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Source: RCR News
Date: August 14, 2000

by Elizabeth V. Mooney

NEW YORK – Arbinet-thexchange Inc. has completed a year-long process of implementing what it calls the first carrier-grade bandwidth trading solution, company officials said at last week’s Telecom Business Conference and Expo here.

"We are now trading cellular traffic on the exchange, and there already is a competitive market for wireless termination on it in Europe," said Chris Reid, director of communications for the New York-based company.

"This will also facilitate (mobile) virtual network operators, which can bundle bandwidth obtained on the exchange with applications under their own brand."

Arbinet estimates the total global market for telephony bandwidth measured in minutes at $706 billion this year alone. The marketplace is characterized by falling retail prices to consumers and a high level of selling, general and administrative expenses. SG&A costs represent about a quarter of revenues, approximately 9 percent higher than the average for all American corporations, according to Arbinet.

"We have implemented the world’s first solution that allows carriers to dynamically manage the flow of traffic across their networks based on their participation in a real-time online marketplace," said Anthony L. Craig, chairman and chief executive officer.

"It allows our members to improve their revenues and significantly reduce their costs of doing business with each other. On the quality side, we have adopted the Sun Microsystems’ objective of delivering Web tone, along with traditional dial-tone quality, to our membership."

A Who’s Who of technology companies participated in the development of
Arbinet-thexchange, including Sun, which supplied the business server platform. From Breakaway Solutions, the exchange obtained what Arbinet described as "the first-of-its-kind trading engine platform development."

Nortel Networks provided the switching platform and Architel the next-generation provisioning and switch activation technology. Cisco Systems delivered the switching and routing equipment and voice over Internet Protocol technology, 3Com Corp. the integrated VoIP telephony platform and ECtel the quality of service and call quality measurement capabilities for voice and VoIP traffic. Taylor McKenzie supplied statistical validation of call quality measurements.

Oracle delivered the informational and transactional databases and Hitachi the data storage and technology equipment. PricewaterhouseCoopers provided systems integration of trading and call processing.

Arbinet describes itself as a full-service exchange for on-demand transactions, automated physical delivery and settlement of telephony bandwidth trades. "Automated delivery is accomplished by employing advanced trading software and a set of patented processes to link the Web-based trading platform with carrier-grade telecommunications switching equipment," the company said.

The exchange is neutral, in that it favors neither buyers nor sellers, and it also allows participants to trade anonymously. Arbinet-thexchange handles all invoices, collection and payment for trades.

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