Trading Desk: AIG’s Minutes Exchange Runs Out of Time

Posted: 01/2001

AIG’s Minutes Exchange Runs Out of Time
By Bruce Christian

Erick Raab AIG Telecommunications

A shock to some, but a natural process of "weeding out" to others,
AIG Telecommunications LLC (www.aigtelecom.com)
decided in early November to end its foray into online minutes trading.

No official announcement had been made by press time at the end of November
by either AIG Telecommunications or its parent American International Group Inc.
(www.aig.com). Neither calls nor e-mail
messages were answered.

However, AIG Telecommunications’ CEO, Eric L. Raab, confirmed the decision at
a bandwidth trading session Nov. 15 during the ASCENT Fall 2000 Conference and
Exhibition in Anaheim, Calif., one week after he learned of the company’s
decision.

Before diving into his presentation that promoted the bandwidth trading
concept, Raab told the audience of AIG’s decision and emphasized his strong
disagreement with it.

At a time when bandwidth traders still are trying to sell the concept as a
good way to do business, AIG’s decision to back out should not be viewed as an
indication that the exchange model won’t work, according to competitors.

Neither did AIG’s decision come as a complete surprise.

"There are a lot of players in the space, and there eventually has to be
a weeding out," says Jeff Stark, executive vice president of marketing for
The Global TeleExchange Inc. (www.thegtx.com).
"This is sort of the natural evolution, especially considering the state of
the economy. A lot of companies are being hard hit by the market adjustments.

"I think it is only natural that when you see a carrier’s restructuring
and a weeding out of CLECs and ISPs, it’s only natural it will happen with
bandwidth trading."

He and Chris Reid, director of corporate communications for
Arbinet-thexchange Inc. (www.thexchange.com),
agree that AIG’s decision to deal only in minutes could have been a factor.

"I really don’t see it impacting the exchanges as a whole, because
bandwidth is being driven by people who own the large chunks of conduit and dark
fiber," Stark says.

Reid adds that AIG’s modest exchange lacked scalability, while Stark says the
company may have had the AIG name, but he does not believe the parent company
ever provided Raab’s division the resources it really needed.

While Reid says he would not be surprised to see AIG re-emerge in another
form of trading, the two agree that others in the space will either fall by the
wayside or be rolled into other companies until three or four global players
remain.