Surfing the site (you’ll need to register first) turns up an offer for a high-speed T1 connection from New York to London at a cost of $13,500 per month. New York to Miami runs $1,967 per month with a minimum one-year commitment.
A buyer interested in leasing a dedicated line-a growing ISP, say-can post a bid. If the seller bites, Band-X steps in, bringing the two parties together and charging the seller a commission of up to 2.25 percent, depending on the size of the deal.
Elsewhere on the site, phone service resellers can post bids for international phone minutes offered by companies with established telephone systems, known as circuit-switched networks. Among the deals to be had: two million minutes from Los Angeles to Taiwan at $0.17 per minute, and a minimum of 250,000 minutes from Miami to New Delhi for $0.41 per minute.
Although buyers are often bandwidth-hungry ISPs or startup long-distance companies, all telecom firms sometimes need to sell off excess capacity or buy some to make up for a shortage on a particular route.
“We make it easier for buyers and sellers to meet each other,” says de Ferranti. Now, instead of traveling to telecom trade shows in far-flung settings such as Las Vegas or Lisbon in the hopes of closing a deal, traders can simply go online. It’s clearly an idea whose time has come. In the last year a number of competing exchanges have cropped up including San Francisco’s RateXchange, InterXion in Amsterdam, and Cape Saffron, a London-based enterprise specializing in the emerging market for Internet phone service (See table: “Where to Buy and Sell Bandwidth Online” below).
Not everyone is enthusiastic about the new order. For instance, it’s now far easier to compare prices, which de Ferranti claims has some of the established companies “pretty miffed.” They’d rather be doing deals the old way, he says, when big telecom companies like AT&T, France Telecom, Deutsche Telecom and other state-run monopolies ran the whole $850-billion-dollar-a-year show. With little competition, and propped up by government protections and bilateral agreements, they signed decade-long contracts that squeezed out newcomers and kept the cost of international phone calls high.
But with deregulation, the market has changed drastically. Now there’s a much broader spectrum of players: outfits dropping new lines on the sea floor such as Gemini Submarine Cable System, Project Oxygen and Atlantic Crossing; a whole raft of companies laying new fiber-optic networks like Qwest Communications and Level 3; and hundreds of wholesalers, resellers and bandwidth brokers interested in cutting fast short-term deals at low-ball prices.
So far, the Band-X exchange has 3,000 members from more than 100 countries. However, it’s still very early days: Users have actually completed only about 50 deals. De Ferranti explains that because of the technical and commercial complexities in telecommunications deals, it can take anywhere from one to six months to conclude a deal after his exchange makes an introduction.
Where to Buy and Sell Bandwidth Online
CompanyHeadquartersYear foundedTrades inArbinet CommunicationsNew York1993international minutesBand-XLondon1997bandwidth and minutesCape SaffronLondon1998minutesInterXionAmsterdam1998minutesRateXchangeSan Francisco1997bandwidth and minutes