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----- Forwarded by Scott Bolton/Enron Communications on 06/26/00 08:05 PM=
=20 ----- =09EBS Office of the Chairman =09Sent by: EBS Announcements =0906/27/00 04:27 PM =09=09=20 =09=09 To: All EBS Worldwide =09=09 cc:=20 =09=09 Subject: EBS Update EBS has realized many significant accomplishments in this first half of 200= 0.=20 We continue to make excellent progress in building out the EIN, as well as= =20 delivering on our two primary commercial opportunities, Bandwidth=20 Intermediation and Broadband Content Services. In addition, EBS continues = to=20 represent a significant portion of Enron=01,s overall market value. We are= very=20 excited about maintaining and growing our momentum. We want to take this= =20 opportunity to share with you an update on our progress to date and to=20 discuss EBS=01, plans for the remainder of this year.=20 Development of the Enron Intelligent Network To date we have 14,601 route miles of fiber owned and contracted in the U.S= . =20 Of this fiber, 4,051 miles are currently lit and operational and we expect = to=20 have 9,095 miles lit by the end of this year. In addition, we have deploye= d=20 54 PoP=01,s and installed two pooling points within our U.S. network. EBS also completed the acquisition of Warpspeed Communications, a leading= =20 provider of on-demand switched bandwidth services. The newly named Enron= =20 Broadband Switching Systems (EBSS) division provides us with significantly= =20 enhanced =01&intelligence=018 for the network, greatly enhancing our bandwi= dth=20 trading and broadband content delivery capabilities. EBSS software will be= =20 incorporated into the EBS fiber optic platform to increase the speed and=20 efficiency of our own network as well as switching capability between=20 networks. Content Services The EBS Content Services business consists of our content delivery services= =20 and distribution network. During the first half of 2000 we signed landmark= =20 long-term agreements with several key content providers including Blockbust= er=20 Inc., which will be publicly announced shortly, to provide video on demand= =20 (VOD) services for Blockbuster=01,s large full-length movie base, and Bridg= e=20 Information Systems to deliver financial content and real time business new= s=20 to enterprises. =20 We have also established an effort focused on delivering broadband solution= s=20 to the rapidly evolving Applications Service Providers (ASP) sector. Our= =20 agreement with i2, a leader in supply chain management software, allows us = to=20 sell network services as well as jointly pursue service offerings to the=20 rapidly growing online exchange community. We also extended the EIN reach to approximately 20 million desktops through= =20 new broadband distribution agreements with Bell South, US West, and SW Bell= =20 to support the distribution of rich media content. Additionally, we have= =20 reached an agreement with Bell Nexxia to expand the EIN into Canada, which= =20 provides the basis for future distribution deals.=20 =20 Bandwidth Intermediation =20 Our intermediation business includes the development of highly structured= =20 bandwidth solutions for our customers as well as the EBS effort to develop= =20 and trade bandwidth directly with the market. Both efforts have been=20 extremely successful this year. =20 In addition, we began offering bandwidth trades on EnronOnline in April. T= o=20 date, we have completed 25 total trades, with several trades being executed= =20 through EnronOnline. We have recently surpassed our 2000 goal of 5,000 DS-3= =20 months, to be settled by year-end, in just the first six months of the year= .=20 Additionally, we have signed long-term, wholesale origination deals for the= =20 network with Frontier, Datacom, Orconet and Neon. Current Metrics and Statistics Metric Current 2000 Target Total Contract Value =01) Content $59.05 Million* $160 Million DS-3 Months 5,152 5000 Route Miles 14,601 15,000 POP=01,s Deployed** 106 250=20 * Excludes Blockbuster VOD ** Modified from =01&Servers Deployed=018 due to a revised architecture for= Media=20 Cast servers=20 We want to take this opportunity to congratulate everyone on the EBS team f= or=20 all of your hard work and for making these great strides.=20 Remaining Year 2000 Goals and Objectives While we have had an outstanding first half of the year, we must focus on= =20 accomplishing some formidable financial and non-financial goals in the=20 remaining six months. To achieve our 2000 goals, we feel we must accomplish= =20 the following: 1. Complete the fiber build of the network, specifically Houston to New=20 Orleans. 2. Increase the number of operational pooling points domestically to 13, a= nd=20 bring online our London pooling point.=20 3. Ensure the highest QoS and reliability to our content and Broadband=20 Distribution Partners (BDP) customers through a stable and robust streaming= =20 platform. 4. Develop an integrated and consistent service offering to our Enterprise= =20 and ASP customer base. 5. Establish sufficient liquidity and transparency in our traded bandwidth= =20 and storage products to manage risk throughout the organization and enable= =20 risk =20 management to be profitable on a stand-alone basis. 