Telecommodities Indices

Posted: 05/1999

U.S.-to-Latin America Routes Lower Global Index

Minutes routes from the United States to Central and South Americas drove down the
global index last month. The RateXchange Americas regional index fell by 9.5 percent,
followed by Asia by 5.24 percent and Europe by a fraction. The global index for
private-line and satellite-capacity pricing was relatively stable, declining by 1.78
percent over the past month–a significant change from the volatile months that preceded
it.

The big story over the past month was the significant decline of voice over Internet
protocol (VoIP) over private network rates. The VoIP market is burgeoning with new directs
and competition, as evidenced by the following spot rate declines: Venezuela (-56.52
percent to 10 cents per minute), Hong Kong (-52.8 percent to 6 cents), Lebanon (-47.81
percent to 24 cents), Malaysia (-45 percent to 11 cents), Greece (-33 percent to 12 cents)
and the Dominican Republic (-28.57 percent to 10 cents).

Graph: RateXchange TeleCommodities Indices

Significant rate adjustments also occurred for public switched telephone network (PSTN)
routes. The leading spot-rate declines were: the Dominican Republic (-47.37 percent to 10
cents), Greece (-31.08 percent to 13 cents), Ecuador (-27.27 percent to 16 cents), Hong
Kong (-24.53 percent to 6 cents) and Brazil (-22.92 percent to 9 cents)

Further analysis of the top 20 routes according to international voice traffic volume
reveals the primary driver of these price decreases is declining termination charges. Over
the past month average termination rates declined by 17 percent, while average transport
rates actually rose. As global liberalization is an evolutionary process, we can expect
further termination rate decreases to drive the spot rate in the short future. Technology
advances in long-haul transport (wavelength division multiplexing [WDM], etc.) largely is
perceived as the fundamental driver for decreasing costs.

Graph: Reginal Indices

The RateXminute is a composite index of all available offering prices on RateXchange
to carriers for the top 20 international voice minute routes weighted by share of global
volume as determined by Telegeography Inc. The RateXmegabyte is a composite index of all
available private lines more than 500 DS-0 miles long weighed by DS-0 miles within the
United States and international private lines (IPLs) from selected routes to Europe and
Asia weighted by share of global IPL volume. RateXminute Regional Indexes are derived from
selected countries within the top 20 routes included in the RateXminute index. The indexes
are updated and published every Tuesday at www.ratexchange.com. Information is provided to
the publisher by RateXchange and is believed to be accurate. RateXchange nor PHONE+ assume
any liability for inaccuracies or decisions made by readers based on this information.

The top international spot rates-per-minute cost of terminating a call from the
United States to a given country are the best offers to sell voice minutes capacity at
RateXchange as of March 23, 1999.