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CLECs Feasting on Data Center Growth

Carol Wilson
4/14/2015
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ORLANDO -- ComptelPlus Spring 2015 -- While mobile backhaul remains a driving force for competitive network expansion, data center interconnection is also in the spotlight here. Multiple fiber optic network builders and operators say their network expansions are increasingly driven by the need to connect enterprises to data centers and data centers to each other.

That was the motivation behind Global Capacity 's decision to add a second point of presence in Dallas and to connect its two PoPs with a metro fiber ring, says Mary Stanhope, VP-product and marketing. Specifically, GC is adding a PoP at 2323 Bryan Street and connecting to its existing One Marketplace PoP at 1950 North Stemmons Freeway. (See Global Capacity Lights Metro Fiber Ring in Dallas.)

"What we had in Dallas was a bunch of data centers, and we were getting more and more demand from the enterprise side to connect," Stanhope says. "There are a number of carriers at the 2323 Bryan St. PoP -- Level 3 has a jump-off point right there and they are a big customer of ours -- so we decided rather than go out and buy a lot of access, we would light up a fiber between the two locations."


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Most of the services Global Capacity will be providing in this new space are higher capacity connections between the new PoP and its existing Stemmons facility which is an Equinix ecosystem connecting data centers.

"As we expand further and further into the enterprise market, connecting data centers is becoming more important," she says. Large and medium enterprises with multiple sites and applications are no longer content to get an MPLS connection to a carrier. They now need multiple connections to data centers for access to different clouds or applications. And that will impact how network operators such as Global Capacity build out their networks going forward, Stanhope says.

FirstLight Fiber operates five data centers of its own and is seeing significantly greater interest in connections to those and other data centers, particularly in some of the Tier 2 and Tier 3 cities it serves, says Maura Mahoney, senior director of marketing and product management.

"A lot of folks are pursuing data centers in Tier 2 and Tier 3 cities and we are able to give them connectivity back to the Tier 1 cities, where most enterprises are already operating," Mahoney says in an interview.

365 Data Centers is one of the companies targeting those smaller markets, mostly to enable social media companies and content providers to push video content and more closer to their customers, says Keao Kaindec, chief commercial officer. Its most recent addition of an Internet exchange in Nashville is an example of how traffic patterns are changing as video content drives bandwidth needs up. Rather than try to backhaul traffic all the way to Chicago or Atlanta, content companies are pushing it out toward the edge. (See 365 Opens Nashville Internet Exchange.)

There is also greater effort by carriers expanding their networks to make sure they include data centers in their planned build-out.

Access to cloud services is certainly driving much of the data center interconnect interest but enterprise outsourcing of their own data centers is another driver, Mahoney notes. Hospitals and other customers who have to store large volumes of data are looking to offload that responsibility and its costs and staffing requirements. They then need highly reliable, high-capacity connections into those outsourced resources.

EarthLink Inc. (Nasdaq: ELNK) is finding the data center market is growing but it's also posing some interesting challenges. Some data center operators don't want to provide direct access to their facilities and prefer to build their own last mile networks and connect to carriers at a nearby point, says Lorenzo Leuzzi, VP of carrier and wholesale services for EarthLink Carrier.

EarthLink is connecting data centers and large interconnect sites for big social media players and others, and that focus is honing its wholesale strategy. The company is building out networks, particularly in the Southeast, that use different routes from the existing networks, in order to provide diversity.

"Our customers are companies who can't afford any outages," Leuzzi notes. EarthLink Carrier now offers multi-service aggregation for MPLS and Layer 2 Ethernet traffic to its wholesale customers, and that is proving attractive to the data center crowd as well, notes his colleague, Kristie Warren, senior manager of carrier sales engineering. The company can aggregate services from multiple providers and provide those under a single contract.

One immediate impact of the increased traffic is fast growing 100-Gig services, Leuzzi notes, joking that "100 is the new 10" when it comes to selling high capacity links. "We've quoted more 100G services in the past month then we did in the previous year," he says. EarthLink, which built out its network on Infinera gear, believes it is well-positioned to handle that growth.

ADVA Optical Networking (Frankfurt: ADV) , which sells metro optical gear, is also seeing the impact of data center interconnection, among both its telecom carrier and enterprise customers, says John Scherzinger, VP of North American Sales. "The North American fiber market is as hot as it's ever been," he says. "In the metro market, we are seeing carriers upping the ante in terms of data center connectivity. But there are still enterprises who choose to build private networks, or use a hybrid approach."

— Carol Wilson, Editor-at-Large, Light Reading

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