Xi Xi,
Thank you for your note.  The reason that regulatory, legal, and tax need to 
analyze peering arrangements is that it appears that EBS may use such 
arrangements to effectively provision IP transport and IP transit obligations 
(see attached note from Gunnar Frey).  

Do you believe what Gunnar contemplates in his note falls within the 
definition of a peering arrangement set forth in your note? 

I think the basic questions are best framed in concrete terms:  

If a US customer with an office in Sao Paulo were to pay EBS, Inc., to 
provide IP transport from Sao Paulo to the US, would EBS Inc. be required to 
establish a Brazilian entity with a Brazilian telecom license to provide the 
IP transport?  

If the answer to the foregoing question is yes, would it matter whether the 
IP transport were provisioned through the purchase of private line capacity 
from Sao Paulo to Miami or via the peering arrangement described below with 
Impsat?  

If the answer to the foregoing question is no, would EBS' licensed Brazilian 
entity have to be a party to the Impsat peering arrangement?

Regards,

W. Wayne Gardner
Enron Broadband Services
1400 Smith Street
Houston, TX  77002-7361
Phone:  713 853 3547
Fax:  713 646 2532
----- Forwarded by Wayne Gardner/Enron Communications on 09/01/2001 08:19 
-----

	Gunnar Frey
	26/12/2000 17:55
		
		 To: Wayne Gardner/Enron Communications@Enron Communications
		 cc: Donald Lassere/Enron Communications@Enron Communications, Arshak 
Sarkissian/Enron Communications@Enron Communications
		 Subject: Re: BMC Software

Wayne,

You may have surmised this already but for the BMC Sao Paulo E-1 I am 
planning to use Impsat Fiber Network.  I wrote you about this company at the 
end of November and proposed this scenario.  I think last time we spoke you 
said you thought we should be able to do this without creating a foreign 
entity or tax liability.  Is that still true.  Thanks,

Wayne,

Arshak and I have been working to reach an agreement with Impsat FIber 
Networks.  Impsat has an extensive network in 8 countries in Latin America as 
well as a pop in Miami.  We have been discussing a peering/transit agreement 
whereby one of our customers could connect to an Impsat port in Latin America 
for IP transit to the EIN.  As we envision this now, we would swap Impsat a 
dedicated 45mbps port to our network for one into their network.  The 
connection between the two networks will take place in Miami.  If an EBS 
customer wanted IP capacity back to the US they could connect to any Impsat 
port in Latin America.  The customer would pay Impsat a port connection fee 
at every point where they connected to Impsat in Latin America.  EBS's 
customer would pay EBS USA for the capacity (e.g. 8 mbps).

The reverse would be true for an Impsat customer in the US.  The Impsat 
customer could connect to an EIN port for a fee that would be paid directly 
to EBS but any charges for capacity would be paid to Impsat.  The Impsat 
customer could use the EIN for transport between EBS pops and an EBS customer 
could have transit between Impsat's pops.  We would expect the EBS customer's 
Latin America requirement to be part of a larger VBN deal with components in 
the US and, possibly, other continents.

Would this scenario create a tax liability for EBS in Latin America?  Impsat 
is incorporated in Delaware and trades on the NASDAQ.  Their hqs are in 
Argentina.  I welcome anyone's comments.  Thanks,


Gunnar Frey
Enron Broadband Services
Global Bandwidth Risk Management
Tel: (713) 853 - 4375; Fax: (713) 646 - 8795

Gunnar Frey
Enron Broadband Services
Global Bandwidth Risk Management
Tel: (713) 853 - 4375; Fax: (713) 646 - 8795

http://www.enron.net/

----- Forwarded by Wayne Gardner/Enron Communications on 09/01/2001 08:19 
-----

	Xi Xi
	08/01/2001 19:43
		
		 To: Wayne Gardner/Enron Communications@Enron Communications
		 cc: Alisa Christensen/Enron Communications@Enron Communications, Angie 
Buis/Enron Communications@Enron Communications, Beth Wapner/Enron 
Communications@Enron Communications, Cynthia Harkness/Enron 
Communications@Enron Communications, David DeGabriele/Enron 
Communications@Enron Communications, David 
Merrill/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Derenda Plunkett/Enron 
Communications@Enron Communications, Donald Lassere/Enron 
Communications@Enron Communications, Gerry Willis/Enron Communications@Enron 
Communications, James Ginty/Enron Communications@Enron Communications, Jan 
Haizmann/LON/ECT@ECT, Jane Wilson/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Jeff 
Dasovich/NA/Enron@ENRON, Lara Leibman/Enron Communications@Enron 
Communications, Malini Mallikarjun/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, 
Michael.Norris@enron.com, Michelle Hicks/Enron Communications@Enron 
Communications, Mike Dahlke/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Rajen 
Shah/LON/ECT@ECT, Richard Anderson/Enron Communications@Enron Communications, 
Robbi Rossi/Enron Communications@Enron Communications, Sue Nord/NA/Enron@ENRON
		 Subject: Re: Proposed Tarl Agenda - Meeting for 9 am Thursday, January 11 
(location/call-in to be announced)

Wayne,

This my response to your question.

What is the regulatory analysis of peering arrangments?

