IDC Says the Global Online Marketplace for Telecom/Bandwidth Trading Is Poised for Continued Growth

FRAMINGHAM, MA — NOVEMBER 27, 2000 — The rapid increase in the demand for and width from hundreds of telecommunications network operators, as well as the steep price decline in telecommunications, has created a bandwidth exchange market that is poised for continued growth. According to IDC, this growth will be driven by several factors.

 

"The sizable investment into leading online exchange operations, the growing member list, and the use of leading online exchange operations are currently the key market drivers," said Mark Winther, group vice president of Worldwide Telecommunications at IDC. "Looking forward, other growth contributors will include providers' ability to handle very large trades and large, ongoing available inventory of global telecom capacity."

Based on interviews it has conducted with executives from leading exchange companies, IDC believes a significant portion of the world's telecom infrastructure, on many key routes, is underutilized today. "The growth and availability of telecom capacity/bandwidth exchange offers exchange providers a huge opportunity to enable telecom companies to anonymously sell off their excess capacity while earning additional revenue and enhancing profit margins," said Courtney Munroe, vice president for IDC's Telecom and IP Services program.

IDC says despite the positive outlook, challenges face bandwidth trading companies. One major challenge is in collecting payments. Because online trading is conducted on an honor system governed by the individual provider's terms and conditions, online exchanges are susceptible to payment defaults. Additionally, as bandwidth costs inexorably decline to zero and margins on bandwidth fall with them, profit margins could dwindle.

"Companies in this sector will be hard-pressed to implement enhanced platforms that will entice buyers and sellers to trade on their systems," Winther said.

Information like the above can be found in IDC's report Telecommunications Portals and Bandwidth Exchanges (IDC #B23189). This report provides an overview of the factors driving development of the telecommunications portals and bandwidth exchange sector. It also includes profiles of the main portals and bandwidth exchanges, including Arbinet, AIG, Bandwidth Market, Band-X, and RateXchange. The report details the key strategies these companies are using to position their services in the marketplace, differentiate their service offerings, and attract members and users.

To purchase this report, contact Bruce Atlas at 1-800-343-4952, extension 4053, or at batlas@idc.com.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies and the financial community. Additional information can be found at www.idc.com.

IDC is a division of IDG, the world's leading IT media, research and exposition company.

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