Vision

Deregulation of the telecommunications industry, advances in transmission and routing technologies and shrinking business cycles have led to the emergence of short-term bandwidth on-demand offerings.

In a wave of enthusiasm over the business models enabled by on-demand service delivery, a new breed of intermediaries, often called "bandwidth exchanges" set up online marketplaces for trading telephony minutes, IP transit, and point-to-point data transport services. The first such businesses appeared back in 1996. A whole range of technical (switching, quality monitoring, integration) and business (standardized contracts, trading processes, neutrality, market liquidity) issues have been tackled in the meantime with varying degrees of success.

This developing field was hit hard by the economic downturn and accounting scandals of 2001-2, losing some of its momentum. According to anecdotal estimates bandwidth trading was set back by about 3 years. However, the technical and scientific challenges that arose from these developments are still relevant. For example, anyone with significant investments in broadband capacity today is exposed to a very high risk of incorrectly estimating the expected return for these assets, simply because the market for these services is undergoing some dramatic changes.

Despite the current negative market climate, the development of an open and efficient bandwidth market leading to optimal allocation of network resources, reduced search costs, price transparency, and the development of instruments for risk management remains an exciting prospect.

Research agenda

We develop methods for market-based pricing and valuation of Internet and e-commerce infrastructure. The internal IBM-only resources for this project can be found here. For an overview of our more recent work on Grid economics, click here.

Contact

Chris Kenyon