Posted: 04/2001
Trading Desk
Band-X Now Has Minutes to Trade in U.S.
Market
By Bruce Christian
Band-X Ltd. (www.band-x.com), the London-based neutral, independent marketplace for wholesale telecommunications capacity, has crossed the Atlantic Ocean to set up shop in New York City.
Band-X has opened a switched minutes platform with integrated VoIP capabilities at 60 Hudson St., one of the largest collocation sites in the United States.
The Band-X Switched Minutes exchange allows U.S. facilities-based carriers to anonymously terminate international wholesale voice traffic. Sellers maximize the value of spare capacity on their direct or indirect international network and buyers have a fast, efficient way of finding the capacity they need.
Band-X already operates similar minutes exchanges in Frankfurt, Hong Kong and London. In its London-based Telehouse, the firm trades more than 15 million minutes per month, according to Paul Newnes, executive vice president of global switched development at Band-X.
He adds that Band-X recognized a 15-fold increase in minutes trading last year.
"We saw something was working," he says. "This service is for international termination. As each carrier trades with other carriers around the world, it has been a good revenue source for each. That very much developed into an arbitrage market, and so it sort of made sense for Band-X to create a single trading environment rather than to build out to each carrier.
"We now have live exchanges in the four largest minute markets," he says.
In addition to the switched minutes exchange, Band-X also provides secure, anonymous trading floors for the exchange of networks, carrier-neutral collocation space and IP transit.
"Band-X switched service allows our participants to achieve a stronger return on investment from their existing infrastructure," Newnes says. "We've taken a process that was previously time-consuming and resource-intensive and streamlined it."
He says, "Any qualified carrier can now participate in the buy/sell process where all members have access to excess capacity, and monitored rates that give a clear view of current market conditions."
According to Newnes, Band-X gives carriers the tools to better manage the pricing and reporting process for traffic volumes, while it monitors costs and quality standards per destination. Through daily updates via web-based reporting tools, Band-X updates members with real-time pricing, volume and quality metrics.
Carriers connected to the Band-X Switched Minutes exchange can streamline many of the expenses that traditionally erode margins in the wholesale telecom business. These include under-performing interconnections, least-cost routing, independent quality analysis and measurement, all with a transparent and disclosed base fee structure, as opposed to arbitrary mark ups.
In the meantime, the company says the long-standing collocation cramp in North America is beginning to ease. Band-X recently released its latest survey on collocation space, which shows that European facilities remain three times larger than U.S. counterparts, and that the prices charged for rack space in the United States remain significantly higher.
According Band-X's quarterly survey, which examines trends in the collocation postings of more than 90 suppliers of collocation providers on its exchange, facility sizes in North America increased during the final quarter of 2000. In the United States, the increases were nearly 40 percent, as the average facility jumped in size from 1,300 square feet during the third quarter of 2000 to 2,100 square feet by the end of the year.
Band-X's survey shows that every new entrant to the market entered with facility sizes greater than the fourth quarter average. It also notes that the new facilities are charging a premium, as rack prices are greater than they were during the fourth quarter.
"The price squeeze in the U.S. over the last year reflects the fact that the North American collocation market has traditionally been driven by the real-estate sector. If you want a fully fitted space, you would go into a building and do the fit-out yourself," says Tim Anker, vice president of collocation trading for Band-X.
"But today, because build-out time is so critical, the off-the-shelf solution offered by colo providers is becoming much more attractive--the market simply hasn't been able to match this demand," he adds.
He also says the carrier neutral collocation market is evolving at an unbelievably fast pace, with more facilities being built while those already available are filling rapidly.
