[Forward from RRE ... John] ============================ From: Phil Agre [mailto:[log in to unmask]] Sent: Friday, January 19, 2001 11:26 PM To: Red Rock Eater News Service Subject: [RRE]Telegeography 2001 =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= This message was forwarded through the Red Rock Eater News Service (RRE). You are welcome to send the message along to others but please do not use the "redirect" option. For information about RRE, including instructions for (un)subscribing, see http://dlis.gseis.ucla.edu/people/pagre/rre.html =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= Date: Fri, 19 Jan 2001 18:20:13 -0800 From: Jessica Marantz <[log in to unmask]> [...] TELEGEOGRAPHY 2001: GLOBAL TELECOMMUNICATIONS TRAFFIC STATISTICS AND COMMENTARY by TeleGeography, Inc. Washington, DC: TeleGeography, 2000 ISBN 1-886142-26-2 http://www.telegeography.com/Publications/tg01.html TABLE OF CONTENTS List of Figures List of Country Traffic Tables Preface Executive Summary Carriers The Growth of International Services Competition Market Shares of International Carriers The Top 40 International Carriers The Top U.S. International Carriers A Primer on Bandwidth Exchanges Pricing Overview of International Pricing Trends International Carrier Call Costs from/to the U.S. International Private Line Prices Settlement Rates and Benchmarks National Interconnection Rates and a Primer on Interconnection Accounting Retail Prices and Trends Retail and Wholesale Rates: PSTN versus VoIP Follow the Money: Network-to-Network Payments for Internet Telephony and Other IP Traffic Streams Facilities MANs: The Golden Mile Submarine Cable Systems International Circuit Usage by U.S. Carriers International Communications Satellites Internet Backbones International Internet Backbones Traffic Analysis Overview of International Traffic Trends Bypass and Refile Traffic VoIP Routes & Traffic International Traffic from Mobile Phones International Call Quality Metrics Traffic Summary Global Traffic Review International Traffic by Region International Traffic by Country Global Reference: Blue Pages INTERNATIONAL INTERNET BACKBONES What is an Internet backbone? And when is it international? The questions are not as straightforward as they might seem. International Internet backbones are private data links which cross international political borders, run the Internet Protocol (IP), are reachable from other parts of the Internet, and carry general Internet traffic: e-mail, Web pages, and most of the other popular services which have come to define today's Internet. That means that international IP links devoted to just one type of traffic -- notably, Voice-over-IP (VoIP) -- are excluded from our definition of backbones on the public Internet. If VoIP is excluded, though, then why publish international Internet backbone data in a book on international telephony? The answer: because it just might be important. Despite a history stretching back more than 30 years, today's Internet really began its push toward ubiquity during the 1990s in a rapid transition from academic network to commercial networks. What evolved was a decentralized infrastructure whose end-to-end design made it possible for users to create new network applications without asking too many people's permission. The resulting infrastructure took media services based on text and simple graphics and turned them into the most widespread media platform since television. That ubiquity only fueled its popularity, however, and soon people were stuffing two-way voice telephony, streaming video, and other bandwidth-intensive applications into the public Internet. They did this not because the Internet's then-infrastructure was particularly well-suited to such services, but because running them over the Internet meant bringing together multiple services on a single platform. On networks, the whole is always more than the sum of its parts. The so-called "public Internet" is at a crossroads. How will it accommodate very different types of traffic inside the same networks? Some want to solve the problem by bestowing Quality of Service (QoS) provisions upon IP so that networks can distinguish between what needs to be delivered immediately and what needs to be delivered with care. Some, pressed for time, prefer to forego fancy traffic engineering by throwing more bandwidth at the problem, hoping to give every packet enough room to get to its destination in style. And some are abandoning the public Internet altogether: distinct backbones are emerging for self-similar traffic generators, like VoIP or the Usenet's text- and photo-oriented discussion groups. Those highly specialized, single-service backbones are not included here. That sharpens the scope of what we mean by "Internet" backbones. But it doesn't close off their possibilities. There is increasing excitement over a "new public network" infrastructure which meshes PSTN (public switched telephone network) and IP infrastructure into the backbone of tomorrow's public communications facilities. If the feverish activity taking place around the world can successfully achieve the economies of scale and creative possibilities that interoperable communications services represent, these backbones will have to come together to look like the Internet as many engineers have always drawn it -- a cloud. Bandwidth, Not Traffic The maps and statistics on the following pages show international Internet backbone capacity, or bandwidth -- not traffic. There are several reasons to keep track of international Internet bandwidth. One is to provide a rough metric for matching supply and demand. But there is