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To: tech101 who wrote (1242)	12/12/2001 12:59:52 AM
From: tech101	Respond to of 2772

Williams is getting ready for CA WCG Sees Little Effect From Enron's Departure 11 Dec 17:32 By Erwin Seba Of DOW JONES NEWSWIRES HOUSTON (Dow Jones)--In the early months of this year, two companies were depicted as fighting over the structure of the commoditized bandwidth market: Enron Corp. (ENE) and Williams Communications Group (WCG). Enron promoted a standardized agreement offering liquidated damages for failure to deliver as the surest way to create a commodity of bandwidth. WCG said Enron's way mightn't be the only way to create the market and telecommunications carriers may prefer their long-standing standard of "best efforts" in contracts. By early December, Enron is gone, leaving a second headquarters building in downtown Houston uncompleted. At the same time, WCG is finishing a 750,000-square-foot headquarters building in downtown Tulsa, Okla., dubbed "the dirty ice cube" by Tulsa citizens for its square shape and the gray-tinted windows that are its exterior facade. Chairman and Chief Executive Howard Janzen thinks the telecommunications capital crunch gives WCG an opportunity. It has removed some competitors and leaves companies requiring telecommunications without the means to build or finish optical fiber networks. Enron, despite the image created by Enron and news reports, wasn't one of those competitors. "We weren't seeing Enron in our markets," Janzen told Dow Jones Newswires. In fact, WCG exited the commoditized bandwidth market Enron was trying to create early in the year, said Sharon Crow, WCG's vice president of bandwidth trading and risk management. "One of the reasons we stayed out of the trading market is we were constantly being criticized for hindering it," Crow told Dow Jones Newswires. The depiction of WCG as a villain attempting to hinder the market's development frustrated Crow. In 2000, WCG sponsored several meetings of companies planning to trade bandwidth, where the discussions about standardized agreements began. Those efforts eventually broke down over Enron's demand for a liquidated damages agreement requirement payment for delivery failure. "The break down was over liquidated damages. You can't take a best efforts industry and make it firm - 'your neck's on the line if you don't deliver' - in one jump. Eventually, there would have to be caps," Crow said. Janzen, like Crow, sees bandwidth trading as a price discovery and risk management tool. "I think bandwidth trading will emerge someday," Janzen said. "But it will always be at the low end of the market." WCG disagrees with the idea of a bandwidth glut. Citing a study done by TeleChoice Inc., Janzen and other WCG executives believe demand on the 22 major optical fiber routes in the U.S. is 80% of capacity. TeleChoice did the study on behalf of WCG. Other telecommunications analysts also believe the bandwidth glut is overhyped. The TeleChoice study also cites the huge amount of unlit optical fiber in the ground, which is usually given as proof of a bandwidth glut. That fiber will have to be lit, at 8 to 30 times the cost of construction, to meet future demand, which is something the owners of the fiber may not be able to afford. Janzen expects WCG will grow as demand for its customers' services grow. For instance, the company provides long-distance service to regional Bell operating company SBC Communications Inc. (SBC). SBC, which provides local telephone service in California, has applied to provide long-distance service in the Golden State. "We're getting ready for California," Janzen said. In the third quarter of this year, WCG reported a net loss of $272.8 million on revenue of $297.8 million. Janzen said the company is on track to have positive results before interest and taxes by the end of this year. He expects the company to be cash flow positive by 2003. -By Erwin Seba, Dow Jones Newswires, 713-547-9214 erwin.seba@dowjones.com (END) DOW JONES NEWS 12-11-01, 05:32