This describes the point-to-point transmission capacity. Prices are typically quoted per DS0 per distance unit per duration unit for DS3 and other capacities. DS3 = 45 Mb/s = 672 DS0's = 672 x 64 kb/s. Bandwidth has many possible quality parameters such as delay, jitter, loss, and latency.

Non-Storability
Bandwidth is non-storable in the sense that unused capacity from yesterday has no value today.

Inventories act to smooth variations in supply and demand. When no inventories exist, prices can jump if supply or demand change suddenly. Prices can also change suddenly when the perception or expectation of supply or demand status suddenly changes. Bandwidth is non-storable so price jumps and spikes (in both directions) are to be expected.

This is a determining factor in electricity price modeling. Jumps and especially spikes are observed often deriving from weather events (e.g. summer 1998, 1999 in Texas, Australia, California) sometimes in combination with equipment failures. In fact even in commodities where storage is possible, like oil, large-scale political events can still cause jumps and spikes in prices. Oil demonstrated a spike in 1990 during the Gulf War and several jumps, in both directions, depending on changes in OPEC policies from 1973 to the present.

Storability
Forward contracts for later delivery, at their maturity, are storable up to that date. Hence price jumps and spikes are expected to be much less important in forward markets as compared to spot markets. This leads on to the next topic: the term structure of forward volatility (TSOV). As the forward maturity gets less the behaviour will approach that of the spot and this TSOV describes how.

Term Structure of Forward Volatility (TSOV)
In commodity markets in general one of the stylized facts is that there is more volatility in the near-term forward market than in the long-term forward market. It is also usual that for non-investment commodities this volatility does not asymptote to zero. In the bandwidth market, whilst in some very long term there may be stability, we consider it more likely that within any reasonable planning horizon, say up to 5 years, there are increasing levels of uncertainty. So far prices are continuously falling (with rare exceptions), but even if we were to assume that this trend will continue, there is significant uncertainty concerning the rate of decline (both on a global and local level).