Enron discusses bandwidth trading

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February 28, 2000
Web posted at: 8:22 a.m. EST (1322 GMT)

by Denise Pappalardo

(IDG) -- Last week Enron Broadband Services held a press event to talk about the company's trading of bandwidth.

While bandwidth trading, or intermediation, as Enron's CEO Joseph Hirko prefers to call it, does not directly affect customers, it's something they should be aware of.

Enron has developed "pooling points" in Los Angeles and New York, where Enron and other serv-ice providers buy or sell bandwidth. Carriers have been leasing capacity from each other for decades and ISPs have been setting up private peering connections with each other for several years, so the concept of using each other's bandwidth is not new.

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But Enron has set up a system that's based primarily on Lucent network management gear, which Enron claims will allow it to do two important things: Guarantee performance over multiple net-works; and change circuits in a matter of seconds, as opposed to days or months.

Today, when carriers buy capacity from each other, they ink deals that sometimes span 20 years. But Enron plans on changing that. The company's idea is to treat bandwidth as a commodity. Instead of signing a 20-year deal, the carrier signs up with carrier ABC because it is offering a competitively low rate on T-3 connections for that month. But next month carrier XYZ is expected to lower its rates, so the carrier then switches its circuits from ABC to XYZ.

Enron has the capability to change circuits every five seconds, says Tom Gros, vice president of global trading at Enron. So the idea is that carriers are going to be able to get high-quality bandwidth at reduced rates. Nothing wrong with that idea, but a few questions come up.

One: Will your carrier or ISP share those savings with you, the business customer? Well, that's hard to say. This is a difficult question to answer because most Enron's "intermediation" partner deals are confidential. Global Crossings, a wholesale carrier, is the only deal that's been announced because it was Enron's first. So chances are you won't even know if your carrier is working with Enron, who claims several other carriers are in fact working with them.

Two: Doesn't constant circuit changes bring up monitoring issues for business users? Gros says it should not, and in fact end users should expect even better monitoring capabilities. Now while En-ron very well might provide its carrier and ISP partners with high-end monitoring tools, I would take the position that it's highly unlikely that carriers are going to make those tools available to their cus-tomers. Why? Well the answer gets back to the first issue. If all of the deals are confidential, end us-ers aren't going to even know their circuits are getting switched around.

Would you want to know if your carrier or ISP is participating in bandwidth trading?

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