Trading Desk: Master Agreement Needs a ‘Bit’ of Defining

Posted: 01/2001

Master Agreement Needs a ‘Bit’ of Defining
By Bruce Christian

For months now, the word has been that a standardized master bandwidth
purchase and sale contract could be reached "any day."

The trouble is, "any day" never seems to pass. The industrywide
committee negotiating the agreement, led by the Competitive Telecommunications
Association (CompTel,,
continues to have a difficult time determining QoS issues.

According to The Global TeleExchange Inc. (
director of marketing Doug Johnson, two factors are holding up the agreement.
They are a payment arrangement for undelivered service and who pays the penalty
if agreed-upon service is not delivered.

Johnson adds that this issue may be inherent in the switching from
traditional wireline phones to packetized voice deliverable via the Internet.

"Traditionally, the way that it works is that if there is a certain
amount of downtime per month, the buyer is compensated in terms of a percentage
of traffic," Johnson explains. "So it all comes down to measurement
and the way they measure."

Traditionally, measurement for QoS would be in terms of time between when a
trouble ticket is written and when the problem is resolved.

However, as voice is digitized and moves as data, the measuring stick has to

"The BTO [Bandwidth Trading Organization] is taking a position more of
an Internet focus," Johnson says. "They are measuring errored seconds,
severely errored seconds and unavailable seconds.

"What they are trying to measure is how many bits are lost in a
particular bit stream," he says.

The category of errored seconds occurs when fewer than 2,400 bit errors are
measured. Severely errored seconds is reached when more than 2,400 bit errors
are recorded. Unavailable seconds occurs when consecutive strings of more than
10 severely errored seconds are measured in a day.

The categories are based roughly on what Enron Broadband Services (
and CompTel have recommended.

"In measuring this way, they are trying to write refunds into the
contract, so it is only natural that people who can’t measure these quantities
aren’t going to sign this," Johnson says.

Not all service providers are digitizing their signals; hence, a bit-error
measurement standard is not applicable to everyone.

"A lot of companies would have to install new hardware and
software," Johnson says.

As far as paying if the seller can’t deliver, that also may remain

Unlike some commodities–such as electricity–in which the seller agrees to a
price and keeps to that price regardless of fluctuations, the current working
agreement does not hold the seller to an agreed-upon set price.

In fact, CompTel president H. Russell Frisby Jr. emphasizes the master
trading agreement’s flexibility.

Last October, he wrote of the proposal: "Although the adoption of
standard terms and conditions increases market efficiency, the proposed master
agreement is entirely voluntary, and there is no requirement or agreement that
companies desiring to engage in bandwidth trading use the standard form."

He further explains, "The agreement is structured to easily permit
parties to tailor the agreement to vary certain terms and provisions."

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