Enron's Lay Calls for Open Access to Transmission Grid: Comment
Bloomberg, 05/08/01

Enron Broadband Services President Plays Europe For Strong Bandwidth
Commoditization
PBI, 05/08/01

USA: Large U.S. firms finding inner-city profits-study.
Reuters English News Service, 05/08/01





Enron's Lay Calls for Open Access to Transmission Grid: Comment
2001-05-08 18:01 (New York)


     Washington, May 8 (Bloomberg) -- Comments by Ken Lay,
chairman of Enron Corp., the largest energy trader, on his belief
that generators should have easier access to the U.S. power grid.
Lay spoke after receiving the U.S. Energy Association's 2001 U.S.
Energy Award.

     ``Today we don't have open access to the transmission grid,''
Lay said. ``We could get 2 to 3 percent more power into the West
if we had open access.''
     Lay said the Federal Energy Regulatory Commission should open
up the power grid throughout the U.S., so generators no longer
have to pay a series of separate fees to move electricity from one
region to another.
     ``We clearly need non-discriminatory open access on the
grid,'' he said, adding that the FERC has the authority to open up
the power grid in the same way that natural gas pipeline
transmissions work.
     ``It's clear we've under-invested in energy infrastructure in
the last 10 to 15 years,'' Lay said. ``It's going to take a few
years to correct that.''

     Lay spoke a day after 96,000 electricity customers in
California suffered hour-long blackouts as high temperatures
boosted demand for power. It was the fifth day of electricity
cutoffs in California this year and more are expected.

--Amy Strahan Butler in the Washington newsroom, (202) 624-1835 or
astrahan@bloomberg.net/de


Enron Broadband Services President Plays Europe For Strong Bandwidth
Commoditization

2001-05-08 17:46 (New York)


By Mark Holmes

       Enron [ENE] in February launched online bandwidth trading
services in Europe. The massive Houston-based utility is hoping to
leverage its skills in other sectors, such as energy, to become a key
player in the European broadband market. In an exclusive interview with
Broadband Networking News, the President of Enron Broadband Services
Europe, Steve Elliott, talks about the broadband opportunity for Enron
in Europe.

       BNN: How do you view the bandwidth trading environment in
Europe? What would you say are Enron's competitive advantages in this
area?
       Elliott: Firstly, the bandwidth market in Europe is really in
its early stages of evolution from a traditional incumbent-based long
lead time, 'difficult to contract in' environment, into a much more
open, transparent, flexible ease-of-transaction type of environment,
but it is in a transition. It is by no means there yet. The local loop
issue aside, there is a number of ingredients that make the European
market attractive, for example, it has a more progressive approach to
commoditization than the U.S. and we have better metro-connectivity.
       Moving on to who Enron is: Enron is a market maker in all the
markets that we operate in. What I mean by a market maker, is that
Enron is the principle in all of the transactions that we do.
Completely different [from] a broker or exchange.  Because of the
combination of our Enron Intelligent Network, risk management services
and bandwidth intermediation skills, Enron is better placed than other
players to offer flexible and reliable solutions and at the same time
help companies to manage their risks. This is especially important in
today's environment. And because we transact in a different fashion
[than] traditional incumbents, we can also react quickly. For example,
we offer both traditional and Web-based transactions through our e-
commerce platform EnronOnline, where real-time pricing is displayed and
transactions can be completed in minutes.

       BNN: What are the implications of bandwidth commodization? How
do you see commoditization evolving?
       Elliott: It is key to create a critical mass of information and
players. It is also critical to have price transparency and
standardization of terms and conditions and levels of quality of
service. These are key elements in identifying the exact product and in
making transacting easier.
       All types of data networking are moving towards commoditization.
For example, today we have IP transport through to colocation and
storage. The future will see chips, media rights and even advertising
space being commoditized.  The days of long drawn-out negotiations are
really coming to an end. We are definitely seeing the end of best
efforts service in this marketplace.

       BNN: I was speaking recently to Duncan Lewis, president of
Ebone, who said that operators were spending around three Euros for
every one Euro of revenue they derived from selling bandwidth, and that
price erosion was "quite phenomenal." What are your views on that? How
does this bandwidth price erosion affect a bandwidth trading facility
such as Enron's?
       Elliott: There has been a phenomenal downwards movement of price
in this market. This is normal when you start to see the improved price
transparency that's out there. Initially, you do tend to have
reductions in prices, but ultimately markets are going to operate more
efficiently, allowing the suppliers to make money. In the long run, the
laws of supply and demand will prevail, and prices will settle at a
point where suppliers can make money. That's not to say that you won't
have periods of irrational behavior around pricing. There are a lot of
players suffering from the 'spending around three Euros for every Euro
of revenue' equation right now. And they will tend to act irrationally
at times. This tends to be short-term phenomena. In the long term,
prices tend to settle into the true cost of having to deliver service.
       From a trading standpoint, I don't see anything different here
from what we have seen in other markets, for example the gas and
electricity markets. This doesn't in any way jeopardize the viability
of having a traded or open market. Price volatility creates the
opportunity as it creates risk and this, in turn, creates the need for
risk management.

       BNN: Does bandwidth demand generate price decline, or vice
versa?
       Elliott: Prices have not come down because of bandwidth moving
towards becoming a commodity. That is not the driver. The driver is in
fact that you have an oversupply in the market right now. A lot of
people have over-invested in assets and are looking to get any sort of
return that they can.

