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Enron Mail |
Xi Xi,
Thank you for your note. The reason that regulatory, legal, and tax need to analyze peering arrangements is that it appears that EBS may use such arrangements to effectively provision IP transport and IP transit obligations (see attached note from Gunnar Frey). Do you believe what Gunnar contemplates in his note falls within the definition of a peering arrangement set forth in your note? I think the basic questions are best framed in concrete terms: If a US customer with an office in Sao Paulo were to pay EBS, Inc., to provide IP transport from Sao Paulo to the US, would EBS Inc. be required to establish a Brazilian entity with a Brazilian telecom license to provide the IP transport? If the answer to the foregoing question is yes, would it matter whether the IP transport were provisioned through the purchase of private line capacity from Sao Paulo to Miami or via the peering arrangement described below with Impsat? If the answer to the foregoing question is no, would EBS' licensed Brazilian entity have to be a party to the Impsat peering arrangement? Regards, W. Wayne Gardner Enron Broadband Services 1400 Smith Street Houston, TX 77002-7361 Phone: 713 853 3547 Fax: 713 646 2532 ----- Forwarded by Wayne Gardner/Enron Communications on 09/01/2001 08:19 ----- Gunnar Frey 26/12/2000 17:55 To: Wayne Gardner/Enron Communications@Enron Communications cc: Donald Lassere/Enron Communications@Enron Communications, Arshak Sarkissian/Enron Communications@Enron Communications Subject: Re: BMC Software Wayne, You may have surmised this already but for the BMC Sao Paulo E-1 I am planning to use Impsat Fiber Network. I wrote you about this company at the end of November and proposed this scenario. I think last time we spoke you said you thought we should be able to do this without creating a foreign entity or tax liability. Is that still true. Thanks, Wayne, Arshak and I have been working to reach an agreement with Impsat FIber Networks. Impsat has an extensive network in 8 countries in Latin America as well as a pop in Miami. We have been discussing a peering/transit agreement whereby one of our customers could connect to an Impsat port in Latin America for IP transit to the EIN. As we envision this now, we would swap Impsat a dedicated 45mbps port to our network for one into their network. The connection between the two networks will take place in Miami. If an EBS customer wanted IP capacity back to the US they could connect to any Impsat port in Latin America. The customer would pay Impsat a port connection fee at every point where they connected to Impsat in Latin America. EBS's customer would pay EBS USA for the capacity (e.g. 8 mbps). The reverse would be true for an Impsat customer in the US. The Impsat customer could connect to an EIN port for a fee that would be paid directly to EBS but any charges for capacity would be paid to Impsat. The Impsat customer could use the EIN for transport between EBS pops and an EBS customer could have transit between Impsat's pops. We would expect the EBS customer's Latin America requirement to be part of a larger VBN deal with components in the US and, possibly, other continents. Would this scenario create a tax liability for EBS in Latin America? Impsat is incorporated in Delaware and trades on the NASDAQ. Their hqs are in Argentina. I welcome anyone's comments. Thanks, Gunnar Frey Enron Broadband Services Global Bandwidth Risk Management Tel: (713) 853 - 4375; Fax: (713) 646 - 8795 Gunnar Frey Enron Broadband Services Global Bandwidth Risk Management Tel: (713) 853 - 4375; Fax: (713) 646 - 8795 http://www.enron.net/ ----- Forwarded by Wayne Gardner/Enron Communications on 09/01/2001 08:19 ----- Xi Xi 08/01/2001 19:43 To: Wayne Gardner/Enron Communications@Enron Communications cc: Alisa Christensen/Enron Communications@Enron Communications, Angie Buis/Enron Communications@Enron Communications, Beth Wapner/Enron Communications@Enron Communications, Cynthia Harkness/Enron Communications@Enron Communications, David DeGabriele/Enron Communications@Enron Communications, David Merrill/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Derenda Plunkett/Enron Communications@Enron Communications, Donald Lassere/Enron Communications@Enron Communications, Gerry Willis/Enron Communications@Enron Communications, James Ginty/Enron Communications@Enron Communications, Jan Haizmann/LON/ECT@ECT, Jane Wilson/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Jeff Dasovich/NA/Enron@ENRON, Lara Leibman/Enron Communications@Enron Communications, Malini Mallikarjun/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Michael.Norris@enron.com, Michelle Hicks/Enron Communications@Enron Communications, Mike Dahlke/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Rajen Shah/LON/ECT@ECT, Richard Anderson/Enron Communications@Enron Communications, Robbi Rossi/Enron Communications@Enron Communications, Sue Nord/NA/Enron@ENRON Subject: Re: Proposed Tarl Agenda - Meeting for 9 am Thursday, January 11 (location/call-in to be announced) Wayne, This my response to your question. What is the regulatory analysis of peering arrangments? Peering is an act of establishing a relationship to pass Internet traffic between one national internet backbone provider to another national provider. Peering is currently not subject to any industry-specific regulations and is governed by commericial requirements. The reason that peering is not regulated by Federal Communications Commission or any other agency is mainly due