Posted: 03/2001
Trading Desk
RateXchange, London Satellite Partner
By Bruce Christian
RateXchange Corp. (www.ratexchange.com) and The London Satellite Exchange (www.e-sax.com) have announced a global alliance that will help ISPs and others buy capacity to fulfill their increasing demands for end-to-end connections.
The agreement also enables satellite users to meet more easily their combined satellite and fiber optic bandwidth needs.
RateXchange operates a trading system for fiber optic bandwidth, and The London Satellite Exchange is the world's first online exchange for the satellite industry. The alliance allows users immediate access to satellite and fiber optic bandwidth capacity and prices, giving them the ability to package value-added network solutions and improve their margins.
According to the alliance agreement, the exchange that generates a lead that results in new business for its trading partner receives a fee, a London Satellite Exchange spokesman says.
What some analysts are calling a "ground-breaking" alliance, the agreement allows diversification of each company's product offerings by allowing its users to package total bandwidth requirements.
The London Satellite Exchange sales engineers are proficient technically, have strong relationships within the industry and already work with more than 80 percent of the world's satellite operators.
"The satellite bandwidth market is estimated to be $10.5 billion in size," says Frank Genin, CEO of The London Satellite Exchange.
He adds the satellite margins are stable when compared to fiber optic bandwidth.
"Demand for applications like streaming video and content delivery over satellite is increasing by 40 percent annually. Packaging solutions through combining satellite and fiber optic capacity for these applications can now be addressed online," Genin says.
Currently, television companies remain the major customers for satellite providers. However, ISPs increasingly are looking to the heavens to deliver Internet-related data to remote areas where the infrastructure is limited, says David Sandham, director of communications and PR for The London Satellite Exchange.
Half of the satellite solutions involve ground infrastructure like copper and fiber, Sandham adds. For instance, an ISP that provides web access to China via satellite often must access a local loop that is connected to fiber originating from the United States, where most websites are hosted.
"A big proportion of customers are people demanding an end-to-end solution," Sandham says. "Therefore, we are finding ourselves having to deal with cable requests increasingly."
Also, ISPs delivering IP via satellite can reduce the traffic jams that occur through the congested pipes, which can put some websites in slow motion--ultimately causing crashes.
"Satellite can provide a different way of leapfrogging over terrestrial congestion," Sandham says.
San Francisco-based RateXchange's CEO and president, Jon Merriman, says he believes strongly in the marriage of satellite and fiber as a way to satisfy the demand for content and other communications applications.
"Until now, customers have not been able to access global satellite capacity and fiber optic bandwidth solutions together online," Merriman explains. "This alliance leverages RateXchange's and The London Satellite Exchange's areas of expertise to the customer's advantage and should increase liquidity in both marketplaces. Both companies will benefit greatly through the integration of our respective trading systems."
The London Satellite Exchange publishes an index of satellite transponder prices that track per-MHz prices in the C and Ku bands. RateXchange provides bandwidth-trading solutions to telecommunications, energy and utility firms, financial institutions and commodity traders.
According to the companies, the partnership should provide additional revenue streams for sellers on the RateXchange neutral trading site, because those selling parties often own a combination of infrastructures, from undersea cable to satellite landing stations.
Furthermore, the alliance provides one point-of-contact for a trader's terrestrial and satellite bandwidth needs, RateXchange executives say.
Josh Long, news editor for PHONE+ magazine, contributed to this article.
