Telecommodities Indices

Posted: 01/2000

Have U.S. East-West Bandwidth Prices
Bottomed?

The Real-Time Bandwidth eXchange*Revealed Price Index (RTBX*RPI), which
tracks the current weighted average price, is applied to DS-3 bandwidth for
major U.S. east-west routes in the accompanying chart for RateXchange trades
since June 1998. For this period, the average rate for a
DS-3 declined by 40 percent to $41,026 per month. Measuring the RTBX*RPI since
September 1999, the November 1999 average rate for a DS-3 decreased slightly
(1.12 percent).

After a couple of months of stabilization, U.S. east-west bandwidth prices
have begun to creep downward with the introduction of lower prices on alternate
routes. For example, DS-3 prices from New York to Los Angeles have stabilized,
but prices from New York to Washington have dropped, letting buyers combine New
York to Washington and Washington to Los Angeles to achieve better pricing.
RateXchange’s index methodology for U.S. east-west bandwidth rates reinforces
the market’s conclusion that prices are stabilizing. However, creative buyers of
bandwidth can use the technique described above to reduce capacity costs.

As mentioned in last month’s issue, we are still seeing regional rates
continue their downward trend.

Turning to international termination rates for additional insights, we see
that prices on major routes are showing the same signs of stability, while more
obscure routes continue to decline. For example, over the last several months,
termination rates to Viet Nam have dropped nearly 16 percent from 62 cents to 53
cents.

International termination rates may be used as a litmus for future bandwidth
rate setting, using Mexico rates since October 1998, when the rate was 12 cents.
Currently, Mexico rates have declined by 50 percent to 6 cents. Similar to the
U.S. east-west bandwidth market, Mexico rates have not changed September to
October.

DS-3 Bandwidth RTBX*RPI and RTBX*RFP-360 Indices

Jun-98 Sep-98 Dec-98 Mar-99 Jun-99 Sep-99 Dec-99Information is provided to
the publisher by RateXchange and is believed to be accurate. RateXchange nor
PHONE+ assume any liability for inaccuracies or decisions made by readers based
on this information.The top international spot rates-per-minute cost of
terminating a call from the United States to a given country are the best offers
to sell voice minutes capacty at RateXchange as of Nov. 22, 1999.