Subject: Datacentric Broadband


=09  =09=09 Jeff,  After your call I thought I should give you some background on Datacentric = Broadband (DCB).=20  1.=09The company was founded by Leslie Anderson a woman entrepreneur in Con= roe Texas.
Leslie continues to be the largest non institutional shareholde= r and is Chairman of the Board.
The president is Gary Remy, a Hispanic, wh= om you met recently at the YPO gathering.=20  2.=09DCB is in the broadband wireless access market focusing on smaller cit= ies in Texas.
They have deployed in nine different locations and have a st= rategy to grow from a regional player to a national player.
The market the= y are in requires no license fees and is one where being first to locate in=  a city is critical to success.
3.=09We have invested $2 million in DCB to date and brought in Redstone Inv= estors who also invested $2 million.
Redstone should continue to participat= e with us in any future investments we make in DCB.
4.=09We have talked to Kevin Garland  to solicit interest from him, however=  he made it clear that DCB was not in his target market and he was not inte= rested in the investment.
5.=09DCB has engaged Arthur Andersen to help raise additional funds for con= tinued growth.
We along with AA have been talking to other potential inves= tors and have found a receptive yet cautious reception.
6.=09About two weeks ago we were approached by representatives of Union Pac= ific Railroad and Norfolk Southern Railroad with a proposal to invest up to=  $75 million in DCB over the next five years beginning with an initial inve= stment of $15 million.
U P asked if Enron would be willing to invest a sim= ilar amount alongside them to help DCB grow into a national broadband wirel= ess access provider to smaller cities.
After this request I asked Ken Rice = if EBS would be interested in an investment in DCB either in conjunction wi= th U P or on a stand alone basis.
My hope was that EBS would view DCB as a=  strategic fit to their business model and would be interested in a much cl= oser relationship with DCB perhaps leading to a buyout.
( Although EBS and =  DCB are in different businesses I know that the trading group of EBS has u= sed DCB to provide liquidity and last mile access for many of their trades.= )  Ken's response was that EBS was not interested in an investment in DCB a= nd he didn't see a strategic fit between the two companies.
=20  7.=09We have also talked to Lou's group, the Xcelerator, and to LJM about i= nvestments in DCB and it appears that LJM is very interested in committing = funds however I don't think they will be ready in time to match U P's commi= tment.
8.
=09At a subsequent meeting with U P we told them not to expect any addit= ional funds from Enron other that a possible $2 to $3 million from ourselve= s since that is all of the capacity that we have left for this investment.
=  They are very disappointed that Enron does not see the strategic potential=  of this business the way they do, but nevertheless are still moving forwar= d in their efforts to invest in DCB in the $75 million range.
We are curre= ntly in the due diligence process with U P and hope to wrap up a deal struc= ture by the end of May.
=09 We have solicited the support of other Enron groups all along the way w= hile making our investment decision.
I truly believe that DCB is in a spac= e that could be very integral to the success of EBS and had hoped that we c= ould work together more closely, however EBS does not see a strategic fit w= ith DCB.
We will continue to develop relationships with other strategic an= d financial partners in order to enhance and grow the value of our investme= nt in DCB.
=09I will be happy to talk to you further about DCB and our investment.
We=  will of course seek your approval for any additional investments that we m= ake in DCB.
Please call me if you have any additional questions.
Gene  =09