The Independent Data Center: Carrier Customer, Channel, Competitor?

B. Washburn

B. Washburn

Summary Bullets:

  • Despite providing advanced services to an enterprise base, FiberMedia executives note that carriers can have trouble seeing the carrier-neutral data center provider as an important customer.
  • tw telecom stands out as explicitly interested in end-to-end networking into third-party data centers; other big providers may choose to do so, but have not gone public with their plans.

Though they can be a significant draw to network revenue, service providers seem mixed on their ties with third-party data center partners.  Take FiberMedia Group, for example; it is a carrier-neutral, independent data center/cloud services provider mostly in the New York City area, with six facilities and 140,000 square feet of floor space.  Like its peers, the company is working to increase data center value per square foot.  The company is strong in storage, disaster recovery, and business continuity; it sells private and public cloud services, the latter built with vendors such as VMware, HP, Dell, and IBM.  FiberMedia makes ongoing investments in tools in its customer-facing management portal.  The company also has added metering equipment, providing options such as metered electrical billing for larger customers.

FiberMedia focuses on verticals that reflect New York City’s client base: financial and media services, healthcare and IT service providers, with an eye toward serving mid-sized Fortune 5000 enterprises.  The company has its own direct sales force and channel program with partners specialized in IT services and disaster recovery.  FiberMedia has a consultative sales approach that is necessary for customers combining in-house data centers with FiberMedia data centers and the network to tie everything together.

Despite its enterprise base, FiberMedia executives note that carriers can have trouble seeing the carrier-neutral data center provider as an important customer.  Some carriers have their own data centers and strategic cloud services: Verizon and AT&T are particularly powerful in targeting very large enterprises, for example.  In the New York City metro, Time Warner Cable Business Class can bundle network services with its acquired NaviSite data centers; Level 3 and CenturyLink each have network in the metro area, and they have built on their data center positions based on respective acquisitions of Global Crossing and Savvis.  By contrast, competitive access providers serving the metro (Zayo and AboveNet, Sidera, and Lightower) join Optimum Lightpath in focusing on network services, not competing with data center/cloud operators; tw telecom, however, goes a step further and seems to be actively investing in a strategy to build services that appeal to independent data center operators.

Still, mid-sized data center providers such as FiberMedia and their connecting carriers might mutually benefit, if carriers colocate edge routers in these providers’ data centers.  This would let carriers deliver secure traffic with CoS from enterprises’ Layer 2/Layer 3 VPNs right to the data center’s doorstep.  Other major U.S. carriers may be thinking along these lines, but tw telecom (with its Intelligent Network initiative) actively expresses interest in winning third-party data center momentum as a target market.  For now, enterprises that want an end-to-end Layer 3 network/data center solution might choose between a one-stop carrier/service provider; combine data center services with dedicated point-to-point circuits or Layer 2 packet services; or consider IPSec VPN tunneling either to the nearest IP/MPLS PoP/gateway or to clients via dedicated Internet access.  However, for network providers willing to consider the notion, there does not seem to be a shortage of independent data centers that could step up as revenue-generating partners.

About Brian Washburn
Brian Washburn is Research Director for Network Services at Current Analysis. Brian tracks the technology and initiatives surrounding carrier Ethernet, IP-VPNs, optical networking and applications closely tied to high-performance networking.

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