Here's another bit of news. I think this one, on balance, is positive. Note the area at the end which I put in bold type.
March 12, 2001
BANDWIDTH BEAT: Dealer Offers Path To Increased Revenue
By MICHAEL RIEKE
A Dow Jones Newswires Column
HOUSTON -- One of the new players in bandwidth trading caused a buzz last week, when it sent out notice via e-mail that it had network circuits to sell.
It wasn't the medium but the message that was unusual: Contrary to traditional practice, the carrier wasn't getting directly involved in the market. In fact, it wasn't even revealing itself. Instead, the business was being handled by the e-mail's sender, Broadband Clearinghouse of Houston.
"Our niche is finding buyers and sellers and doing back-to-back trades," Richard Kim, one of the four co-founders of Broadband Clearinghouse, told Dow Jones Newswires. "To a carrier with fiber in the ground, increased network utilization means increased revenues."
Broadband Clearinghouse is offering high-capacity bandwidth for sale to link a number of cities in the East. Broadband does back-to-back deals to avoid financial exposure. They don't buy a circuit until they have a buyer committed to the deal.
"I don't think we're at the position where we want to take a long or short position yet," Kim said.
The e-mail lists seven cities in the East: New York; Philadelphia; Washington; Atlanta; Miami; Orlando; and Raleigh, N.C. A buyer can combine any two cities to form a city pair.
While most bandwidth brokers and traders concentrate on DS3 and OC3 circuits, Broadband Clearinghouse lists faster OC12 and OC48 circuits. The listings are for one-year contracts beginning June 1.
OC12 circuits are priced at $.0055 per DS0 mile per month and OC48s are $.0053/DS0 mile/month. Prices are for circuits that run from one point of presence to another. They don't include any nonrecurring charges, local-loop charges, taxes, government fees or surcharges.
The nonrecurring charges will be minimal, Kim said. A buyer can negotiate "a low NRC or no NRC" for a deal. With few exceptions, most carriers will drop the NRCs if the deal is big enough, he added.
Deals Will Use Standard Carrier Contract
Deals will be done with a standard carrier agreement, he said. That means "best-efforts," not firm. The carrier won't pay any liquidated damages for delivering the circuit later than the June 1 date listed for the start of the contract. If a circuit goes down, the buyer won't have to pay for it while it's not available. But the seller won't cover any loss of revenue to the buyer during the outage. And there won't be any liquidated damages paid for quality of service problems, Kim said.
"The force majeure and liquidated damages section will be very much like a typical carrier contract," Kim said.
All the bandwidth is being provided by one carrier, Kim said. So the circuits won't be "a pieced together Frankenstein-type system."
Of course, he wouldn't identify the carrier. At least not purposely.
But the e-mail does list addresses for the points of presence in each city. For example, the PoP in New York is 60 Hudson St. That's a prestigious address, because it was one of the first telecom hotels in New York. It's difficult if not impossible to get a PoP in 60 Hudson these days.
"It's pretty much crammed with telecom tenants," said a real estate specialist at a telecom company.
That's one clue for identifying the carrier. Another is Raleigh, which stands out among the seven cities on the Broadband Clearinghouse list. Narrowing the candidates further, the PoP is located at 2111 Harrod St. in Raleigh, while most carriers have PoPs on Tarheel Drive or Wolfpack Lane, a source said. Only a couple have PoPs on Harrod Street.
Using a little bandwidth, I entered the address at an Internet search site. The search yielded seven listings at that address. One is Kivex.com, which is now part of Allegiance Telecom Inc. (ALGX) of Dallas.
A recent news release on the Allegiance Telecom Web site listed cities where the company has facilities. Neither Orlando nor Raleigh was listed.
The Web search also yielded PSInet (PSIX). A spokesman for the company said PSInet has PoPs in New York, Philadelphia, Washington, Atlanta, Miami, Orlando and Raleigh. They have OC12 and OC48 circuits in each of them.
Allegiance said it wasn't the carrier. I can't say for certain that Broadband Clearinghouse is selling circuits for PSInet, which couldn't immediately answer the questions.
But the company's shares were selling for just over $1 Monday, down from a 52-week high of about $59. Allegiance was trading at about $21 a share, down from its 52-week high of $102. Companies seeing that kind of share depreciation should probably be looking for new ways to increase their network usage and their revenues.
-By Michael Rieke, Dow Jones Newswires; 713-547-9207; michael.rieke@wsj.com |