another reason: bandwidth take-up may provide a clue to Internet traffic statistics, which are still in very short supply. International Internet bandwidth is growing faster than international Internet traffic, however. In the past few years, tremendous physical infrastructure builds began to come on-line. Because raw bandwidth does not translate immediately into Internet capacity, however -- it must first be lit, sold, deployed, and integrated into data network operations -- the numbers showed what, to casual observers, appeared to be a mismatch between physical capacity and Internet capacity. In 2000, however, bandwidth started diffusing up the network layers, moving from physical installation to actually existing network services. As Internet capacity began to take advantage of the fiber explosion, two-and-a-half gigabit per second OC-48 (STM-16) links running Internet Protocol became, if not common, at least widespread. All this new Internet capacity makes network bandwidth less useful as a proxy for traffic. But it does provide important insights as to how traffic is routed. Historically, steep intraregional bandwidth costs, a comparative lack of local content, and limited regional coordination had caused the U.S. to become the Internet's central switching office, even for data flows within a region. Last year, we found that the Internet was still U.S.-centric but that places like Western Europe and, to a lesser extent, eastern Asia were beginning to develop as secondary hubs (see Figure 1. Interregional Internet Bandwidth, 2000). In 2000, this trend continued. In Europe, international capacity between European countries again grew at a noticeably faster clip than did outgoing international bandwidth, nudging the continent's in-region connectivity to beyond 75 percent of its total international Internet bandwidth. Asia's intraregional connectivity, too, grew more than twice as fast as to anywhere else, doubling the proportion remaining within the region to one-sixth of total international Internet bandwidth. Enormous differences still remain from country to country. The U.S.-centric pattern wanes only with substantial and sustained infrastructure builds of the sort that has swept Europe, rolled into Asia, announced itself in Latin America, and stalled in most of Africa. The connectivity divide is reflected in the larger pattern of global net bandwidth (see Figure 2. A Question of Scale). Although fiber builds in Latin America and the Caribbean increased substantially in the last year, the Internet had not yet caught up as of mid-2000, and the continued reliance on slower, more expensive satellite links for international connectivity translated into another year of the World Wide Wait. In continental Africa, similarly, the number of countries connected at above 10 Mbps went from three to six -- but Africa-U.S. Internet bandwidth remained the continent's fastest-growing route. The Players Approximately 300 International Internet Service Providers (IISPs) own, lease, or otherwise get hold of transborder network capacity; place routing computers at either end; and use these segments to cobble together logical networks that, together, form the Internet's international backbone. Three hundred may seem like a lot. Not all backbones are equal, however: in mid-2000 the ten largest IISPs controlled three-quarters of international Internet bandwidth. Some observers try to make sense of the Internet's snarl of networks by dividing them into three or four tiers. Under that framework, "Tier Ones" are the handful of global backbone operators who have rich interconnection relationships with all other significant providers; "Tier Twos" are the not-quite-Tier-One backbones who end up having to pay for some of their direct backbone connectivity; and "Tier Threes" and "Fours" are the national/regional and local ISPs, depending on the context and topology, in question. Those definitions are somewhat fuzzy -- and for good reason. As a whole, the Internet service provider world is not segmented into hierarchical divisions, so hard-and-fast typologies just aren't possible on a global scale. The same is true, perhaps more so, of the IISP segment. Instead, we have identified four groupings around which IISPs cluster. However imperfect, these markings on the IISP spectrum help understand which way they lean: Global IISP. Two kinds of IISPs engage in activities which place them in the "global" range. One is a set of very large players who have strong historical roots in the U.S. Internet, either in origin (AT&T/Concert, Genuity, WorldCom, PSINet, Sprint) or by osmosis; Cable & Wireless acquired much of MCI's Internet backbone as a result of the MCI-WorldCom merger. The other group of IISPs are providers who feature managed IP bandwidth over bent-pipe (point-to-point) satellite as important parts of their services portfolios, typically Intelsat signatories like Telecom Italia, whose Seabone offering connects many countries around the world, or service providers like Interpacket. The effort to move from the second set of global IISPs into the first -- Teleglobe attempted this during the late 1990s -- is a key dynamic within this grouping. Regional IISP. A regional IISP specializes in operating backbone connectivity between different countries in a single region, like GTS E-Bone in Europe, Pacific Century CyberWorks or Telstra in Asia, and Africa Online. Because of the impressive build-out in Europe during the past two years, Western Europe is probably the best example of the impact that regional IISPs can have on reconfiguring a single region's topology map. At the other end of the spectrum, a