to two factors: 1) data traffic has not been subjected to the same stringent regulation as voice traffic 2) history of Internet -- Since it was the National Science Foundation (NSF) who founded the first backbone to encourage the exchange of information between different scientists and researchers, the open environment for peering was essential to the rapid growth of the Internet. Currently, most of the Internet traffic is exchanged through private pooling instead of the public Network Access Point (NAP). With private peering, traffic can be exchanged in the same city, which avoids the classic sydrome in which traffic that orignates and terminates in Houston would have to travel through NY or even India. Please note that peering is not be be confused with Interconnection in the PSTN, which are very cumbersome and expensive. May I also ask for what reason are you bringing up the topic of peering, is there a deal involving this topic ? Please let me know if you have any questions. Xi Xi Wayne Gardner 01/08/01 11:12 AM To: Alisa Christensen/Enron Communications@Enron Communications, Beth Wapner/Enron Communications@Enron Communications, Cynthia Harkness/Enron Communications@Enron Communications, David DeGabriele/Enron Communications@Enron Communications, David Merrill/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Derenda Plunkett/Enron Communications@Enron Communications, Donald Lassere/Enron Communications@Enron Communications, Gerry Willis/Enron Communications@Enron Communications, James Ginty/Enron Communications@Enron Communications, Jan Haizmann/LON/ECT@ECT, Jane Wilson/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Jeff Dasovich/NA/Enron@ENRON, Lara Leibman/Enron Communications@Enron Communications, Malini Mallikarjun/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Michael.Norris@enron.com, Michelle Hicks/Enron Communications@Enron Communications, Mike Dahlke/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Rajen Shah/LON/ECT@ECT, Richard Anderson/Enron Communications@Enron Communications, Robbi Rossi/Enron Communications@Enron Communications, Sue Nord/NA/Enron@ENRON, Xi Xi/Enron Communications cc: Angie Buis/Enron Communications@Enron Communications Subject: Proposed Tarl Agenda - Meeting for 9 am Thursday, January 11 (location/call-in to be announced) I propose a 1 hour meeting to try to regroup from the holidays and hopefully come up with a framework that will allow us to pick up the pace for future meetings. Below is a proposed agenda: 1. Establish what we have learned to date: Trading of private line and lambda service terminating in Japan unavoidably requires a local license held by local entity - therefore, trading of private line and lambda service terminating in Japan must be done by a local entity - exposure to high Japanese tax and potential double tax reduced if Japan only has half-circuit - but this requires having multiple EBS parties to a trade - and trading half-circuits may not even be a commercial alternative - a Master and a confirm must be bilateral, i.e., there can be only be one counterparty on each side of the agreement - thus, a customer that wishes to trade an entire segment (e.g., Tokyo to San Jose) will have to execute two Masters and two confirms if the half-circuit alternative is used US tax guidelines to avoid double tax on Japanese trading Trading of Australian bandwidth entails no license requirements Trading of Western European bandwidth entails no license requirements provided that no physical fiber is owned Trading US telecom capacity requires an FCC 214 license - EBS, Inc. has an FCC 214 license - No other affiliate of EBS, Inc. needs to acquire an FCC 214 license IF that affiliate is directly or indirectly wholly-owned by EBS, Inc. With regard to any IP transport deal, we must have the counterparty enter into a separate Master agreement and confirm with each EBS entity involved in the transaction. - Thus, in an IP transport deal involving numerous countries that require licensed local entities to provide local IP services, the counterparty will be required to execute a Master with each of the local entities - This is the ONLY feasible way from a legal standpoint to structure an IP transport deal, but is not a very good solution. None of the foregoing points raise significant accounting issues. Other? 2. What are the important near term questions that remain to be answered and how long will it take to answer them: Does private line and lambda trading of segments terminating in Hong Kong, Singapore, and India unavoidably require local license held by local entity? - If so, is there any way to limit the problem? Does IP transport constitute a telecommunications service that requires a license in Sao Paulo, Tel Aviv, Japan, Singapore, Hong Kong, and India? - If so, must that license be held by a local entity? Does IP transit constitute a telecommunications service that requires a license in Sao Paulo, Tel Aviv, Japan, Singapore, Hong Kong, and India? - If so, must that license be held by a local entity? What is the legal relationship of parties to peering arrangements? What is the regulatory analysis of peering arrangments? What is the tax analysis of peering arrangments? Other? 3. Update on Singapore Pioneer Status application 4. Are there things should we be doing to try to get ahead of the curve? I encourage questions and comments on the agenda. W. Wayne Gardner Enron Broadband Services 1400 Smith Street Houston, TX 77002-7361 Phone: 713 853 3547 Fax: 713 646 2532
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