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The Story of Grid Net: How Ray Bell Is Betting WiMAX Can Fix the Grid

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To many, wireless standards are an important part of creating networks that can easily communicate and be built on the cheap. To others, it’s more like a religion. Take Ray Bell, the entrepreneur, former Cisco (s CSCO) networking exec and, most recently, founder of San Francisco smart meter software company Grid Net. To Bell, the clear answer to building out the smart grid rests with the wireless standard WiMAX — a nascent, high-speed wireless technology that has morphed into an alternative wireless option for cell phone companies’ next-generation networks. As Bell, with the conviction of both a lifelong network engineer and the founder of multiple startups, put it to me: “Why would the smart grid not use WiMAX?”

If anyone can do it, it could be Bell — he’s been taking a hard look at both the network and energy worlds for years. After helping Cisco build its network management systems, then leaving to found the network management startup SmartPipes (a play on the carrier as the “dumb pipe”, which had funds from Netscape founder Jim Clark and Kleiner Perkin’s John Doerr), Bell joined Foundation Capital as an entrepreneur-in-residence in the early 2000s. A lesser known fact is that he then joined one of Foundation’s smart grid portfolio companies, Silver Spring Networks, as its CEO in 2003. One of his tasks was to refocus the company, another was to recruit current Silver Spring CEO Scott Lang. Bell left Silver Spring in 2005 over what he says was “a different strategic opinion for how the smart grid should evolve.” Now, in an interesting turn, Bell finds himself competing with Silver Spring for some of the same utility customers.


Bell says his WiMAX-based smart meter, which is built by GE (s GE), uses an Intel (s INTC) WiMAX chip and Grid Net software, is one of the first truly open-standards based approaches to building a meter. “You don’t need GE, Grid Net or Intel to build this meter,” he explains. Open standards mean third parties will be able to build various applications and devices in conjunction with it, helping to dramatically drive down cost. WiMAX chip sets currently cost around $36, says Bell, but in a year they’ll be closer to $12, and in another 6 months they could hit $8 or even $6. Grid Net’s meter went on sale to select utility customers this March, and though Bell declined to state the current price, said that within a year and a half he expects the price to drop low enough to undercut any of the meters on the market that use proprietary technology.

While Silver Spring uses unlicensed 900 MHz spectrum and some cellular networks for its wireless technology, Grid Net is focusing solely on WiMAX. One advantage is that WiMAX has drawn the support of a variety of industry heavyweights. Beyond Intel and GE, Sprint and Clearwire are building out a nationwide WiMAX network, cable firms and Google have climbed onboard, and Motorola and Samsung have bet heavily on the technology, too. WiMAX also runs over licensed wireless spectrum, which Bell claims is far more reliable and secure than unlicensed — a particularly important feature for smart grid deployments. On the other hand, it’s also more expensive to run a network over licensed spectrum as the network owner has to purchase the license.

Bell is also working with broadband-over-power-line chip maker Intellon to connect the smart meter via communication-enabled power lines. Ultimately Bell envisions his smart meter device almost like a router, with a broadband connection, and selling services into the home. It’s ambitious, but strikes me as almost overshooting the case — why make the smart meter the central, sophisticated point for energy in the home? Cisco clearly sees the possibilities of joining smart grid and consumer devices, but I’m wondering if they’d want to work with a smart meter that had similar (or even more) intelligence as their Linksys devices.

Grid Net’s Progress

Bell has brought on an impressive list of backers. Back in 2006, Intel Capital GE and Catamount Ventures invested in Grid Net (they won’t disclose the size of the round). Today Grid Net is three years old and employs around 40 people (all but three of whom are engineers). GE also signed on to manufacture the smart meters that would use Grid Net’s software, and is spearheading its relationships with utilities.

So far Bell says Grid Net has done pilot deals with four utilities — reportedly including Australian utilities EnergyAustralia and SP AusNet, and reportedly in discussions with American utilities American Electric Power, and Consumers Energy. Bell was pretty quiet about his utility deals during our meeting, saying only that Grid Net will be making “big announcements” on the partnership front in a month or so.

Hurdles Ahead

Many questions remain, such as whether Grid Net will be using national WiMAX networks like those from Clearwire when they’re ready or partnering with WiMAX network builders for utility-owned networks. Bell says both, and though he declined to discuss specifics, said that in some cases utilities had expressed more interest in owning their own networks, while in others, national service providers had proved more attractive. Whether it’s better to build or to rent space off existing networks is an ongoing debate among utilities looking to build smart grid networks.

As it is with all-or-nothing bets, Grid Net’s success will depend on the success of the deployment of the WiMAX standard itself. The most prominent national WiMAX service provider Clearwire has certainly had its share of problems. As Daryl Schoolar, senior analyst with the market research firm In-Stat, put it recently: “There is a business case for WiMAX…However, I also recognize the success of Clearwire and WiMAX in the U.S. is far from certain. Clearwire faces several critical challenges, including funding, timing of its network rollout, device availability, economy and competitors.” Meanwhile, phone company Nokia has taken to referring to WiMAX as wireless Betamax, in an effort to prove that the standards debate has already been lost.

Bell’s dreams of building a WiMAX-based smart grid are reliant on the efforts of the WiMAX industry. That could prove to be both his company’s competitive advantage as well as its Achilles heel. At issue is a stake in the upcoming smart grid deployments, which some analysts expect to be one of the biggest drivers of wealth in the decade. Utilities are spending tens of billions on smart meter deployments, and the Obama administration is calling for the installation of an additional 40 million of them. If just a small percent of those meters use Grid Net’s software, it’ll be a success.

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