|
|
Enron Mail |
Cool, huh?
----- Forwarded by Scott Bolton/Enron Communications on 02/09/00 04:45 PM ----- bankst@fleishman.com 02/10/00 06:37 AM To: csandhe@enron.com, Scott Bolton/Enron Communications@Enron Communications, Janet Johnson/Enron Communications@Enron Communications, Claudia Johnson/Enron Communications@Enron Communications, hubbardh@fleishman.com, haberj@fleishman.com, mandigom@fleishman.com, woodrufd@fleishman.com, pendergb@fleishman.com cc: Subject: Motley Fool EBS clip Hi Everybody, Here's a very strong clip on Enron Broadband Services from today's Motley Fool -- Bill Mann was at the briefing yesterday. I'm fairly certain we'll see something in today's CommDaily, as well -- then there's the weeklies and monthlies who were there and will be coming on stream. I'll keep you posted.. -- Terry < FOOL ON THE HILL < An Investment Opinion < Enron's Telecommunications Revolution < By Bill Mann <http://www.fool.com/About/staff/billm.htm<; (TMF Otter) < February 9, 2000 < Here's a juicy piece of trivia for you. Can you name the company with the < largest amount of business derived from e-commerce? < < If you managed to see the title you'd likely expect the answer to be < Enron. And you'd be right. < < Houston-based Enron Corp. (NYSE: ENE) < <http://quote.fool.com/uberdata.asp?symbols=ENE<; processes online < transactions with a notional value of $300-400 million per day. Enron's < electricity and natural gas intermediation services manage a significant < portion of the natural gas spot contracts in the United States and Canada, < providing service via its own natural gas pipeline network as well as < providing the information system to broker sales between suppliers and < purchasers. < < In effect, Enron has decided to leverage its network of pipelines by using < the information about natural gas flow to help make a much more efficient < system. The information is then what becomes valuable, with the network < and the actual natural gas just being the commodity upon which the < information exchange is built. < < Enron has made some recent splashes here at The Motley Fool, starting with < its inclusion as a NOW 50 Index <http://www.fool.com/now50/now50.htm<; < company, which began on the first day of trading in 2000. In just the last < two weeks Enron's CEO, Ken Lay, appeared with Tom and David Gardner on The < Motley Fool Radio Show <http://www.fool.com/radio/radioonline.htm<;, and on < Monday of this week, George Runkle (TMF Runkle) wrote about it as a part < of the Pathfinder Series < <http://www.fool.com/dripport/2000/dripport000207.htm<; being undertaken in < the Drip Port. < < But what really catches my eye about Enron is its attempt to bring the < same spot market efficiency to the bandwidth market as it has done with < natural gas. This is something really bold -- a company with natural gas < and electric utility backgrounds (Enron owns Portland General Electric < <http://www.pge-online.com/<, the incumbent utility in northwestern < Oregon) moving into the telecommunications field, one of the most fiercely < competitive on the planet. Are these people nuts? < < Not at all. They're crazy like foxes, actually. Enron is part of a rare < breed, a company that is perfectly willing to go out and compete for < business anywhere, anytime. They seem to have no preconceived notions of < what their business limitations are supposed to be, and have never seen < any such thing as a sacred cow, to the point of selling off the operations < that first brought them into commerce. These companies, to which I assign < the highest regard, include Nokia (NYSE: NOK) < <http://quote.fool.com/uberdata.asp?symbols=NOK<;, CMGi (Nasdaq: CMGI) < <http://quote.fool.com/uberdata.asp?symbols=CMGI<;, Reed Elsevier (NYSE: < ENL) <http://quote.fool.com/uberdata.asp?symbols=ENL<;, Cable & Wireless < (NYSE: CWP) <http://quote.fool.com/uberdata.asp?symbols=CWP<; and < Schlumberger (NYSE: SLB) <http://quote.fool.com/uberdata.asp?symbols=SLB<;, < operate in different industries, but they are in effect companies that < trade primarily in intellectual capital. Enron fits this mold as well -- < it trades in information, the commodities and services it provides are the < manifestations of that information. < < With this background in mind, I jumped at the opportunity this morning to < attend an informational session that Enron held in Washington, D.C. to < discuss its new initiative, Enron Broadband Services, presented by the CEO < of EBS, Joe Hirko, and the Vice President of Bandwidth Trading, Tom Gros. < < What Enron