Internet Spot Market For Bandwidth Set Up By Band-X

Computergram International, June 30, 1998

Telecom capacity broker Band-X has set up a spot market on the internet for telephone minutes and bandwidth. The exchange provides registered users with screens for placing anonymous bids and offers on any telecom route. Users wishing to purchase capacity on a route at the displayed rate call Band-X to take the trade further.

Minutes are purchased by placing a deposit or bond with Band-X which guarantees payment to sellers and charges a switching fee of 0.85% to buyers and 1.00% to sellers. Buyers set up their own E1 connection to the Band-X switch at the London Telehouse, a facilities center for international telecoms operators and ISPs. Once a deal has been concluded, capacity is immediately made available. In order to help the development of a commodity market in telecom capacity, Band-X has been active in setting up standards for call clarity. It uses BT's call clarity index to determine the value of a connection, a move which Band-X directors Marcus de Ferranti and Richard Elliot hope will lead to the co mmoditization of bandwidth and the eventual setting up of a futures and options market as well as a spot market. Mr de Ferranti expects deals worth between 18m pounds and 24m pounds to be conducted through the switch before the end of 1998. Band-X set up the first independent virtual market for international wholesale telecom capacity in July 1997. Since then two similar exchanges have started operations on the web, RateXchange which is based in San Francisco and Arbinet in New York. Band-X claims that it has attracted 2,000 carriers, wholesalers and resellers from around the world to its service.