Sanjay Mewada, an analyst with Yankee Group, thinks that such schemes could unleash a flood of new bandwidth onto the market. Except for high-volume dates like Mother’s Day and Christmas, analysts estimate that, on average, AT&T’s international network operates at less than 20 percent capacity. If discount resellers could get their hands on the unused bandwidth, Mewada says, calling costs could drop precipitously.
Because of the possibility for such market upheavals, the industry is rife with speculation about the future of the new exchanges and, specifically, which one might ultimately dominate. Ovum’s Young predicts that Mashinsky could become the “Telecom Tsar” if his market takes off. Others think the big carriers may use the Internet to bypass the middlemen and trade amongst themselves. Telecom analyst Jeff Pulver, on the other hand, sees a slightly different future: “In less than five years, [bandwidth] will be traded on Wall Street.”
Time will tell whose crystal ball is clearest, and also whether the notion of bandwidth as commodity will ever benefit consumers. Many already suspect that savings inherent in deregulation and the vast increase in capacity created by new fiber-optic networks somehow have not made it onto their phone bills. Now, with the route prices published on the exchanges, consumers can examine the sometimes striking discrepancy between retail and wholesale rates: $1.76 per minute vs. $0.17 per minute for calls from Los Angeles to Taiwan, $2.57 per minute vs. $0.41 per minute when you dial New Delhi from Miami.
While an efficient market should cut prices, consumers shouldn’t imagine that they will ever pay the rates they see on the bandwidth exchanges. With an average deal on Band-X sized at 1 million minutes, explains de Ferranti, “the price is bound to be way under the retail price. Likewise, if you bought 14 tons of coal, you would be thrilled at the per bag cost.”
But both de Ferranti and Mashinsky hold out hope that Joe Sixpack may someday reap the benefits of the bandwidth exchanges directly. In some cases, consumers can already play the market, for instance if they bypass their long-distance company to reach a cut-rate carrier by pecking out heavily-advertised digits such as “10-10-321” before making a call. In the future, smart phones patched into a real-time exchange might automatically route calls along the cheapest path.
Such scenarios are, in fact, what daydreams are made of around the new bandwidth exchanges. Today, these startups struggle with logistics, new technology, a low profile and too few customers-not to mention powerful competitors ready to step in and take over at the first sign of success. But tomorrow, muses de Ferranti, his exchange could be a bustling bazaar where “several million” empowered consumers haggle for their share of the very stuff the information age is built of.