proposes to do, and is provisioning its network for, is to < create a market by which Internet Service Providers (ISPs), carriers, < brokers and end users can purchase high bandwidth capacity on a spot < market. Enron is initially using its existing 14,000-mile fiber optic < network in the U.S., along with pooling points and other points of < presence, currently in 25 U.S. cities. < < The concept is revolutionary. Currently high-bandwidth pipelines (DS-3 and < higher) are provisioned on a long-term contract basis and can take up to < 90 days to be brought into service. This means that it is very difficult < for networks to do any dynamic load management because their networks must < be built to handle peak usage times that, in some instances, can be 200 < times as high as the low usage points. < < Enron estimates as a result of this that even on the heaviest trafficked < routes, such as New York-Los Angeles, that the load factor (amount of < capacity that is actually used) for circuits is less than 5%. What Enron < is proposing would provide a way for network managers to use as much < bandwidth as they need during peak times, and sell it on the open market < during their own lower traffic times. But how can companies do this given < the long lead times required to bring up and tear down circuits? < < Enter Enron. Enron has built its first two pooling points (one in New < York, one in Los Angeles) to which ISPs, carriers and high-density end < users can connect. These pooling points can then, using Enron's network < optimization protocols, route the traffic from any number of customers < across the same network. In so doing, Enron has provided its customers a < solution that would otherwise be unavailable to them -- the ability to < efficiently provision their own bandwidth needs, on a time-of-day, hourly, < or one-time purchase basis. < < So, for example, if Citigroup (NYSE: C) < <http://quote.fool.com/uberdata.asp?symbols=C<; needed to send wiring < information out from its New York clearinghouse once a day from 2-3am, < Enron could provide them dedicated bandwidth for that transaction, selling < the capacity to other clients during the other 23 hours of the day. Enron < can even "hot roll" a data stream, matching supply and demand every 5 < seconds, and move a customer from one dedicated circuit to another without < any disruption of service to the customer. < < There is a great deal of things that need to take place in the market < before this vision becomes real, such as terms of service standards, legal < efficiency (master contracts), and an increased level of interconnectivity < between carriers. But more importantly, carriers need to be willing to < change the rules of the game. At least one carrier has been dismissive of < Enron's entrance into their sandbox, saying that there's nothing an Enron < could teach them about their own business. This suits Joe Hirko just fine, < as Enron is working to set up a liquid telecommunications market, and in < the end, like anything else, the needs of the consumers will drive the < market. Hirko expects that activity in a liquid bandwidth market will < build through 2001. But already Enron Communications has some $160 million < in streaming contracts. < < Seeing as Akamai (Nasdaq: AKAM) < <http://quote.fool.com/uberdata.asp?symbols=AKAM<; -- whose Internet < delivery service provides network flexibility is valued at $24 billion for < $1.7 million in annual sales -- is it any wonder why some analysts believe < that Enron Communications could be worth more than all of the rest of the < company? If Enron succeeds in its drive to create an open broadband < market, its $31 billion market cap could be a distant memory. < < Be sure to check out our Valentine's Day treat, Stocks Fools Love < <http://www.fool.com/specials/2000/sp000208sfl.htm<;, for a few love < sonnets and other odes to some of our favorite companies! You might learn < something, and you might be inspired to compose a ditty for your own < beloved. < < Fool on! < < Bill Mann, TMFOtter on the boards < < Related Sites: < Enron Message Board < <http://boards.fool.com/Messages.asp?id=1100058000000000<; < Enron Corp website <http://www4.enron.com/corp/<; < Enron Broadband Services <http://www.enron.net/index2.html<; < FOOL ON THE HILL < * Post <http://boards.fool.com/Post.asp?id=1030056000000000&;reply=false< < your thoughts about this article. < * Read <http://boards.fool.com/Messages.asp?id=1030056000000000<; the FOOL < ON THE HILL message board. < * Archives </news/foth/archive.htm< < <
|