Enron Opens Bandwidth Commodity Trading Service

Cutting the red ribbon for bandwidth commodity trading, high-bandwidth application service company Enron Communications Inc. Friday officially introduced its new approach to bandwidth.

“This is ‘Day One’ of a potentially enormous market,” said Jeff Skilling, Enron president and chief operating officer. He compared the present inflexible agreements for pre-set capacity amounts to pre-reform “oil contracts in the 1970s, natural gas contracts prior to 1990 and electric power contracts prior to 1994.”

The first contract for Enron’s (ENE) new structure is for DS-3 bandwidth between New York and Los Angeles which transmits video and other high-bandwidth data at 45 megabits per second. Global Crossing (GBLX) is selling the capacity, and has expressed its excitement to be involved in the new system.

Skilling said that his company will prove that bandwidth can be traded without losing quality standards, adding that both the buyer and the seller will be monitoring the transactions.

Enron introduced plans for the new bandwidth capacity reservation system in May, promising that bandwidth trading would make Internet applications more efficient and cost-effective, as well as pave the way for development of new applications. Cisco Systems Inc. and other major companies welcomed the concept, which would free them from signing long-term capacity contracts.

Enron Communications also announced that the currently operational North American (New York-Los Angeles) Benchmark Segment is expected to be connected to the mid-construction Atlantic (New York – London) Benchmark Segment soon after its introduction in May of next year. Once tapped, the connection will allow international bandwidth trade in the near future.

Global Crossing enters the picture again as the facility owner of the UK bandwidth pooling point.

Enron’s IP broadband infrastructure, the Enron Intelligent Network, is also expected to expand into Europe, Japan, Asia and South America early next year.

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