number of IISPs continue to vault into the regional area by purchasing existing smaller, nationally-based IISP networks; once, these were dominated by former incumbents, but an increasing number of new entrants have borrowed this strategy as well, fuelled by the international spread of venture capital and Initial Public Offerings. National IISP. Typically, this is an Internet provider which has acquired international connectivity as part of a national or local service; which acts increasingly as an upstream provider for other providers who have little or no international connectivity; and which moves to expand into neighboring countries. In 2000, this sector actually shrunk, as existing players federated or were bought up to form regional IISPs. Academic IISP. Research networks, including those operated by academic institutions, often act as international connectivity providers alongside commercial IISPs. In many environments, they operate high-capacity, leading-edge systems, catalyzing Internet development -- examples are Europe's DANTE TEN-155 and GIANT projects -- but they are increasingly specializing in exclusively academic and research traffic as part of the international coordination of Internet2 and advanced research applications. Methodology The data depicted on the following pages -- using different scales for different regions -- result from a TeleGeography, Inc. study completed in October 2000. The research focused on the network topologies of over 300 IISPs operating international Internet links -- routers or switches directly connected across an international border over an internal network. These links and their capacities were then tracked through over 300 cities in more than 180 countries. Each IISP's network routes and capacities were derived from a combination of public documents, confidential interviews, and computer-based network analysis tools. The study grouped specific switch and router locations according to Consolidated Metropolitan Statistical Area, Census Metropolitan Area, or the equivalent. Only the IP network was mapped, instead of the physical network infrastructure which runs beneath it. In cases where IISPs had provisioned relatively new dedicated IP capacity, the study did not include the capacity unless it was believed to be operational and available for public Internet traffic as of mid-2000 (i.e., bandwidth kept in reserve was excluded). A final note: due to the complex and ever-changing nature of network architectures, omissions may have occurred. A PRIMER ON BANDWIDTH EXCHANGES The term "bandwidth exchange" has been pulled and stretched to cover the canvas of diverse business models and operational approaches. But what exactly is a bandwidth exchange? Part of the definitional problem originates from the complexity inherent in the telecom industry's web of supply and demand -- whether it be for cross-border telephone calls, intracity fiber optic connections, or access to the Internet's cloud. A second, more obvious, obstacle to a clear definition is the newness of the bandwidth exchange business -- many companies have redirected and redefined their strategic focus (and marketing programs) more than once in just a few short years of existence. Nonetheless, these bandwidth bazaars all share a common purpose: to facilitate transactions between buyers and sellers. Their challenge -- and the source of their diversity -- is to develop the best methodology for facilitating each type of transaction. This primer differentiates the services exchanged, as well as the role played by the matchmaker in each deal. We will begin with a brief description of the companies involved -- including Band-X, now TeleGeography's corporate parent. Background The traditional process of buying and selling communications bandwidth -- for carriers, ISPs, and multinational corporations alike -- can be time -- consuming and labor-intensive. The process typically requires direct negotiation over price, quality, and delivery. An exchange, however, can extend, complement, or replace all or part of a buyer's or seller's sales force at various stages of the process. Furthermore, bandwidth buyers can use exchanges to find quickly the best price/quality ratio on offer, and bandwidth sellers with excess capacity can earn incremental revenues with minimal effort. A bandwidth exchange may consist of a bullpen of brokers, perhaps part of a larger team of traders, who spend their days scanning price listings and phoning potentially interested parties. We classify these brokerages, along with bulletin-board operators, as "virtual matchmakers". Alternatively, an exchange may be based upon a switch connected to a computerized system where anonymous buyers and sellers swap traffic. Such exchanges, which have facilities where members interconnect their networks for physical delivery, fall under the category of "physical matchmakers". Both operational models, virtual and physical, assist buyers and sellers of bandwidth in finding counterparties and completing transactions. Of the more than 35 companies with actual or stated plans to trade bandwidth, at least twelve have facilities which route capacity between buyers and sellers. The remaining two-thirds of existing exchanges, accordingly, are virtual matchmakers. Bandwidth exchanges also differ by their own degree of involvement in the bandwidth transaction. Some exchanges are neutral, favoring neither buyer nor seller; others are created by a party to the trades. The latter category includes "market maker" exchanges -- exchanges whose founders are in the carrier or capacity building business. The oft-cited market maker example