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Enron Mail |
Enron's Lay Calls for Open Access to Transmission Grid: Comment
Bloomberg, 05/08/01 Enron Broadband Services President Plays Europe For Strong Bandwidth Commoditization PBI, 05/08/01 USA: Large U.S. firms finding inner-city profits-study. Reuters English News Service, 05/08/01 Enron's Lay Calls for Open Access to Transmission Grid: Comment 2001-05-08 18:01 (New York) Washington, May 8 (Bloomberg) -- Comments by Ken Lay, chairman of Enron Corp., the largest energy trader, on his belief that generators should have easier access to the U.S. power grid. Lay spoke after receiving the U.S. Energy Association's 2001 U.S. Energy Award. ``Today we don't have open access to the transmission grid,'' Lay said. ``We could get 2 to 3 percent more power into the West if we had open access.'' Lay said the Federal Energy Regulatory Commission should open up the power grid throughout the U.S., so generators no longer have to pay a series of separate fees to move electricity from one region to another. ``We clearly need non-discriminatory open access on the grid,'' he said, adding that the FERC has the authority to open up the power grid in the same way that natural gas pipeline transmissions work. ``It's clear we've under-invested in energy infrastructure in the last 10 to 15 years,'' Lay said. ``It's going to take a few years to correct that.'' Lay spoke a day after 96,000 electricity customers in California suffered hour-long blackouts as high temperatures boosted demand for power. It was the fifth day of electricity cutoffs in California this year and more are expected. --Amy Strahan Butler in the Washington newsroom, (202) 624-1835 or astrahan@bloomberg.net/de Enron Broadband Services President Plays Europe For Strong Bandwidth Commoditization 2001-05-08 17:46 (New York) By Mark Holmes Enron [ENE] in February launched online bandwidth trading services in Europe. The massive Houston-based utility is hoping to leverage its skills in other sectors, such as energy, to become a key player in the European broadband market. In an exclusive interview with Broadband Networking News, the President of Enron Broadband Services Europe, Steve Elliott, talks about the broadband opportunity for Enron in Europe. BNN: How do you view the bandwidth trading environment in Europe? What would you say are Enron's competitive advantages in this area? Elliott: Firstly, the bandwidth market in Europe is really in its early stages of evolution from a traditional incumbent-based long lead time, 'difficult to contract in' environment, into a much more open, transparent, flexible ease-of-transaction type of environment, but it is in a transition. It is by no means there yet. The local loop issue aside, there is a number of ingredients that make the European market attractive, for example, it has a more progressive approach to commoditization than the U.S. and we have better metro-connectivity. Moving on to who Enron is: Enron is a market maker in all the markets that we operate in. What I mean by a market maker, is that Enron is the principle in all of the transactions that we do. Completely different [from] a broker or exchange. Because of the combination of our Enron Intelligent Network, risk management services and bandwidth intermediation skills, Enron is better placed than other players to offer flexible and reliable solutions and at the same time help companies to manage their risks. This is especially important in today's environment. And because we transact in a different fashion [than] traditional incumbents, we can also react quickly. For example, we offer both traditional and Web-based transactions through our e- commerce platform EnronOnline, where real-time pricing is displayed and transactions can be completed in minutes. BNN: What are the implications of bandwidth commodization? How do you see commoditization evolving? Elliott: It is key to create a critical mass of information and players. It is also critical to have price transparency and standardization of terms and conditions and levels of quality of service. These are key elements in identifying the exact product and in making transacting easier. All types of data networking are moving towards commoditization. For example, today we have IP transport through to colocation and storage. The future will see chips, media rights and even advertising space being commoditized. The days of long drawn-out negotiations are really coming to an end. We are definitely seeing the end of best efforts service in this marketplace. BNN: I was speaking recently to Duncan Lewis, president of Ebone, who said that operators were spending around three Euros for every one Euro of revenue they derived from selling bandwidth, and that price erosion was "quite phenomenal." What are your views on that? How does this bandwidth price erosion affect a bandwidth trading facility such as Enron's? Elliott: There has been a phenomenal downwards movement of price in this market. This is normal when you start to see the improved price transparency that's out there. Initially, you do tend to have reductions in prices, but ultimately markets are going to operate more efficiently, allowing the suppliers to make money. In the long run, the laws of supply and demand will prevail, and prices will settle at a point where suppliers can make money. That's not to say that you won't have periods of irrational behavior around pricing. There are a lot of players suffering from the 'spending around three Euros for every Euro of revenue' equation right now. And they will tend to act irrationally at times. This tends to be short-term phenomena. In the long term, prices tend to settle into the true cost of having to deliver service. From a trading standpoint, I don't see anything different here from what we have seen in other markets, for example the gas and electricity markets. This doesn't in any way jeopardize the viability of having a traded or open market. Price volatility creates the opportunity as it creates risk and this, in turn, creates the need for risk management. BNN: Does bandwidth demand generate price decline, or vice versa? Elliott: Prices have not come down because of bandwidth moving towards becoming a commodity. That is not the driver. The driver is in fact that you have an oversupply in the market right now. A lot of people have over-invested in assets and are looking to get any sort of return that they can. BNN: Will Enron have to evolve its broadband strategy if this price erosion continues? Will you have to look to offer services like dark fiber provision, duct space and colocation space in the future? What will be the revenue generators for Enron in the future? Elliott: We offer all of those other services (commodities) right now. When you say bandwidth trading, that is what it is commonly referred as, but I view it as a series of commodities in the data communications markets. Capacity, or bandwidth, is one. Colocation, dark fiber, optical wavelinks, different levels of IP capacity, storage, ultimately streams. These are all elements of the overall data networking market. Each one of these products is being commoditized and is ultimately moving towards a more open, robust market. We are an active 'market maker' in each of those commodities, but we also re- bundle them into different packages and structures that give our customers whatever they need. That may be raw commodities, bundled service offerings, price risk management capability around a customers' commodity exposure. BNN: If we could talk about your content delivery business - you recently terminated a deal with Blockbuster that would have given Enron exclusive rights to deliver movies on a video-on-demand service. How big a blow was that to your content delivery business? How do you see this business developing in the European marketplace? Elliott: You are right, we are very much in the content delivery business. We have developed a content delivery platform for video-on- demand. We believe there has been a lack of an effective commercial model to successfully migrate content to the broadband system, which is technically reliable, scaleable and secure and have developed a complete integrated service, including content management, aggregation and distribution. Tests prove the platform is reliable and we are talking to distribution companies to provide services to households via DSL, cable and, later, satellite. In addition, we are also talking directly with film studios and other content providers. BNN: Do you expect to see consolidation in the industry? Will you look to make acquisitions to boost your pan-European operations? Elliott: We are always looking for value, whether it be in assets or companies or physical positions. Clearly, prices for companies in these markets have come down significantly and many of them are at risk right now. I think you will see more of them fail. In all markets where Enron participates in, we tend to own selected physical assets. Sometimes we go about acquiring those through company acquisition or some times through physical asset acquisitions. Sometimes we develop a business from scratch. BNN: Enron is a massive Unite States utility with expertise in a number of areas. What is the broadband opportunity for Enron in Europe? Elliott: The data networking market is an extremely large market and is very appealing to us. It also has the characteristics that allow our business model to work effectively: a large market that is operating inefficiently and undergoing fundamental change. We can take this market towards a more open price-transparent environment, where we can offer our core services of price risk management and creative deal structuring...to give customers whatever they need. (Anita Cullen, Enron Broadband Services, +44-207-783-2384.) FOR MORE INFORMATION on this or any other story from Broadband Networking News, May 8, 2001, please call PBI Media, LLC's Client Service Department at 800/777-5006. USA: Large U.S. firms finding inner-city profits-study. 05/08/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, May 8 (Reuters) - America's largest corporations are finally figuring out what inner-city and rural businesses have known for years, profits can be found in their neighborhoods. Several executives, including officials from Enron Corp. , Pfizer Inc. , American Express Co. , Union Bank of California , State Farm and Marriott International , came together on Tuesday to promote a new study by the Ford Foundation showing increasing participation and profits at 30 companies from cultivating commercial activity in the country's poorest sections. "Distressed rural areas and hardscrabble inner cities are transforming themselves into some of America's most competitive places to do business," Susan V. Berresford, president of the Ford Foundation, said in a teleconference. But some, like Matthew Lee, executive director of Bronx, N.Y.-based community and consumer group Inner City Press/Community on the Move, had few positive things to say about corporations involvement in inner-cities. Banks in particular, he said, only come into the poorest urban areas after much prodding by his group and others advocating for the urban poor. He added that Federal money is being siphoned off to subsidize the big businesses at the expense of local initiatives. Michael Porter, a Harvard Business School professor who studies inner-city businesses, said that businesses that enter inner cities find success. The average rate of growth at Inner-City 100 firms, a list compiled yearly by inc. magazine, is 54 percent, he said. Porter said inner-cities offer companies a central location, a large and underserved market of consumers and businesses looking for commercial services and a large and underutilized workforce. Porter also declared the trend of businesses moving to the suburbs is reversing, with many taking a new look back at cities. But at the same time, "lingering perceptions that inner-cities are not a good place to do business persist," Porter said. Large corporations across all industries are beginning to make investments in partnerships with community-oriented venture capital partners, investing in promising inner city and minority-owned businesses, the report said. "We're not doing this because it feels good. We're doing this because it makes business sense," Jeffrey Skilling, the chief executive of Enron, said in a release. His company committed $20 million and raised another $20 million to make equity investments in 19 different women-and minority-owned businesses in Houston, according to Gene Humphrey, president and CEO of Enron Investment Partners. "We view this as a profitable and a for-profit venture," Humphrey said during the teleconference. San Francisco-based Union Bank of California found it was losing customers to local check cashing shops and that an estimated 20 percent of all households in the markets they served were operating "outside the banking system," according to Richard Hartnack, vice chairman with the firm. After opening several branches in "very low income areas" and finding it difficult to make a profit, the firm combined banking products with check cashing services eight years ago, calling them Cash & Save. The outlets have hit their profit targets, Hartnack said, and through 2003 they expect to build another 40 branches in addition to the 20 already operating. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
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