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Fw: Re: IP: Fw: Re: enron bandwith trading
From: David Farber <dfarber () earthlink net>
Date: Sat, 12 Jan 2002 13:49:06 -0400
-----Original Message----- From: "Mike O'Dell" <mo () ccr org> Date: Sat, 12 Jan 2002 12:30:02 To: farber () cis upenn edu Subject: Re: IP: Fw: Re: enron bandwith trading Charles omitted one additional problem from his list of Enron's problems: (4) "Bandwidth Trading" is a largely absurd notion that could only be created by financiers who define their understanding of anything from the standpoint of "monetization", and who have no notion of how bandwidth is actually used in building real networks. the problem is seldom "getting bandwidth" - the biggest problem is usually getting to it where ever it exists. the fiber comes out of the ground in only so many places and they are seldom where you need it, so you have to get from where you are to where it is, which involves building or buying local fiber tails, etc, etc. there is one other problem with Enron's fundamental business model. They essentially declared themselves to be middle-men who would take a piece of the action from inserting themselves into the middle of every transaction. the problem is that the margin in a deal is pretty-much fixed due to market price competition, when you divide it up between more entities who are trying to make a profit, they all have a harder time surviving. or more likely, the price charged to the end user goes up to cover everyone's margin requirements. so one tends to destablize the participants in a previously-successful competitive environment, and the other raises prices to the end user. what part of this is am i supposed to enjoy? cheers, -mo (Sent from Dave's Blackberry.) For archives see: http://www.interesting-people.org/archives/interesting-people/
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