is Enron, the energy company which is investing heavily in both a nationwide network build-out and the development of a bandwidth trading exchange (see Figure 1. Selected Bandwidth Exchanges). But why would an energy company enter the world of telecommunications bandwidth? The power industry's experience with energy trading may prove applicable to the emerging bandwidth marketplace. Enron's vision of the communications market relies on the commoditization of bandwidth, where a liquid market allows the trading of forward contracts and financial derivatives by bandwidth users, as well as speculators and arbitrageurs. This vision may bear fruit. Our discussion here, however, focuses on the current state of the bandwidth exchange industry and emphasizes the delivery market for bandwidth -- the buying and selling of bandwidth for actual use -- rather than the still mostly theoretical trading world of bandwidth financial instruments. Services To date, most bandwidth trading has focused on international telephone calls, or "minutes," and raw network connectivity, or "bandwidth circuits." More recently, bandwidth exchange Band-X has also begun trading Internet transit, or "routed IP" services. Some exchanges may also broker related services to their customers, such as colocation space in carrier hotels, or empty ducts between points in a city. Minutes. Telephone carriers typically meter service to their customers in minutes or a portion thereof. Thus, because carriers around the world have agreed on standard definitions of a "conversation minute," they are able to route minutes easily from one network to another through their switches. Many exchanges, including Band-X, Arbinet, and TheGTX, currently trade minutes. The total volume of minutes traded through exchanges is difficult to ascertain. But our research indicates that international traffic flows through exchanges could reach 300 to 500 million minutes in 2000 -- about 0.5 percent of the world's traffic. The minutes bought and sold through an exchange may include either traditional, circuit-switched minutes, or Voice-over-IP (VoIP) minutes. Some exchanges specialize in IP minutes (e.g., Pulver.com's Min-X); others allow members to specify if VoIP minutes are desired (e.g., Arbinet). Those exchanges with their own switching facilities may trade circuit-switched and IP minutes without differentiation if their switches route both SS7 (circuit-switched) signaling and IP protocols. Although hard numbers are difficult to come by, it is generally agreed that VoIP minutes make up a small, though growing, share of the total minutes traded. Arbinet, for example, reports that nearly ten percent of its traded traffic is Voice-over-IP. Minutes offers are typically listed on exchanges on a country-to- country or city-to-city basis: for example, "U.S. to India at $0.13 per minute." And although each minute is, by definition, the same 60 seconds of connect time, a minute's quality is not standard and can vary considerably. For this reason, minutes offers frequently contain a quality metric as well (see Figure 2. Common Bandwidth Trading Parameters). Bandwidth Circuits. International carriers of voice and fax services may purchase wholesale minutes, as discussed above, to route calls to their desired destinations. Alternatively, buyers may lease or purchase bandwidth circuits between points and provision switches at the ends. Thus, minutes and bandwidth circuits can be, in some instances, substitutes for each other. But there the comparison ends. Minutes are a service which ride on a physical circuit; bandwidth circuits are the capacity which may be provisioned to carry any application. A buyer purchases minutes by quantity, and bandwidth circuits by capacity, for a given time period. Bandwidth circuits are typically listed in city pairs and by potential carrying capacity: for example, New York to London at 2 Mbps. In addition to the geographic and capacity parameters, bandwidth circuit exchangers must specify their commitment period. Commitments can range from one year leases to Indefeasible Rights of Use (IRUs) for the lifetime of the facility. Bandwidth circuits take various forms. The circuit may be a satellite link, a segment of a terrestrial network, or an undersea submarine cable connection between world regions. As the medium used to carry the traffic differs, so too does the circuit's level of provisioning. A company may purchase dark fiber, which is optical fiber not connected to transmission equipment. Alternatively, a company may prefer a circuit which is already "lit" to handle its application of choice. A new class of bandwidth products -- wavelengths -- has recently emerged for buyers and sellers of optical fiber. A wavelength, or a single channel on an optical fiber system, is typically sold at 2.5 Gbps or 10 Gbps increments (see TeleGeography's International Bandwidth 2000 report for a detailed explanation of the various options available). Given the wide range of bandwidth circuit increments and technologies, determining universal standards and contracts is far from a simple task. Band-X has developed a standardized Service Level Agreement (SLA), which includes both provisioning time and SLA post- provisioning, for bandwidth circuit trades on its exchange. A few organizations, including one organized by carrier association CompTel, have convened to resolve the issue; not surprisingly, one of the thorniest issues has been the liquidation of damages if one party does not abide by the terms of a bandwidth deal. As with creating quality of service measurements for bandwidth circuits, standardizing bandwidth contracts