StockFairy,
This months BCR(p14) has an article on bandwith trading. Concurs with what you are saying. Also, mentions that many of the trades on the exchanges are 'funny'. Never go to physical delivery..just trying to prime the market..
.."These trades are torn up. 'closed out' or 'booked out' before they get to delivery," he (Carlos Alarcon, VP of capacity markets with LYNX technologies) said. This keeps the parties from having to pay liquidation damages when they dont fulfill their contracts, and keeps everyone in the game...
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From Telecommunications online August 2001:
A Conversation with David Brauer of GPU Telcom Services
Sam Masud, Senior Technology Editor
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David Brauer is president and CEO of GPU Telcom Services, a wholly owned subsidiary of GPU Inc., a Morristown, N.J.-based electric utility company serving New Jersey and Pennsylvania. Brauer joined the parent company in 1982 and was named director of financial planning in late 1989. He came to GPU Telcom following a four-year stint at GPU International, which has interests in overseas power generation plants. Brauer, who became GPU Telcom's president and CEO in May 2000, is responsible for expanding the company's position in the telecom market.
Q As a 50-year-old energy company, what made GPU decide to get into the telecom business?
A This goes back to the energy company setting up a communications network to provide high-speed, high-reliability services for its facilities in New Jersey and Pennsylvania. This network began about 12 years ago, when we laid fiber from midwestern Pennsylvania to New Jersey using GPU's right of way as an electric utility. Obviously, we put in more fiber than what the [utility]company needed, since there were telecom carriers interested in leasing capacity.
QWhat made GPU become a telecom company?
AUp until the 1996 Telecom Act, our business was growing with the internal needs of GPU's utility business and also from meeting the needs of external customers, carriers and other businesses that leased fiber from us. The Act was an opportunity to grow our business, so GPU Telcom Services was founded as a separate business unit to enter into agreements with the New Jersey and the Pennsylvania state commissions, so we could have access to the rights of way of the utility companies. The Act really propelled GPU Telcom into becoming a separate unit seeking outside business.
QWhat's the footprint of GPU Telcom's network and how much fiber have you put in?
AThe original deployment was about 500 route miles. Currently, we have about 3500 route miles or about 200,000 fiber miles. When we first started constructing and installing fiber, the count was about 36 fibers, but today we construct up to 432. Over the last couple of years, we've increased our investment in fiber substantially to deliver services in the metro markets.
QWhat are you doing with this fiber?
AWe sell and lease dark fiber, and we also provide dim fiber-partially lit fiber for which the customer provides the end equipment. We also provide wholesale transport services, anything from a T1 to an OC-48.
QWho are your customers?
ABuyers might be ISPs, wireless providers, cable companies, IXCs or even our affiliate AFN (America's Fiber Network), which is a joint venture of four utilities and a CLEC. AFN is in the carrier's carrier business, and we have a 25-percent share in it. This gives us a long-haul network with a geographic reach along the eastern United States, from Montreal down through Albany, New York City, the Baltimore-Washington, D.C. area and into the Midwest.
QAre top IXCs such as AT&T, WorldCom and Sprint your customers?
AAll of the above.
QWho are typically your biggest customers?
ACLECs and IXCs.
QAre there plans to substantially expand your network?
AWe're close to completing our long-haul deployment. We have an agreement with Amtrak to use its right of way, so we're completing a route from Penn Station in New York City down to Washington, D.C. and across to Harrisburg, Pa. Once this is done in August or September, it will represent a majority of our long-haul construction, since our major focus is on the metros and buildout of local fiber to connect the last mile.
QSo you're also a last-mile fiber provider?
AWe have a joint venture called Telergy Mid-Atlantic with Telergy (Syracuse, N.Y.) to provide fiber-based services to large customers. Telergy Mid-Atlantic provides services such as voice, video, data and data storage to large enterprise customers.
QDo you also have a retail business?
AWe provide retail services through affiliates such as Telergy Mid-Atlantic. In addition to AFN and Telergy, we also have a third partnership with Sting Communications (a privately held Lebanon, Pa., company), which is a wireless last-mile provider of high-speed data services.
QRoughly what percentages of your business are wholesale and retail?
AProbably three quarters of our revenue is from wholesale, since the retail side is only about a year or year-and-a-half old.
QIs GPU Telcom profitable?
AWe are. Things have changed substantially in the industry from a year ago, but we've been careful to stick to our business plan, which is to complete the long-haul network and focus on metro services. We've been conservative compared to the rest of the industry, so it's been slow but steady. Our major construction is behind us, and we're looking to grow our revenues and earnings over the next couple of years.
QWhat's your target market?
AOur focus is in the Tier 2, 3 and 4 markets, and we serve these through our affiliates. GPU Telcom provides the last-mile connectivity and [metro and long-haul] transport services to both businesses and other carriers.
QDo you believe these smaller markets present an on-going opportunity?
AAbsolutely. A lot of carriers have spent a lot of money putting in fiber and equipment in large markets, and prices there have declined substantially over the last year. The real issue is getting infrastructure and services out to underserved markets-Tier 2, 3 and 4-because that's clearly where the need and demand are, and where we believe profitability lies. This is clearly our focused business plan.
QHow does this square with your network going into New York City, Washington and Philadephia?
AWe're not going in to compete in those cities, but we can serve smaller markets off our backbone through colocation sites and POPs. In Tier 1 cities, we're only looking to pick up and terminate traffic. For example, we've got business relationships with a number of carriers that serve the New York City market and we would hand traffic to them.
QHow many POPs do you have?
AWe have more than 70 facilities that tariffed carriers might call POPs, if you include those of our affiliates.
QWhose SONET equipment are you using?
ANortel [for long-haul] and Cerent in the metro. We began buying Cerent equipment before it was acquired by Cisco. We typically use this equipment for a county-wide ring and to provide services such as LAN-to-LAN interconnection.
QAny plans for deploying DWDM?
AWe're currently using SONET for transport and don't really see a need at this time for DWDM equipment, although AFN is in the process of deploying DWDM. GPU Telcom is more of a regional carrier off the AFN network, which means we move traffic from our SONET network to the AFN partnered network and vice versa.
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