This New Platform Lets Australian Businesses Trade Unused Network Bandwidth For A Fee

Data centre: Shutterstock

Pay-as-you-go telecommunications provider Intabank has launched a bandwidth trading platform that allows businesses to buy and sell unused network capacity.

The service targets mid-sized businesses in finance, media and telecommunications that house their IT equipment with large data centre providers such as iseek, Equinix, Global Switch and NextDC.

Intabank has spun out of Sydney-based cloud computing provider ASE, which has hardware in 10 data centres globally, including iseek, Equinix and Global Switch in Sydney, NextDC in Melbourne, and Equinix in London, New York and California.

About 5000 businesses that are co-located in any of those data centres will be able to pay $500 a month to connect to Intabank’s hardware to trade bandwith with others on the network.

Other organisations, for example larger firms that operate from their own data centres, may also connect to Intabank’s platform but they would have to wear the cost of fibre cross-connect cables to do so.

According to Intabank estimates, 96% (204.14Tbps) of the world’s network capacity went unused in 2012, including 2Tbps of unsold submarine cable bandwidth and 6.15Tbps of unsold carrier capacity.

ASE CEO and founder Andrew Sjoquist, who also co-founded Intabank, says prices will be determined by the market but expects buyers to be paying 50%-80% less than they would currently, based on the example of paying $10,000 for a line that may only be used 8-10 times a month.

“Today’s business model for carrier networks requires customers to sign up for 24 or 36 month contract periods for point to point or MPLS services,” he says.

“Intabank isn’t a replacement for carriers who provide long term Internet connectivity to organisations; rather, Intabank is an insurance policy for any organisation wanting to monetise remnant bandwidth capacity they may have already purchased.”

Intabank co-founder David McGrath expects the bandwidth trading platform to appeal to financial services firms that have large amounts of unused bandwidth on weekends, when markets are shut.

Buyers – for example, media companies looking to transfer video content internationally – are matched with a seller based on two of three requirements: speed; price; or “transfer exchange window”, which accounts for a time limit and file size.

Businesses selling bandwidth on Intabank will pay a 20% commission; however, McGrath says Intabank will waive commissions for 3-6 months from today’s “soft launch” as well as offering a certain amount of free bandwidth to drum up interest.

McGrath notes that market liquidity – that is, the availability of buyers and sellers in the marketplace – is key to Intabank’s success, but hopes not to be dealing with speculative bandwidth traders for now.

“It’s been raised in some conversations – not by us, but externally – but for us, it’s not the intention,” he says. “We want it to be as true a marketplace as possible; we want to protect against [market manipulation].”

Intabank’s bandwidth trading technology is currently offered as a technical, network-level platform that requires a great deal of intervention by Intabank staff.

The co-founders hope to offer a more user-friendly dashboard in the coming months that customers’ network engineers may access via their desktops or mobile devices to set parameters that will determine how much bandwidth they wish to buy or sell from the pool.

They will begin seeking about $2 million of capital to fund the dashboard and other improvements in the coming weeks, after which Sjoquist hopes to attract educational institutions and smaller ISPs that may benefit from cheaper, unused bandwidth from the corporate world.

ASE and Intabank are privately held. Intabank has been operating with two pilot customers for the past 6 months, but has not raised any capital from external investors so far.

Now read: Australian Startups Say There’s A Lack Of Money, But That Might Be A Good Thing

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