’s technology is designed to get the so-called “last mile” of the network installed, and that is the critical segment that takes the infrastructure to individual customers. Clover said that about 72% of the commercial customers not hooked up to fiber today are less than three-quarters of a mile from a fiber route today. Using a utility analogy, he noted that the transmission system for fiber is now firmly in place, but there is little or no distribution system.

The Sempra Fiber Links technology vice president, Scott Beals, is scheduled to brief a joint gas, finance and technology committee on the fiber installation system as part of the summer meetings this week of the National Association of Regulatory Utility Commissioners in Portland, OR.

“I think we have a good story to tell,” Clover said. “As we take our small steps and gain credibility, this business will keep growing.”

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