Last-Mile Matchmaking Goes Online

By Khali Henderson

On Valentine’s Day, Last Mile Connections (LMC) appropriately announced it has moved its matchmaking platform online and extended it to seven additional markets.

The company’s services have been provided to CLECs on a broker basis - using phone, fax and instant messaging - in the New York metro area where it inventories and connects to some 800 buildings. Now, the Online Exchange, www.lastmileconnections.com, offers buyers and sellers a neutral real-time marketplace for private lines, Ethernet services, wavelengths, colocation and Internet access.

“The big news is that e-commerce for broadband services is available for the first time on an exchange platform. What happened to the airline industry through Expedia now has happened to the telecom industry,” says LMC President and CEO James Martino in a Feb. 23 interview with PHONE+.

LMC facilitates and monitors the process from request for quote (RFQ) to bid-to-sale. Registered buyers simply submit an RFQ to the LMC trading desk, listing the service and terms they desire, including location details, date needed and price. LMC responds with three pricing points for buyers, including standard pricing based on public tariffs; “Buy It Now” pricing, which is competitive pricing guaranteed by LMC, and the price expected through auction. If buyers choose an auction, LMC invites multiple Tier 1, 2 and 3 carriers to secure bids. Sellers are given the option of placing a competitive bid or selecting the “Sell It Now” function, which meets all the buyer’s requirements and closes the auction. If an auction is launched, sellers submit their decreasing bids in an open marketplace managed by the LMC trading desk.

The LMC Online Exchange manages point-to-point physical delivery of orders, as counterparties can interconnect in one of LMC’s seven centers. In addition to New York, the service is available in Atlanta, Chicago, Dallas, Los Angeles, Miami, and Washington, D.C. - at neutral colocation facilities LMC acquired from Universal Access Global Holdings Inc. The transaction, which closed Dec. 15, gave LMC an additional 100 interconnects.

“We started in New York. Today we are in seven markets. We started with one node at 60 Hudson Street. Today, we have 10 nodes with the announcement yesterday of the Switch and Data deal as well,” Martino says. On Feb. 22, the companies announced a strategic partnership beginning this month in which three Switch and Data neutral colos in Atlanta, Miami and New York will be enabled with the Online Exchange. Additional centers are expected to be added later.

While historically LMC has sought to solve the local-loop issue, Martino says the Online Exchange also includes long-haul sales because many local-loop purchasers are looking to connect their access circuits to long-haul networks The local-access component is key to making the bandwidth exchange different than those of year’s past that succumbed under pressure from the industry meltdown and the controversy surrounding the accounting scandal at Enron, which was bandwidth exchanges’ most vocal champion.

“The difference here is no one has ever created an exchange for last-mile connectivity access,” says Martino. “It’s pretty well regarded that the major problem in the industry is last-mile connectivity. Providing a solution that allows people to buy on a fairly frequent basis from the CLEC community easily and efficiently versus buying from the RBOC community is a significant value-added program and allows them to reduce their access costs significantly. It also allows them to reduce the nonproductive process of funneling what cash they have left on their balance sheets to the RBOCs.”

He says many CLECs send 95 percent of their access dollars and 75 percent of their revenue to their No. 1 competitors - the Bell companies.

“While the directive [from the CEO] was to use the CLEC, the reality would be the purchaser would process the order in the easiest way possible. This was building into their businesses a high cost of access, which was slowly bankrupting these companies, says Martino, recalling the days of the telecom downturn when the LMC concept was formed. Reasons for choosing the Bell company over the CLEC included the lack of a ubiquitous CLEC footprint in a market; inefficient and inconsistent order processing; and lack of inventory, pricing and contract information.

“We looked at that and said there needs to be a third party who can rationalize this access space,” he says.