----- Forwarded by Scott Bolton/Enron Communications on 06/26/00 08:05 PM 
-----

	EBS Office of the Chairman
	Sent by: EBS Announcements
	06/27/00 04:27 PM
		 
		 To: All EBS Worldwide
		 cc: 
		 Subject: EBS Update



EBS has realized many significant accomplishments in this first half of 2000. 
We continue to make excellent progress in building out the EIN, as well as 
delivering on our two primary commercial opportunities, Bandwidth 
Intermediation and Broadband Content Services.  In addition, EBS continues to 
represent a significant portion of Enron,s overall market value.  We are very 
excited about maintaining and growing our momentum.  We want to take this 
opportunity to share with you an update on our progress to date and to 
discuss EBS, plans for the remainder of this year. 

Development of the Enron Intelligent Network

To date we have 14,601 route miles of fiber owned and contracted in the U.S.  
Of this fiber, 4,051 miles are currently lit and operational and we expect to 
have 9,095 miles lit by the end of this year.  In addition, we have deployed 
54 PoP,s and installed two pooling points within our U.S. network.

EBS also completed the acquisition of Warpspeed Communications, a leading 
provider of on-demand switched bandwidth services.  The newly named Enron 
Broadband Switching Systems (EBSS) division provides us with significantly 
enhanced &intelligence8 for the network, greatly enhancing our bandwidth 
trading and broadband content delivery capabilities.  EBSS software will be 
incorporated into the EBS fiber optic platform to increase the speed and 
efficiency of our own network as well as switching capability between 
networks.

Content Services

The EBS Content Services business consists of our content delivery services 
and distribution network.  During the first half of 2000 we signed landmark 
long-term agreements with several key content providers including Blockbuster 
Inc., which will be publicly announced shortly, to provide video on demand 
(VOD) services for Blockbuster,s large full-length movie base, and Bridge 
Information Systems to deliver financial content and real time business news 
to enterprises.  

We have also established an effort focused on delivering broadband solutions 
to the rapidly evolving Applications Service Providers (ASP) sector.  Our 
agreement with i2, a leader in supply chain management software, allows us to 
sell network services as well as jointly pursue service offerings to the 
rapidly growing online exchange community.

We also extended the EIN reach to approximately 20 million desktops through 
new broadband distribution agreements with Bell South, US West, and SW Bell 
to support the distribution of rich media content.  Additionally, we have 
reached an agreement with Bell Nexxia to expand the EIN into Canada, which 
provides the basis for future distribution deals. 
 
Bandwidth Intermediation   

Our intermediation business includes the development of highly structured 
bandwidth solutions for our customers as well as the EBS effort to develop 
and trade bandwidth directly with the market.  Both efforts have been 
extremely successful this year.    

In addition, we began offering bandwidth trades on EnronOnline in April.  To 
date, we have completed 25 total trades, with several trades being executed 
through EnronOnline. We have recently surpassed our 2000 goal of 5,000 DS-3 
months, to be settled by year-end, in just the first six months of the year. 
Additionally, we have signed long-term, wholesale origination deals for the 
network with Frontier, Datacom, Orconet and Neon.

Current Metrics and Statistics

 Metric   Current   2000 Target

    Total Contract
    Value ) Content  $59.05 Million*  $160 Million

    DS-3 Months    5,152   5000

    Route Miles   14,601   15,000

    POP,s Deployed**   106   250 

  *  Excludes Blockbuster VOD
** Modified from &Servers Deployed8 due to a revised architecture for Media 
Cast servers 

We want to take this opportunity to congratulate everyone on the EBS team for 
all of your hard work and for making these great strides. 

Remaining Year 2000 Goals and Objectives

While we have had an outstanding first half of the year, we must focus on 
accomplishing some formidable financial and non-financial goals in the 
remaining six months. To achieve our 2000 goals, we feel we must accomplish 
the following:

1.  Complete the fiber build of the network, specifically Houston to New 
Orleans.
2.  Increase the number of operational pooling points domestically to 13, and 
bring online our London pooling point. 
3.  Ensure the highest QoS and reliability to our content and Broadband 
Distribution Partners (BDP) customers through a stable and robust streaming 
platform.
4.  Develop an integrated and consistent service offering to our Enterprise 
and ASP customer base.
5.  Establish sufficient liquidity and transparency in our traded bandwidth 
and storage products to manage risk throughout the organization and enable 
risk     
     management to be profitable on a stand-alone basis.
6.  Ensure that we have the resources, accountability and focus on the 
service delivery side of the organization to enable us to be successful in 
executing on our 
     strategy.  

