Big Deal - Telecom Carriers Dial Into B2B E-Commerce

BellSouth Corp. (www.bellsouth.com) wants to drive $1 billion out of its equipment costs over the next few years; Enron Corp. (www.enron.com) and Williams Communications (www.williamscommunications.com) want to make a bandwidth trading exchange that's safe for all the players; and Bandwidth.com Inc. (www.bandwidth.com) just wants to make a market.

BellSouth and Commerce OneInc. (www.commerceone.com) have announced a joint venture, which remained unnamed at press time, for the online trading of telecom equipment. BellSouth brings its money and expertise. Commerce One provides the software platform that makes "e-marketplaces" run.

Each partner will own a minority share of the venture. Fifteen percent of the venture will be set aside for an initial public offering (IPO), to take place within the next two years. Pat Shannon, BellSouth's vice president of exchange services, says he expects a half dozen or so other "large telco buyers" to take a stake as well. CLECs and anyone who wants to buy telecom equipment are welcome as customers, but not as owners.

For the moment, the big equipment players are not part of this effort, and that's OK with Shannon. He says BellSouth will start making a market for small stuff, such as office supplies and temporary services, before moving on to Class 5 switches and fiber optic cable.

Enron and Williams have their roots in the energy business, where commodities trading is old news, so perhaps it was only a matter of time before they decided to treat bandwidth like natural gas.

Williams has named Sharon Crow, a veteran trader on the corporation's energy side, to be its new vice president of bandwidth markets. Enron has changed its communications subsidiary's name from Enron Communica-tions to Enron Broadband Services (www.enron.net) and has set out to conquer the bandwidth-trading universe.

Both Williams and Enron say that, rather than merely swapping OC-48s, they will concentrate on "building the market" in which such trades can be done reliably. What a good market needs is standards, they say.

But the owner of a similar B2B site disagrees. Bandwidth.com Inc. (www.bandwidth.com), which is operated from the Park City, Utah, home of its founder and president, David Morken, is a classic exchange play. Like the bandit in The Treasure of Sierra Madre might put it, Morken don't got to show you no stinking standards.

What he shows you is bandwidth, and people who want to buy bandwidth. "This is a business-to-business marketplace that streamlines the procurement of business-class data communications capacity," Morken says. On his site, someone in the market for an OC-48 from Dallas to Chicago can punch in that information and wait for the bids to come back; and people with a lonely stretch of glass can find buyers who need it. The privately held Bandwidth.com gets paid by carriers.

Morken's customers already are looking for QoS guarantees, credit authorization and a variety of possible services. For now, credit authorization and QoS are the customers' responsibility, but Morken says he will offer such services in the future.

In the meantime, Morken says life is good. Venture capitalists like him, and bandwidth is whooshing through his house like ... well, like light through glass. Among his customers, he says, are Williams and Enron.

Of course, one need not be a carrier to make a market in bandwidth. Consider Telephone.com Inc. (www.telephone.com), which is being developed by MarkeTVision Direct Inc. (www.mktv.com). The site, which launched March 31, is offering a portal where equipment and bandwidth can be sold in real time.

In addition to being a B2B site, Telephone.com end users--consumers and businesses, alike--can find, compare and purchase a variety of telecom services.

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