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Essential Guide to Telecommunications, The, Third Edition by Annabel Z. Dodd

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Bandwidth Trading: The Commoditization of Bandwidth

Just as commodities such as natural gas, oil and electricity are traded, bandwidth trading in telecommunications is just emerging as a way to buy and sell capacity and hedge the risks of building new routes and buying capacity. For example, a competitive local exchange carrier (CLEC) that sells both long distance and local service can decrease its risk of price spikes by locking in a future price for bandwidth leases. The seller, a carrier, can cut its risk of adding expensive electronics such as wavelength division multiplexing (WDM) to dark fiber by selling future capacity. A future sale locks in a price floor and future revenues. It guarantees the price won't drop below a certain price for ...

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