Trading Desk - Band-X Now Has Minutes to Trade in U.S. Market

Posted: 04/2001

Trading Desk

Band-X Now Has Minutes to Trade in U.S.
Market
By Bruce Christian

Band-X Ltd. (www.band-x.com), the
London-based neutral, independent marketplace for wholesale telecommunications
capacity, has crossed the Atlantic Ocean to set up shop in New York City.

Band-X has opened a switched minutes platform with integrated VoIP
capabilities at 60 Hudson St., one of the largest collocation sites in the
United States.

The Band-X Switched Minutes exchange allows U.S. facilities-based carriers to
anonymously terminate international wholesale voice traffic. Sellers maximize
the value of spare capacity on their direct or indirect international network
and buyers have a fast, efficient way of finding the capacity they need.

Band-X already operates similar minutes exchanges in Frankfurt, Hong Kong and
London. In its London-based Telehouse, the firm trades more than 15 million
minutes per month, according to Paul Newnes, executive vice president of global
switched development at Band-X.

He adds that Band-X recognized a 15-fold increase in minutes trading last
year.

"We saw something was working," he says. "This service is for
international termination. As each carrier trades with other carriers around the
world, it has been a good revenue source for each. That very much developed into
an arbitrage market, and so it sort of made sense for Band-X to create a single
trading environment rather than to build out to each carrier.

"We now have live exchanges in the four largest minute markets," he
says.

In addition to the switched minutes exchange, Band-X also provides secure,
anonymous trading floors for the exchange of networks, carrier-neutral
collocation space and IP transit.

"Band-X switched service allows our participants to achieve a stronger
return on investment from their existing infrastructure," Newnes says.
"We’ve taken a process that was previously time-consuming and
resource-intensive and streamlined it."

He says, "Any qualified carrier can now participate in the buy/sell
process where all members have access to excess capacity, and monitored rates
that give a clear view of current market conditions."

According to Newnes, Band-X gives carriers the tools to better manage the
pricing and reporting process for traffic volumes, while it monitors costs and
quality standards per destination. Through daily updates via web-based reporting
tools, Band-X updates members with real-time pricing, volume and quality
metrics.

Carriers connected to the Band-X Switched Minutes exchange can streamline
many of the expenses that traditionally erode margins in the wholesale telecom
business. These include under-performing interconnections, least-cost routing,
independent quality analysis and measurement, all with a transparent and
disclosed base fee structure, as opposed to arbitrary mark ups.

In the meantime, the company says the long-standing collocation cramp in
North America is beginning to ease. Band-X recently released its latest survey
on collocation space, which shows that European facilities remain three times
larger than U.S. counterparts, and that the prices charged for rack space in the
United States remain significantly higher.

According Band-X’s quarterly survey, which examines trends in the collocation
postings of more than 90 suppliers of collocation providers on its exchange,
facility sizes in North America increased during the final quarter of 2000. In
the United States, the increases were nearly 40 percent, as the average facility
jumped in size from 1,300 square feet during the third quarter of 2000 to 2,100
square feet by the end of the year.

Band-X’s survey shows that every new entrant to the market entered with
facility sizes greater than the fourth quarter average. It also notes that the
new facilities are charging a premium, as rack prices are greater than they were
during the fourth quarter.

"The price squeeze in the U.S. over the last year reflects the fact that
the North American collocation market has traditionally been driven by the
real-estate sector. If you want a fully fitted space, you would go into a
building and do the fit-out yourself," says Tim Anker, vice president of
collocation trading for Band-X.

"But today, because build-out time is so critical, the off-the-shelf
solution offered by colo providers is becoming much more attractive–the market
simply hasn’t been able to match this demand," he adds.

He also says the carrier neutral collocation market is evolving at an
unbelievably fast pace, with more facilities being built while those already
available are filling rapidly.