       BNN: Will Enron have to evolve its broadband strategy if this
price erosion continues? Will you have to look to offer services like
dark fiber provision, duct space and colocation space in the future?
What will be the revenue generators for Enron in the future?
       Elliott: We offer all of those other services (commodities)
right now. When you say bandwidth trading, that is what it is commonly
referred as, but I view it as a series of commodities in the data
communications markets. Capacity, or bandwidth, is one. Colocation,
dark fiber, optical wavelinks, different levels of IP capacity,
storage, ultimately streams. These are all elements of the overall data
networking market. Each one of these products is being commoditized and
is ultimately moving towards a more open, robust market. We are an
active 'market maker' in each of those commodities, but we also re-
bundle them into different packages and structures that give our
customers whatever they need. That may be raw commodities, bundled
service offerings, price risk management capability around a customers'
commodity exposure.

       BNN: If we could talk about your content delivery business - you
recently terminated a deal with Blockbuster that would have given Enron
exclusive rights to deliver movies on a video-on-demand service. How
big a blow was that to your content delivery business? How do you see
this business developing in the European marketplace?
       Elliott: You are right, we are very much in the content delivery
business. We have developed a content delivery platform for video-on-
demand. We believe there has been a lack of an effective commercial
model to successfully migrate content to the broadband system, which is
technically reliable, scaleable and secure and have developed a
complete integrated service, including content management, aggregation
and distribution.
       Tests prove the platform is reliable and we are talking to
distribution companies to provide services to households via DSL, cable
and, later, satellite. In addition, we are also talking directly with
film studios and other content providers.

       BNN: Do you expect to see consolidation in the industry? Will
you look to make acquisitions to boost your pan-European operations?
       Elliott: We are always looking for value, whether it be in
assets or companies or physical positions. Clearly, prices for
companies in these markets have come down significantly and many of
them are at risk right now. I think you will see more of them fail. In
all markets where Enron participates in, we tend to own selected
physical assets. Sometimes we go about acquiring those through company
acquisition or some times through physical asset acquisitions.
Sometimes we develop a business from scratch.

       BNN: Enron is a massive Unite States utility with expertise in a
number of areas. What is the broadband opportunity for Enron in Europe?
       Elliott: The data networking market is an extremely large market
and is very appealing to us.  It also has the characteristics that
allow our business model to work effectively: a large market that is
operating inefficiently and undergoing fundamental change. We can take
this market towards a more open price-transparent environment, where we
can offer our core services of price risk management and creative deal
structuring...to give customers whatever they need.
       (Anita Cullen, Enron Broadband Services, +44-207-783-2384.)

FOR MORE INFORMATION on this or any other story from Broadband
Networking News, May 8, 2001, please call PBI Media, LLC's Client
Service Department at 800/777-5006.



USA: Large U.S. firms finding inner-city profits-study.

05/08/2001
Reuters English News Service
(C) Reuters Limited 2001.

NEW YORK, May 8 (Reuters) - America's largest corporations are finally 
figuring out what inner-city and rural businesses have known for years, 
profits can be found in their neighborhoods. 
Several executives, including officials from Enron Corp. , Pfizer Inc. , 
American Express Co. , Union Bank of California , State Farm and Marriott 
International , came together on Tuesday to promote a new study by the Ford 
Foundation showing increasing participation and profits at 30 companies from 
cultivating commercial activity in the country's poorest sections.
"Distressed rural areas and hardscrabble inner cities are transforming 
themselves into some of America's most competitive places to do business," 
Susan V. Berresford, president of the Ford Foundation, said in a 
teleconference. 
But some, like Matthew Lee, executive director of Bronx, N.Y.-based community 
and consumer group Inner City Press/Community on the Move, had few positive 
things to say about corporations involvement in inner-cities. 
Banks in particular, he said, only come into the poorest urban areas after 
much prodding by his group and others advocating for the urban poor. 
He added that Federal money is being siphoned off to subsidize the big 
businesses at the expense of local initiatives. 
Michael Porter, a Harvard Business School professor who studies inner-city 
businesses, said that businesses that enter inner cities find success. The 
average rate of growth at Inner-City 100 firms, a list compiled yearly by 
inc. magazine, is 54 percent, he said. 
Porter said inner-cities offer companies a central location, a large and 
underserved market of consumers and businesses looking for commercial 
services and a large and underutilized workforce. 
Porter also declared the trend of businesses moving to the suburbs is 
reversing, with many taking a new look back at cities. 
But at the same time, "lingering perceptions that inner-cities are not a good 
place to do business persist," Porter said. 
Large corporations across all industries are beginning to make investments in 
partnerships with community-oriented venture capital partners, investing in 
promising inner city and minority-owned businesses, the report said. 
"We're not doing this because it feels good. We're doing this because it 
makes business sense," Jeffrey Skilling, the chief executive of Enron, said 
in a release. 
His company committed $20 million and raised another $20 million to make 
equity investments in 19 different women-and minority-owned businesses in 
Houston, according to Gene Humphrey, president and CEO of Enron Investment 
Partners. 
"We view this as a profitable and a for-profit venture," Humphrey said during 
the teleconference. 
San Francisco-based Union Bank of California found it was losing customers to 
local check cashing shops and that an estimated 20 percent of all households 
in the markets they served were operating "outside the banking system," 
according to Richard Hartnack, vice chairman with the firm. 
After opening several branches in "very low income areas" and finding it 
difficult to make a profit, the firm combined banking products with check 
cashing services eight years ago, calling them Cash & Save. 
The outlets have hit their profit targets, Hartnack said, and through 2003 
they expect to build another 40 branches in addition to the 20 already 
operating.

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.