It is with these goals in mind that we make following modifications to the 
organization.  An organization chart for both EBS global and EBS Europe is 
attached which details all departmental reporting relationships.  Some of the 
more significant changes are discussed below:

Commercial Coverage

We remain convinced that we must focus our efforts on customers rather than 
products in order to be successful in capitalizing on opportunities in the 
rapidly evolving broadband marketplace.  Further, while our service offerings 
can still be broadly defined as intermediation and/or content services, our 
marketing approach toward enterprise customers must differ substantially from 
that of our media and entertainment content customers.  

We also are more likely to offer bundled solutions combining both streaming 
and/or bandwidth products to the enterprise segment, while our streaming 
platform is forefront in the minds of our media and content customers.  In 
addition, there is significant potential for integrated transactions among 
the Enterprise, Technology Partners, and ASP/ISV customer segments.  To 
capture the tremendous opportunities these customer bases provide, we have 
segmented our customer coverage functions into three groups: 

Content and Distribution Services will be led by David Cox and will focus its 
efforts intensely on aggregating high bandwidth content and ensuring high 
quality delivery through its Broadband Distribution Partner (BDP) customer 
base.  Stewart Seeligson will join David Cox to provide day-to-day management 
of our efforts in this area.  David will continue to focus on large 
commercial opportunities and provide commercial direction over the deployment 
of our streaming platform.  Stewart will focus on driving the commercial 
activities of the group.  April Hodgson and Steve Luginbill will report to 
Stewart.  In addition, due to the scale of efforts required to make the 
Blockbuster agreement a success, we have formed a Video on Demand (VOD) team 
consisting of cross-functional expertise.  This team is led by Frank Bay, who 
also reports to David Cox.  

Enterprise/ASP will be led jointly by Jim Crowder and Rex Shelby, and will 
focus on providing bundled solutions to this rapidly evolving business 
marketplace.  In addition, this group will continue to be responsible for our 
key strategic relationships.    

The Wholesale Group, led by Ted Seitz, will continue to focus its coverage 
efforts on the traditional telecom sectors of carriers, ISP,s, CLEC,s, RBOC,
s, global carriers and transcontinental capacity providers located in the 
U.S. and Canada.

EBS Europe

Unlike many of Enron,s traditional businesses, the communications business is 
truly global in nature.  Therefore, it is essential that we extend ourselves 
internationally in areas where we can leverage our existing network and skill 
sets.  We feel that the European region now presents significant 
opportunities to EBS, and we are pleased to announce that Steve Elliott, 
former head of Network Development, will be moving to London as President of 
EBS Europe to head up this effort.  Joining Steve in London will be Kevin 
Kohnstamm as VP of Network and Business Implementation.  

Steve,s former responsibilities will be shared by: Ted Seitz, who will 
oversee the development of the network domestically from a commercial 
perspective, as well as manage our Canadian initiatives; Jon Thomsen who will 
consolidate our Latin American activities in Mexico and South America.  We 
will also be consolidating all of our Asian activities into one group, whose 
leadership we will announce shortly.  In addition, we are pleased to announce 
that Raj Thapar has now joined us from Enron India.  Raj will manage all of 
EBS, activities in India, where he will work closely with the Enron India 
team headed by Sanjay Bhatnagar.  Raj will report to Steve Elliott.

David Leatherwood and the Network Construction group will now report to John 
Griebling in John,s capacity as head of Network Engineering and Operations.

Product Engineering

The rapidly evolving nature of the broadband streaming services business, 
coupled with the robust capabilities of the EIN, provide EBS with almost 
unlimited potential streaming application opportunities.  At the same time, 
we must deliver on the capabilities of established products.  To balance the 
need for execution with the need to develop new products, we have segmented 
the former Product Development group into two efforts:  

Diane Hetzel will lead the newly named Product Engineering group, which is 
charged with application development and deployment on our network of all 
current EBS product offerings.  Diane will report to the Office of the 
Chairman.  Also, Global Information Systems, managed by Laura Beneville, will 
now report to Diane.