across multiple exchanges and carriers will take time. How active is bandwidth circuit trading? As the pooling points necessary for facilities-based bandwidth circuit trading are still in their early stages of development, the number of deals facilitated by virtual matchmakers far outnumber those by physical matchmakers. From July to September 2000, brokerage Chapel Hill Broadband reported two to three hundred requests for wholesale capacity through the Bandwidth.com lead-generating website. Physical matchmaker Enron, in contrast, says it will facilitate about 100 bandwidth deals this year. Internet transit (IP routed). Exchanges may also help match buyers and sellers of upstream Internet access, or transit. To date, Band-X remains the only bandwidth exchange to provide physical matchmaker services for Internet transit. Like bandwidth circuit buyers, Internet transit buyers purchase dedicated capacity for a specific time period. However, unlike bandwidth circuits, Internet transit capacity is not restricted to a point-to-point route. Instead, a buyer of Internet transit receives a guaranteed connection to an Internet backbone, which will carry the buyer's traffic over various, unspecified paths to reach its intended recipient. Recipient locations are IP addresses, not physical places. The exchange itself does not provide the IP transit; rather, the exchange helps the buyer to find and connect to an "upstream" ISP. For example, a large company may require high-speed Internet access for the next few months. Instead of negotiating with a number of ISPs, determining the best price and quality match, and signing a contract with the chosen provider for a fixed length of time, the company may enlist the services of a bandwidth exchange. Buyers can choose from various, anonymous ISPs based on price and performance, and, in some cases, can switch providers as often as once a month (for a detailed description of Band-X's routed IP service, see Figure 4. Case Study: Band-X). Operational models The business practices of bandwidth exchanges are in constant flux, and many include elements of multiple business models. Keeping this in mind, we consider two operational categories: virtual and physical matchmakers. The examples highlighted in the accompanying figures illustrate the individual approaches of certain exchanges. Virtual matchmaker. Virtual matchmakers help to put bandwidth buyers and sellers together without physically interconnecting the counterparties. There are two non-exclusive categories of virtual matchmakers: electronic bulletin-board operators and over-the-counter (OTC) brokers. Electronic bulletin-board operators post sellers' offers and buyers' bids on a website, speeding the information-gathering process for the parties involved. The posting process may be automated, with website members directly listing their prices; or, employees of the bulletin-board operator may enter the information into the site after communicating with the buyers and sellers. Generally, a bulletin-board offers a passive means of generating leads, as it is left to the interested parties to act on the bids and offers posted (see Figure 3. Case study: Bandwidth.com). Band-X, a virtual matchmaker for bandwidth circuits, has developed a more interactive approach by holding reverse auctions on its website, where sellers place competitive offers on specified routes in real time. Frequently referred to as "dating services," OTC brokers search for bandwidth or minutes terms which match buyers' or sellers' requirements; the broker often works out the details of the deal over the phone. An OTC broker may rely on electronic bulletin-board services to find prices, and then call clients to alert them to attractive deals. Or a broker may have his own "inventory" of available bandwidth that he has collected, as an independent operator, from contacting sellers of capacity. In contrast to bulletin-board operators, OTC brokers provide active matching services to buyers and sellers, often adding value to their clients through their personal connections and effort. OTC brokers are generally carrier-neutral-their concern is to complete bandwidth deals, not to favor one buyer or seller over another. At times, however, a broker may represent one party from the bid or offer stage through to contract negotiation. For example, Chapel Hill Broadband, which most often acts as a neutral broker, may also be hired to negotiate a specific transaction on behalf of the buyer or seller. Virtual matchmakers, in addition, may facilitate the delivery of the minutes or bandwidth trade. For example, although by definition a virtual matchmaker owns no interconnect facilities, it may hold information on where its clients are colocated, and suggest locations for interconnection. As with other deals made through virtual matchmakers, these transactions are not anonymous, as both parties must work together to provision their networks for delivery. Physical matchmaker. Physical matchmakers do more than match buyers to sellers; they actively facilitate the delivery of the bandwidth deal through their own facilities. Such exchanges deploy switches or hubs where their members may interconnect. The decision of which switch or hub equipment to use depends upon the kind of services the exchange provides; facilities that carry minutes differ from facilities that allow bandwidth circuit trades. For minutes, switches of various shapes and sizes route calls from seller to buyer and monitor their flow. Bandwidth circuits, in contrast, are not so easily switched between carriers. A number of companies are currently developing an infrastructure for