6. Ensure that we have the resources, accountability and focus on the=20 service delivery side of the organization to enable us to be successful in= =20 executing on our=20 strategy. =20 It is with these goals in mind that we make following modifications to the= =20 organization. An organization chart for both EBS global and EBS Europe is= =20 attached which details all departmental reporting relationships. Some of t= he=20 more significant changes are discussed below: Commercial Coverage We remain convinced that we must focus our efforts on customers rather than= =20 products in order to be successful in capitalizing on opportunities in the= =20 rapidly evolving broadband marketplace. Further, while our service offerin= gs=20 can still be broadly defined as intermediation and/or content services, our= =20 marketing approach toward enterprise customers must differ substantially fr= om=20 that of our media and entertainment content customers. =20 We also are more likely to offer bundled solutions combining both streaming= =20 and/or bandwidth products to the enterprise segment, while our streaming=20 platform is forefront in the minds of our media and content customers. In= =20 addition, there is significant potential for integrated transactions among= =20 the Enterprise, Technology Partners, and ASP/ISV customer segments. To=20 capture the tremendous opportunities these customer bases provide, we have= =20 segmented our customer coverage functions into three groups:=20 Content and Distribution Services will be led by David Cox and will focus i= ts=20 efforts intensely on aggregating high bandwidth content and ensuring high= =20 quality delivery through its Broadband Distribution Partner (BDP) customer= =20 base. Stewart Seeligson will join David Cox to provide day-to-day manageme= nt=20 of our efforts in this area. David will continue to focus on large=20 commercial opportunities and provide commercial direction over the deployme= nt=20 of our streaming platform. Stewart will focus on driving the commercial=20 activities of the group. April Hodgson and Steve Luginbill will report to= =20 Stewart. In addition, due to the scale of efforts required to make the=20 Blockbuster agreement a success, we have formed a Video on Demand (VOD) tea= m=20 consisting of cross-functional expertise. This team is led by Frank Bay, w= ho=20 also reports to David Cox. =20 Enterprise/ASP will be led jointly by Jim Crowder and Rex Shelby, and will= =20 focus on providing bundled solutions to this rapidly evolving business=20 marketplace. In addition, this group will continue to be responsible for o= ur=20 key strategic relationships. =20 The Wholesale Group, led by Ted Seitz, will continue to focus its coverage= =20 efforts on the traditional telecom sectors of carriers, ISP=01,s, CLEC=01,s= , RBOC=01, s, global carriers and transcontinental capacity providers located in the= =20 U.S. and Canada. EBS Europe Unlike many of Enron=01,s traditional businesses, the communications busine= ss is=20 truly global in nature. Therefore, it is essential that we extend ourselve= s=20 internationally in areas where we can leverage our existing network and ski= ll=20 sets. We feel that the European region now presents significant=20 opportunities to EBS, and we are pleased to announce that Steve Elliott,=20 former head of Network Development, will be moving to London as President o= f=20 EBS Europe to head up this effort. Joining Steve in London will be Kevin= =20 Kohnstamm as VP of Network and Business Implementation. =20 Steve=01,s former responsibilities will be shared by: Ted Seitz, who will= =20 oversee the development of the network domestically from a commercial=20 perspective, as well as manage our Canadian initiatives; Jon Thomsen who wi= ll=20 consolidate our Latin American activities in Mexico and South America. We= =20 will also be consolidating all of our Asian activities into one group, whos= e=20 leadership we will announce shortly. In addition, we are pleased to announ= ce=20 that Raj Thapar has now joined us from Enron India. Raj will manage all of= =20 EBS=01, activities in India, where he will work closely with the Enron Indi= a=20 team headed by Sanjay Bhatnagar. Raj will report to Steve Elliott. David Leatherwood and the Network Construction group will now report to Joh= n=20 Griebling in John=01,s capacity as head of Network Engineering and Operatio= ns. Product Engineering The rapidly evolving nature of the broadband streaming services business,= =20 coupled with the robust capabilities of the EIN, provide EBS with almost=20 unlimited potential streaming application opportunities. At the same time,= =20 we must deliver on the capabilities of established products. To balance th= e=20 need for execution with the need to develop new products, we have segmented= =20 the former Product Development group into two efforts: =20 Diane Hetzel will lead the newly named Product Engineering group, which is= =20 charged with application development and deployment on our network of all= =20 current EBS product offerings. Diane will report to the Office of the=20 Chairman. Also, Global Information Systems, managed by Laura Beneville, wi= ll=20 now report to Diane. John Bloomer will head the New Products and Technology group, which will=20 identify emerging product and technology opportunities with the goal of=20 eventual commercialization and integration into our product offering. John= =20 will report to Scott Yeager=01,s Strategic Development group. Risk Management Systems In order to succeed in developing a broad-based product offering that can= =20 scale effectively, EBS must put in place an integrated state-of-the-art=20 transaction-processing platform. This requires effective coordination of a= ll=20 risk system development