John Bloomer will head the New Products and Technology group, which will 
identify emerging product and technology opportunities with the goal of 
eventual commercialization and integration into our product offering.  John 
will report to Scott Yeager,s Strategic Development group.

Risk Management Systems

In order to succeed in developing a broad-based product offering that can 
scale effectively, EBS must put in place an integrated state-of-the-art 
transaction-processing platform.  This requires effective coordination of all 
risk system development activities.  

John Echols joins EBS as head of the new Risk Systems Development and Service 
Delivery group.  John brings a wealth of experience in transaction systems 
development from Enron North America and Enron Energy Services.  To ensure 
that we are developing appropriate risk reporting and customer service 
capabilities to this effort, Barry Pearce and Penny Crane, who head these 
respective functions, will report to John.  In addition, David Reece will 
join John as Project Manager for all risk management systems, software 
development.

Broadband Operating System (BOS)

The successful implementation of an Application Programming Interface (API) 
for broadband applications remains a key component of EBS,s overall 
strategy.  The ability of applications to have access to bandwidth capacity 
on-demand is integral to the success of our network and the broadband 
marketplace in general.  Larry Ciscon will continue in his role as Chief 
Architect for the Broadband Operating System (BOS).  Everett Plante will 
assume the role of Program Manager for BOS to provide the necessary linkages 
to the network architecture efforts of the EIN.

Structuring

A core competency of Enron has been its ability to identify, segment, 
appropriately price and manage risks rigorously in emerging commodity 
markets, while continuing to be flexible enough to rank by Fortune as the 
most innovative company in America.  Across the company, an effective 
structuring group with the proper representation of financial, technical and 
other assorted disciplines has been a key part of this success.  Towards this 
end, we have established the Structuring and Transaction Development group 
under Brad Richter and Steve Barth.  

We also have merged the Sales Engineering group, led by Merat Bagha into the 
structuring group to ensure the proper technical input for all potential 
transactions.  It is essential that we support this group in its efforts by 
allowing structuring to review all transactions emanating from the customer 
coverage groups to ensure proper pricing, accountability, and documentation 
of all related risks.  The efforts of this group are critical in establishing 
the framework to allow our business to scale exponentially to meet the 
accelerating demands of the broadband marketplace.

Trading and Risk Management

Jim Fallon, formerly Managing Director of Power Trading and Risk Management 
for Enron North America, has joined EBS as head of Global Risk Management.  
Jim and his team is charged with replicating the successful trading platform 
he built in North America into a bandwidth trading platform for EBS.  Paul 
Racicot, VP of Bandwidth Trading, will head the North America trading desk, 
and Marcello Romano, Director of Bandwidth Trading, will head this function 
in Europe, while reporting jointly to both Jim and Steve Elliott. .  As 
previously announced, VP John Scoblick will head real estate risk, and IRU 
Management, led by Andy Unverzagt, will also report to Jim.

Warpspeed Acquisition 

We highlighted above the significance of the Warpspeed acquisition.  Terry 
Stavropoulos, VP, Mike Golden, EBSS-CTO, and Andy Rundquist, architect, lead 
Enron Broadband Switching Systems, formerly Warpspeed.  We welcome the EBSS 
team of 55 employees to the EBS team.  

Staff Functions

Kelly Kimberly, formerly Senior VP of Marketing, Communication and PR for 
Enron,s international companies, now leads that function for EBS as well as 
overseeing the Market Interface and Intelligence group, headed by VP Tony 
Mends.  It is critical that our external message be consistent to ensure we 
are communicating EBS, strategy effectively.  Toward this end, the marketing 
representatives, formerly in the verticals, will now report directly to Kelly.

As was recently announced, Marla Barnard is now leading the HR function for 
EBS.  We recognize that intellectual capital is our most important resource.  
Marla will focus on keeping EBS competitive by developing strategies to 
ensure that EBS is able to attract, develop and retain the best talent in the 
industry.

We are in a rapidly changing and dynamic industry. While our strategy and 
overall objectives will remain unchanged, we must continue to be flexible on 
how we execute on our strategy and achieve our objectives to effectively 
respond to the changing needs of our customers and to new opportunities in 
the marketplace.  This requires timely modifications to our organization.  We 
are convinced that we have a winning strategy and the best team in the world 
to execute on our strategy. 

While we have accomplished a great deal in the first six months of 2000, let,
s build on this momentum and work together to achieve our goals over the 
remainder of the year. 


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