trading bandwidth circuits which provides the necessary measurement and routing capabilities. At this writing, however, physical trading of bandwidth circuits remains in its infancy (see Figure 5. Pooling Points and Physical Matchmakers). A physical matchmaker may deploy one or many switches or hubs and may or may not interconnect them. Clearly, more hubs extend an exchange's geographic reach, allowing more buyers and sellers to interconnect at a lesser cost. Some exchanges have multiple, separate facilities (e.g., Band-X); others are building a network of hubs that are linked together (e.g., TheGTX). Again, an exchange's network architecture reflects the orientation of the service provided by the exchange, as well as the exchange's preferred technological blueprint. Even if an exchange owns its own hubs, it may broker deals that are "off-hub," if it is more cost-efficient for the parties to interconnect through their own facilities. Owning facilities may allow a physical matchmaker to offer anonymous trading services to its interconnected members and to measure actively the traded minutes or circuits. Monitoring of service quality, in such instances, becomes critical for buyer confidence. Physical matchmakers may post quality metrics on their website or even guarantee quality levels to buyers. Band-X has pioneered its own algorithm for determining the quality of IP network access that is available through its facilities (again, see Figure 4). A few physical matchmakers have developed facilities that allow transactions to happen in "real time" -- instantly, without human intervention. Once connected to the exchange's hub, a member of such an automated exchange can find a counterparty and provision the service delivery entirely through a Web-based interface (see Figure 6. Case Study: Arbinet). Payment and Risk As exchanges differ by service and operational model, so too do they vary by fee structure. Buyers and sellers compensate bandwidth exchanges through commissions on deals they facilitate, fees for membership in the exchange, or revenue from advertising or other ancillary services. Consistent with practices in the energy industry, brokerage houses and lead generators may generate commissions only from bandwidth sellers, not buyers. But not always. Chapel Hill Broadband, for instance, has a variable fee structure that depends on the type and volume of the transaction it enables. Chapel Hill's commission can range to as high as seven percent, if assessed on both buyer (three percent) and seller (four percent). On its switched minutes trading floor, Band-X takes a five percent total commission -- two percent from buyers and three percent from sellers. For "networks," or bandwidth circuit deals, Band-X charges the successful bid/offer poster, whether buyer or seller, a two and a half percent commission on the first $200,000 and one percent thereafter. Some exchanges have moved away from charging commissions altogether. Arbinet, for example, has chosen to replace commissions on minutes trades with flat-rate capacity-based fees. Similarly, RateXchange has forsaken commissions on bandwidth circuit deals in favor of increasing its market presence. Bandwidth exchanges can also take on counterparty risk in the financial transaction. In such cases, the exchange pays the seller directly, regardless of whether it is able to collect payment from the buyer. The seller, therefore, is relieved of any worries of bad debt or risk management. Exchanges which offer these clearing services "take title" to the minutes or bandwidth sold, becoming the buyer to every seller, and the seller to every buyer. For example, AIG Telecom buys blocks of minutes from the selling carrier, pays the seller, sells the minutes to the purchaser, and later invoices and collects from the buyer. To protect themselves, bandwidth exchanges often require participating members to undergo extensive background credit checks. Summary Bandwidth exchanges have a common goal: to facilitate the buying and selling of communications capacity. Most notably, exchanges help companies deal in minutes, bandwidth circuits, and Internet access. Exchanges provide virtual or physical matchmaking services -- or a combination of the two. Virtual matchmakers facilitate bandwidth trades without physically linking buyers and sellers. Of the virtual matchmakers, bulletin-board operators serve as passive lead generators, while OTC brokers play an active role in bringing counterparties together. Physical matchmakers, which have facilities where their members interconnect, may offer anonymous trading and monitoring capabilities at varying degrees of automation. Payment structures of exchanges include differing commission schedules and membership fees. Bandwidth exchanges may assume counterparty risk by guaranteeing payment to sellers. Difficult as it may be to categorize bandwidth exchanges, the industry's ongoing evolution is sure to bring greater standardization as well as significant change. TeleGeography, Inc. is a wholly-owned subsidiary of the bandwidth exchange Band-X Ltd. The editors of TeleGeography 2001 are solely responsible for the accuracy and completeness of this article. ## ************************************************************************************ Distributed through Cyber-Society-Live [CSL]: CSL is a moderated discussion list made up of people who are interested in the interdisciplinary academic study of Cyber Society in all its manifestations.To join the list please visit: http://www.jiscmail.ac.uk/lists/cyber-society-live.html *************************************************************************************