While international and long-haul routes have been the first act for emerging bandwidth trading activities, traders say metro trading is not far off. Lack of infrastructure, rather than lack of interest, is responsible for the delay.
"Trading metro capacity makes sense," says Chris Lemmer, director of bandwidth risk management and optimization for Williams Communications (www.williamscommunications.com). "We'll see the long-haul evolving first. We'll see a similar evolution on the metro side."
Infrastructure in the long-haul arena is more evolved, Lemmer says, explaining why it has logically offered the first products to be traded as commodities. "From a metro standpoint, capacity isn't as fluid," he says. "Some cities have metro rings, some don't. If it all depends on the RBOC, there's not much to trade."
Lemmer predicts that metro trading could begin in Tier 1 cities such as New York within a year. "Let me put it this way--we won't see it in Tulsa in the next 12 months," he says.
Because of the need for multiple trading partners, city-to-city trading has evolved similarly, starting with lines between major hubs, such as New York to Los Angeles, New York to London, and Los Angeles to Hong Kong.
Paul Racicot, vice president of global bandwidth risk management for Enron Broadband Services (www.enron.net), predicts metro trading will be in its infancy in three to six months.
"I project it will develop very rapidly," he says, noting that metro connectivity solutions are being driven by many parties, including neutral collocation providers and carriers offering multiple connection points within a MAN.
"I ultimately envision a scenario where numerous metro area networks are interconnected," Racicot says, adding that this will provide ubiquitous access and trading for buyers and sellers within a MAN.
Enron's metro trading desk is staffed by five people and is currently executing trades and managing risk for the company. Racicot says, however, that Enron runs its trading desks as books in which the bandwidth is accounted for whether it is transacted in a liquid market or not.
As the major wholesale providers interconnect with each other, Racicot sees a brisk trade evolving between carrier hotels and COs. He cautions, however, that metro trading is not likely to develop for fiber to the home or fiber to the curb, where there will be few suppliers.
While metro capacity can and will be traded by itself, traders predict that early metro trades will be an extension of city-to-city trading, enabling a seller to deliver bandwidth to the buyer's PoP when it is not physically located with the seller's. So, for example, if the seller is at 60 Hudson and the buyer is at 111 8th Avenue, the seller might also buy (and build into his bid) a connection from a third party between the two carrier hotels in order to provision the bandwidth.
In this way, Lemmer says, metro trading can facilitate efficient city-to-city trading for carriers that aren't collocated, creating a "frictionless transaction for end-to-end trading."
Companies such as Telseon (www.telseon.com) are planning to provide metro infrastructure for long-haul traders. The gigabit Ethernet IP wholesaler can "help them reach their trading partner," says Sean Whelan, Telseon's vice president of strategic alliances. "We become a virtual extension of their trading hub--an extension of their delivery mechanism," he says.
Industry experts expect the emergence and subsequent population of neutral collocation facilities and neutral pooling points within or near carrier hotels to promote metro trading by providing active or passive cross-connect opportunities for carriers and customers located in those sites.
Williams' agreement with neutral collocation provider COLO.COM (www.colo.com), for example, enables it to provide metro private line and metro wave services, as well as local and global transport services, to wholesale customers.
"This agreement is in direct response to our customers' needs for ready local access to our carrier-focused global network," says Joe Turcotte, senior vice president of access services and IP for Williams.
