Arbinet launches electronic trading platform for Internet access

July 8, 2004 Nashua, NH--Minutes trader Arbinet (New Brunswick, NJ) is rolling out an electronic trading platform later this month aimed at route optimization for buyers and sellers of Internet access, reports Senior Editor Kathleen Richards.

Jul 8th, 2004

July 8, 2004 Nashua, NH--Minutes trader Arbinet (New Brunswick, NJ) is rolling out an electronic trading platform later this month aimed at route optimization for buyers and sellers of Internet access.

More than 30,000 interconnected networks, and 130,000 worldwide destinations comprise the Internet today, says Roger Kim, vice president of data thexchange at Arbinet. The transport of packet traffic is uncertain due to potential issues such as latency and packet loss. As users increasing want to use the Internet for business critical applications, various techniques for route optimization are gaining in popularity.

Arbinet's data thexchange is designed to offer buyers the highest performance "routes" for Internet access based on their requirements and proprietary Internet performance metrics such as packet loss, latency, border gateway protocol (BGP) stability, and jitter. Participating members' IP prefixes are tested hourly using probe packets and assigned a quality score, based on the highest performing paths. This data is stored in a quality matrix database, which a routing intelligence server uses to determine the most efficient routing table by matching the liquid supply of participating sellers' routes to the buyers' pricing requirements. Sellers could include tier-1 carriers, and international, as well as regional Internet service providers.

Trading process
Initially members can connect to data thexchange at the One Wilshire carrier hotel in Los Angeles. Member carriers are activated by establishing a BGP session with the trading arbiter. To trade, members enter a bid or sell (ask) order using autonomous systems numbers to the online trading floor, which indicate what the respective carrier/service providers wishes to buy or sell and at what price. For a buyer, Arbinet's routing arbiter updates the BGP session and sends an optimized routing table. After an order is executed, Arbinet meters the traffic flows between buyer and seller. Buyers are billed and sellers are paid each month.

Data thexchange will offer 3 levels of service: OptimizedIP, which offers buyers optimized Internet access, SelectIP for customized Internet access using a specific Internet route, and PrimeIP for standard Internet access, whereby the buyer places a bid and chooses from among responding sellers.

The electronic trading platform for data thexchange will be officially launched this month. To date, 20 members have participated in various stages of the beta testing of data thexchange, according to Kim. Fourteen of these members are physically connected.

Lower tier carriers who must pay transit fees to tier-1 service providers may find some economic benefits to using electronic trading platforms such as data thexchange.

Arbinet, which founded its electronic trading platform for voice minutes in 1996, reported 298 members and 7.9 billion minutes of trading in 2003, substantial growth from 5 billion minutes in 2002.

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