Loosely defined, bandwidth means the frequencies that travel along a communications medium - usually a telephone line - and it is used for everything from telephone calls to video conferencing, cable television and remote-controlled fridges. Demand is soaring and increasingly bandwidth is becoming a commodity that is being traded. Energy companies as well as telecoms companies are at the forefront of the market.
In a survey of 35 telecommunications carriers, data companies and locations providers, consultant Arthur Andersen found that 85% of companies planned to participate in a traded bandwidth exchange in the next 12 months.
So headhunters are on the lookout for bandwidth traders. Of-the-shelf traders do not exist, so there has had to be some lateral thinking. 'It has been a question of sourcing people from the nearest transferable market. In this case, that has meant experienced energy traders or natural gas traders,' says Nick Williams of the financial services recruiters Principle Search.
In future, recruiters expect to cast their nets wider. Jonathan Hawes at TMP Worldwide Executive Search says: 'As the demand for bandwidth traders grows, we will be looking a lot more at banks. They are the largest pool of talented people who can transfer their trading skills to the market.'
Some people have already done so. Richard Elliot, a former director in equities at Kleinwort Benson, founded online bandwidth trading exchange Band-X in 1997. Hawes also expects that banks currently involved in electricity trading may enter the fray themselves. These include Goldman Sachs, JP Morgan Chase and Morgan Stanley.
But at the moment, it is the energy companies that offer the best employment prospects. Marcello Romano heads a team of 40 bandwidth traders at Enron Broadband Services, the broadband division of the large US energy company Enron, which invested about $500m (&euro545m) in bandwidth trading infrastructure, customer and skills development in 2000.
Romano is effusive about the market's dynamism. 'A lot of traded commodities have been about for a long time,' he says. 'But the bandwidth market is new and the technology associated with it is changing. Think of it as the data market. As the digital revolution progresses, data will become the biggest commodity in the world.'
Romano has an eclectic team that includes a former FX options trader, a former gas trader and some telecoms engineers.
He is seeking recruits with a commodities background who understand the difficulties of trading a physical product, which is what bandwidth is despite its digital associations. The delivery of bandwidth includes cables under the sea, pooling centres called 'carrier hotels' and connections to individual users. This complexity means that liquidity in the market is low and long-term contracts remain common. But liquidity is expected to rise.
'Liquid bandwidth markets will emerge in two to three years,' says Ciara Ryan, senior manager in Arthur Andersen's bandwidth team in London. 'The technology exists today to deliver bandwidth within a couple of hours. More commonly though this provisioning cycle takes up to three months for telecoms companies. In terms of contract length, typical deals are between three and 12 months.'
So far, a great deal of trading has been based on the close relationships between telecoms companies. But sensitive to the threat posed by the liquid market being aggressively developed by energy companies such as Enron, telecoms players are also entering this field. Cable and Wireless, AT&T and Sprint appear to be among those interested.
As liquidity increases, the market is expected to become financial. Bandwidth prices are falling and the need to manage risk is rising. Arthur Andersen found significant interest in bandwidth options, forward contracts and futures.
To attract staff, bandwidth traders are offering rewards at least equivalent to those available in banks. Williams of Principle Research says guaranteed bonuses are often used to mitigate the uncertainty of moving into a new market. Illiquidity is also adding to the potential for profit.
'At the moment the market still offers the prospect of relatively healthy trading margins,' says Ryan of Arthur Andersen. 'It has been characterised by a lot of inefficiency in the past. More liquid city pairs such as the transatlantic (New York-London) route spreads have tightened considerably in the past six months, but the skills and insights of a financial trader remain in short supply in the bandwidth market at present.'
At Enron, Romano tempts new recruits with the thrill of helping an infant market mature. 'If you ask any trader if they would like to be there at the start they will say 'yes'.
'The contacts that you make and the experiences that you have are far superior to anything that can be gained from coming in later. Right now, I believe that this is the most exciting product to trade in the world,' he says.