Playing by Darwin’s Rules

Not much has changed in telecom services when it comes to carrier hotels and colos. Not much, that is, except for VoIP, a technology that seems to be the missing link in the evolutionary telecom chain. VoIP is causing prolific adaptation in the industry, including the decommissioning or upgrading of metal circuit switches; equipment consolidation; the spread of Ethernet; and changes in space and power requirements. It also is exposing the need for more and better communication among carrier hotels and their many tenants. All in all, IP telephony is creating more opportunities for colo meet-merooms as points of interconnection.

“We’re in the absolute Darwin phase of VoIP right now,” says John Savageau, managing director of CRG-West, which operates the carrier hotel at One Wilshire in Los Angeles.

“We’ve got a lot of [VoIP] companies that are growing very strong and it’s just that period of churn right now where the industry is developing and the strong will be stronger and the weak will be eaten.”

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For CRG-West, a cable is a cable “and it makes no difference whether it’s carrying a packet or a TDM,” Savageau says. “We’re a real estate company at the end of the day.” The unfolding from data to packet, though, does mean some carriers - at CRG-West, anyway - are replacing their old metal switches - perhaps akin to trilobites - with computers.

“These things are being turned into boat anchors right now,” Savageau jokes.

At 60 Hudson in New York, colo telx reports only a few switches have been decommissioned. “A lot of them just stay in place and augment or front-end it with a VoIP gateway, which gives the full horsepower of the circuit switch on the back end, but gives it the access to Ethernet as an interface and IP as a protocol for transporting voice,” says Hunter Newby, chief strategy officer for telx. He calls that approach “phenomenal” because the Class 4 and 5 switches still work, and with gateways in front to do the call management, they adapt to the presence of VoIP.

For CRG-West and Savageau, the biggest news in the colocation world is the creativity and craze of VoIP. Natural selection will determine who lives or dies, he notes.

Tim Doherty, managing director at One Wilshire, adds, “I think the biggest movement afoot in the industry today is consolidation of equipment, added security measures, additional power consumption and diversity of connectivity. As customers continue to upgrade their equipment they have a need for additional power, new thresholds are set every six months, and the customers are going to providers that have flexibility and the ability to meet their continued needs.”

Doherty says some of the best data centers built within the last four years have fallen short of their expected occupancy levels because they used all their existing power. “With that said,” he notes, “all of the existing flavors of the week - VoIP, peering, [disaster recovery] - are all predicated upon the data center operator to provide.”

Source: University of Utah

Ethernet is the newsmaker for telx. “[It’s] reshaping communications infrastructure,” and would not be possible without VoIP, Newby says. “It’s allowing enterprises to finally take Ethernet across the metro, into the wide area and link LANs that aren’t even in different cities in the same countries, but are in different countries. There’s tremendous cost savings going on, and I think one of the biggest benefits is that Ethernet and IP are universal languages.”

This is crucial for carrier hotels, because they are the common points of interconnection, Newby says. “It’s sort of like a voice Internet is being built, and it’s all built around carrier hotels that have their history seated in TDM circuit switching. Voice over IP, necessarily, has to exist where all the old Class 4 and 5 switches are because they need access to the PSTN. That dictates that they must put their gateways in carrier hotels and not in peering points, because peering points are only for pure IP applications and they have no real access to the PSTN.”

The rise of VoIP leads to a couple of conundrums and challenges: what to do when a VoIP carrier only wants one rack unit of space and requires the same amount of tech support as the carrier paying the hotel hundreds of thousands of dollars monthly. And, how to compete against the CLEC colos that offer services for “next to nothing,” Newby says.

Indeed, Savageau says, those CLEC competitors would not be “overwhelmed with joy” if the major carrier hotels banded together and created a high-performance backbone.

This leads to a need some in the colo industry would like to see addressed - communication among the different hotels. Savageau posits that would provide ‘global hegemony’ to the industry. “I think there’s adequate justification for that dialogue to exist,” he says. Indeed, it seems the dialogue has reached promising stages in the past. Executives at telx say they have endeavored several times to foster communication among industry colleagues; those attempts, though, faltered due to leadership changes within other carrier hotels. “When a property gets taken out and the management team is gone, the momentum that you had built with those people is gone as well,” Newby explains. “I think part of it is, right or wrong, [traditional real estate people] don’t see that the value of their building can be increased by spending more time on the telecom aspect of it, whereas we spend most of our time on the telecom aspect, and therefore drive a greater dollar-per-foot a month than other telecom buildings.”

One effort at least has proven successful: telx hosts its business customer exchange event, which Newby says other hotels have tried to imitate. telx also had a marketing agreement with 151 Front St. West in Toronto, which fell through when management changed, Newby says.

Scott Metcalfe, director of leasing and property management for 151 Front St. West says, “We intend to continue working with our colleagues in creating this alliance. We look forward to exchanging services and tenants with our peer buildings, just as we set out to do originally. The departure of one employee does not affect the formation of the alliance at all.”

Carrier hotels continue to operate the same as always, but are adapting to and accommodating the immense changes VoIP is fostering. Intense security measures remain intact, customer service is as crucial as ever and connectivity remains No. 1.


151 Front St. West

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