Peering is an act of establishing a relationship to pass Internet traffic 
between one national internet backbone provider to another national provider. 
Peering is currently not subject to any industry-specific regulations and is 
governed by commericial requirements.  The reason that  peering is not 
regulated by Federal Communications Commission or any other agency is mainly 
due to two factors:

1)  data traffic has not been subjected to the same stringent regulation as 
voice traffic

2)  history of Internet -- Since it was the National Science Foundation (NSF) 
who founded the first backbone to encourage the exchange of information 
between different scientists and researchers, the open environment for 
peering was essential to the rapid growth of the Internet.  Currently, most 
of the Internet traffic is exchanged through private pooling instead of the 
public Network Access Point (NAP).  With private peering, traffic can be 
exchanged in the same city, which avoids the classic sydrome in which traffic 
that orignates and terminates in Houston would have to travel through NY or 
even India.

Please note that peering is not be be confused with Interconnection in the 
PSTN, which are very cumbersome and expensive.

May I also ask for what reason are you bringing up  the topic of peering, is 
there a deal involving this topic ?

Please let me know if you have any questions.

Xi Xi




	Wayne Gardner
	01/08/01 11:12 AM
		 
		 To: Alisa Christensen/Enron Communications@Enron Communications, Beth 
Wapner/Enron Communications@Enron Communications, Cynthia Harkness/Enron 
Communications@Enron Communications, David DeGabriele/Enron 
Communications@Enron Communications, David 
Merrill/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Derenda Plunkett/Enron 
Communications@Enron Communications, Donald Lassere/Enron 
Communications@Enron Communications, Gerry Willis/Enron Communications@Enron 
Communications, James Ginty/Enron Communications@Enron Communications, Jan 
Haizmann/LON/ECT@ECT, Jane Wilson/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Jeff 
Dasovich/NA/Enron@ENRON, Lara Leibman/Enron Communications@Enron 
Communications, Malini Mallikarjun/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, 
Michael.Norris@enron.com, Michelle Hicks/Enron Communications@Enron 
Communications, Mike Dahlke/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Rajen 
Shah/LON/ECT@ECT, Richard Anderson/Enron Communications@Enron Communications, 
Robbi Rossi/Enron Communications@Enron Communications, Sue 
Nord/NA/Enron@ENRON, Xi Xi/Enron Communications
		 cc: Angie Buis/Enron Communications@Enron Communications
		 Subject: Proposed Tarl Agenda - Meeting for 9 am Thursday, January 11 
(location/call-in to be announced)

I propose a 1 hour meeting to try to regroup from the holidays and hopefully 
come up with a framework that will allow us to pick up the pace for future 
meetings.  Below is a proposed agenda:

1.  Establish what we have learned to date:
Trading of private line and lambda service terminating in Japan unavoidably 
requires a local license held by local entity
-  therefore, trading of private line and lambda service terminating in Japan 
must be done by a local entity
-  exposure to high Japanese tax and potential double tax reduced if Japan 
only has half-circuit
-  but this requires having multiple EBS parties to a trade
-  and trading half-circuits may not even be a commercial alternative
-  a Master and a confirm must be bilateral, i.e., there can be only be one 
counterparty on each side of the agreement
-  thus, a customer that wishes to trade an entire segment (e.g., Tokyo to 
San Jose) will have to execute two Masters and two confirms if the 
half-circuit alternative is used
US tax guidelines to avoid double tax on Japanese trading
Trading of Australian bandwidth entails no license requirements
Trading of Western European bandwidth entails no license requirements 
provided that no physical fiber is owned
Trading US telecom capacity requires an FCC 214 license
-  EBS, Inc. has an FCC 214 license
-  No other affiliate of EBS, Inc. needs to acquire an FCC 214 license IF 
that affiliate is directly or indirectly wholly-owned by EBS, Inc.
With regard to any IP transport deal, we must have the counterparty enter 
into a separate Master agreement and confirm with each EBS entity involved in 
the transaction.
-  Thus, in an IP transport deal involving numerous countries that require 
licensed local entities to provide local IP services, the counterparty will 
be required to execute a Master with each of the local entities
-  This is the ONLY feasible way from a legal standpoint to structure an IP 
transport deal, but is not a very good solution.
None of the foregoing points raise significant accounting issues.
Other?

2.  What are the important near term questions that remain to be answered and 
how long will it take to answer them:
Does private line and lambda trading of segments terminating in Hong Kong, 
Singapore, and India unavoidably require local license held by local entity?
-  If so, is there any way to limit the problem?
Does IP transport constitute a telecommunications service that requires a 
license in Sao Paulo, Tel Aviv, Japan, Singapore, Hong Kong, and India?
-  If so, must that license be held by a local entity?
Does IP transit constitute a telecommunications service that requires a 
license in Sao Paulo, Tel Aviv, Japan, Singapore, Hong Kong, and India?
-  If so, must that license be held by a local entity?
What is the legal relationship of parties to peering arrangements?
What is the regulatory analysis of peering arrangments?
What is the tax analysis of peering arrangments?
Other?

3.  Update on Singapore Pioneer Status application

4.  Are there things should we be doing to try to get ahead of the curve?

I encourage questions and comments on the agenda.

W. Wayne Gardner
Enron Broadband Services
1400 Smith Street
Houston, TX  77002-7361
Phone:  713 853 3547
Fax:  713 646 2532