Posted: 04/2000
New Exchanges, Pooling Points, Brokers, Associations Spur Global Bandwidth Trading
BY KHALI HENDERSON
In mid-February carrier's carrier Williams Communications (www.williamscommunicatiions.com) did an about-face, saying it plans to be a leader in setting standards for bandwidth trading.
The company, a vocal naysayer of commodity bandwidth trading, plans to draw on the experience of its parent company, Williams Co., which has been trading energy commodities such as natural gas for years (see related story on page 23). The announcement is the latest in a steady stream of events, including the launching of a real-time bandwidth "exchange," neutral pooling point operators, bandwidth brokerages and associations, that indicate the commodity trading of bandwidth is gathering momentum.
Parties from the investment and telecommunications industries met in late January at the Pacific Telecommunications Conference (PTC) in Honolulu to discuss formation of an association for bandwidth traders. Tentatively named, Telecom Capacity Trading Association (TCTA), the non profit organization is being proposed by Risk Publications (www.riskpublications.com) and is at least the second such entity to be proposed in the past 90 days.
While Risk Publications' Managing Dir-ector Mark Kemp did not respond to interview requests, he did send out a global e-mail to interested parties indicating the PTC meeting garnered enough support for a carrier-run TCTA to schedule a March briefing for international telecom carriers in Washington, D.C.
A similar group, the Association of International Telecommunications Dealers (AITD, www.aitd.org.uk) was formed in December and received initial support, particularly from online trading floors and brokerages. However, AITD was faulted by some industry observers for being lead by the investment community rather than carriers.
To be sure, the investment community is eager to see the commodity trading of bandwidth take off. Commodity brokers already are forming their own bandwidth market desks. Energy brokerage Sakura Dellsher Inc. (www.sdinet.com) hired broker Ronald Banaszek in August to create the SDI Bandwidth Markets Group. Energy broker Mike Moore, a partner with Amerex (www.amerex.com), formed Amerex Band-width in December, becoming its managing director. Both Banaszek and Moore are convinced of the opportunity to take their extensive OTC trading model to the bandwidth marketplace, and both support the commodity trading model proposed by Enron Corp. subsidiary Enron Broadband Services Inc. (www.enron.net). The company already announced in December a trade with Global Crossing Ltd. (www.globalcrossing.com).
Enron's May proposal called for standardized contracts and neutral interconnection points for counterparty-to-counterparty trading and streamlining the existing bandwidth buying and selling process.
In support of this model, several companies have announced plans to construct neutral interconnection facilities. Washington-based LighTrade Inc. (www.lightrade.com) was formed in September and expects to have eight sites operational in major U.S. cities by third quarter. In 2001, it plans to have additional points in the United States as well as Frankfurt, Hong Kong, London, Milan, Paris, and .Tokyo.
In February, The Global TeleExchange Inc. (www.theGTX.com) announced a $25 million agreement with Lucent Technolo-gies Inc. (www.lucent.com) to build a carrier-neutral system of global exchange points used for originating and terminating excess minutes and other telephony applications on the collective networks of telecom wholesalers. Trading members will be able to anonymously buy, in a Nasdaq-like setting, standard units of telephony wholesale applications (bandwidth, dark fiber, etc.) at one price in the morning and at another price during off-peak hours. GTX expects to be operational in second quarter with PoPs in New York and London.
Meanwhile, RateXchange Inc. (www.ratexchange.com) officially launched its Real-Time Bandwidth eXchange (RTBX) in early February. The initial products available for trading on the exchange include one-month spot and one-year forward contracts for telecom capacity between neutral hubs at carrier hotels in New York and Los Angeles. Trading on RTBX offers buyers and sellers anonymity and a standardized contract that incorporates credit, settlements, delivery and billing.
