Ethernet Exchanges Attracting Mostly Sellers

ORLANDO -- Comptel Plus -- Competitive carriers continue to sign up to Ethernet exchanges, but even they admit the "exchange" idea remains a one-way notion.

Zayo Group Inc. (NYSE: ZAYO) was the latest CLEC to announce a new Ethernet Exchange, naming Telx Group Inc. on Tuesday as its latest connection. The company already connects to CENX Inc. (See Zayo Joins Telx Ethernet Exchange.)

Maura Mahoney, vice president of marketing and business development at Sidera Networks Inc. , which has connections to all four Ethernet exchanges, is seeing a lot of companies interested in selling through an exchange, but fewer interested in buying.

"Most companies want to turn their investment into revenue," Mahoney says. "They are looking to monetize what they've built, not buy from someone else."

Her sentiments are echoed by other CLECs that are also connected already to at least one exchange.

Michael Kozlowski, director of product management for 360networks Inc. , calls Ethernet exchange "a really neat concept" but one that is currently out of balance, with a lot more sellers than buyers.

"Large enterprise customers are already buying neutral colo space from companies like Equinix Inc. (Nasdaq: EQIX)" to make direct connections to carriers, Kozlowski says. "It's harder to pitch them on the efficiency of connecting to an exchange."

David Howson, president of Zayo, thinks the exchanges are still early in their evolution, but admits his company is not a big buyer of the Ethernet services they offer.

"What they need is for a few of the companies that buy their Ethernet services, the bigger companies like Level 3 Communications Inc. (NYSE: LVLT) or Verizon Communications Inc. (NYSE: VZ), to get more engaged, which would tip the balance of trade," Howson says. "Exchanges are a convenient and cost-effective way to buy Ethernet connections, but they still need a critical mass."

— Carol Wilson, Chief Editor, Events, Light Reading

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