activities. =20 John Echols joins EBS as head of the new Risk Systems Development and Servi= ce=20 Delivery group. John brings a wealth of experience in transaction systems= =20 development from Enron North America and Enron Energy Services. To ensure= =20 that we are developing appropriate risk reporting and customer service=20 capabilities to this effort, Barry Pearce and Penny Crane, who head these= =20 respective functions, will report to John. In addition, David Reece will= =20 join John as Project Manager for all risk management systems=01, software= =20 development. Broadband Operating System (BOS) The successful implementation of an Application Programming Interface (API)= =20 for broadband applications remains a key component of EBS=01,s overall=20 strategy. The ability of applications to have access to bandwidth capacity= =20 on-demand is integral to the success of our network and the broadband=20 marketplace in general. Larry Ciscon will continue in his role as Chief=20 Architect for the Broadband Operating System (BOS). Everett Plante will=20 assume the role of Program Manager for BOS to provide the necessary linkage= s=20 to the network architecture efforts of the EIN. Structuring A core competency of Enron has been its ability to identify, segment,=20 appropriately price and manage risks rigorously in emerging commodity=20 markets, while continuing to be flexible enough to rank by Fortune as the= =20 most innovative company in America. Across the company, an effective=20 structuring group with the proper representation of financial, technical an= d=20 other assorted disciplines has been a key part of this success. Towards th= is=20 end, we have established the Structuring and Transaction Development group= =20 under Brad Richter and Steve Barth. =20 We also have merged the Sales Engineering group, led by Merat Bagha into th= e=20 structuring group to ensure the proper technical input for all potential=20 transactions. It is essential that we support this group in its efforts by= =20 allowing structuring to review all transactions emanating from the customer= =20 coverage groups to ensure proper pricing, accountability, and documentation= =20 of all related risks. The efforts of this group are critical in establishi= ng=20 the framework to allow our business to scale exponentially to meet the=20 accelerating demands of the broadband marketplace. Trading and Risk Management Jim Fallon, formerly Managing Director of Power Trading and Risk Management= =20 for Enron North America, has joined EBS as head of Global Risk Management. = =20 Jim and his team is charged with replicating the successful trading platfor= m=20 he built in North America into a bandwidth trading platform for EBS. Paul= =20 Racicot, VP of Bandwidth Trading, will head the North America trading desk,= =20 and Marcello Romano, Director of Bandwidth Trading, will head this function= =20 in Europe, while reporting jointly to both Jim and Steve Elliott. . As=20 previously announced, VP John Scoblick will head real estate risk, and IRU= =20 Management, led by Andy Unverzagt, will also report to Jim. Warpspeed Acquisition=20 We highlighted above the significance of the Warpspeed acquisition. Terry= =20 Stavropoulos, VP, Mike Golden, EBSS-CTO, and Andy Rundquist, architect, lea= d=20 Enron Broadband Switching Systems, formerly Warpspeed. We welcome the EBSS= =20 team of 55 employees to the EBS team. =20 Staff Functions Kelly Kimberly, formerly Senior VP of Marketing, Communication and PR for= =20 Enron=01,s international companies, now leads that function for EBS as well= as=20 overseeing the Market Interface and Intelligence group, headed by VP Tony= =20 Mends. It is critical that our external message be consistent to ensure we= =20 are communicating EBS=01, strategy effectively. Toward this end, the marke= ting=20 representatives, formerly in the verticals, will now report directly to Kel= ly. As was recently announced, Marla Barnard is now leading the HR function for= =20 EBS. We recognize that intellectual capital is our most important resource= . =20 Marla will focus on keeping EBS competitive by developing strategies to=20 ensure that EBS is able to attract, develop and retain the best talent in t= he=20 industry. We are in a rapidly changing and dynamic industry. While our strategy and= =20 overall objectives will remain unchanged, we must continue to be flexible o= n=20 how we execute on our strategy and achieve our objectives to effectively=20 respond to the changing needs of our customers and to new opportunities in= =20 the marketplace. This requires timely modifications to our organization. = We=20 are convinced that we have a winning strategy and the best team in the worl= d=20 to execute on our strategy.=20 While we have accomplished a great deal in the first six months of 2000, le= t=01, s build on this momentum and work together to achieve our goals over the=20 remainder of the year.=20 LINK TO POWERPOINT PRESENTATION BELOW: <<<< Link to PowerPoint Presentation EBSORGOO.ppt and EBSEurope.ppt (Open= =20 document and right click on the icon to launch or view). If you are not able to use the link then to access PowerPoint Presentation= =20 open database using ECPDXAPPS01/Enron Communications as the server and in t= he=20 "Apps" folder find the "ECI Corporate Document Repository" database and ope= n=20 the database. Open the view "By Category" <<< Chairman's Updates <<< Email= =20 messages from the Office of the Chairman.
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