Telco Data Centers: 6 Reasons Carriers Shouldn't Run Their Own Facilities

Running your own data center brings a variety of benefits. But it's expensive and requires specialized skills: It's not for everybody.

Previously, we gave you seven good reasons why telcos should run their own data centers. Now, let's look at some of the reasons why it might be a bad idea. (See Telco Data Centers: 7 Reasons Carriers Should Run Their Own Facilities)

1. It's a distraction from the core business
Selecting a site, designing and building a data center is an expensive proposition, and requires specialized expertise, says Matt Miszewski, SVP sales and marketing for Digital Realty. "If operating centers is not what you do as a core competency, you should look at a different way to deploy the capital." (See Digital Realty Connects Data Centers and Pics: Inside Digital Realty's Data Centers)

Figure 1:Digital Realty's downtown Los Angeles data center.

"Capital should be deployed against strategic direction, not operationally," he says. "I always ask CEOs if they would rather deploy a dollar figuring out where to locate a data center or acquiring a new customer or revenue stream."

Not surprisingly, Digital Realty is in the data center hosting business. It believes that carriers should operate the technology in the data center -- "above the raised floor," says Miszewski -- and leave operating the data center itself to the specialists.

2. To ensure redundancy
Redundancy available from a hosting provider such as Equinix Inc. (Nasdaq: EQIX), which hosts multiple carrier customers in multiple locations, assures availability, notes Kazuhiro Gomi, president & CEO, NTT America Inc. "From the customer perspective, I want extra assurance of operational resiliency," he says.

Nonetheless, NTT also operates its own data centers. "We typically understand customer requirements, but some customers want extra, additional layers of comfort on top of that." (See NTT's Builds Global Virtual Data Centers, NTT Taps SDN to Enhance Cloud Flexibility and NFV Lets NTT America Flex Its Networks.)

3. Scale and size
Big companies should operate their own data centers, says Doug Gourlay, VP systems engineering, Arista Networks Inc. It's a necessity for carriers big enough to operate at 10 megawatts or greater power consumption.

But the economies of scale are such that telcos need to be a certain size before it makes economic sense for them to run their own data center facilities. Smaller companies should look to outsourcing -- in some cases. "You should never outsource your competitive advantage," Gourlay says. (See Colt Pulls the Trigger on Data Center Virtualization and Arista Stock Jumps On Meteoric Growth.)

4. You just offer basic service
If all a telco is providing is SMS and voice in a prepaid environment, a data center is an unnecessary cost, says Heavy Reading analyst Roz Roseboro. "Do you want to try to out-Amazon Amazon? Partnering might be better in terms of matching the cost base." (See NFV & The Data Center: Top 10 Takeaways and Data Center Virtualization: Tough for Carriers, Tougher for Vendors)

She adds: "It might make more sense from a cost standpoint and a time-to-market standpoint to not do it yourself." But if a data center is required for the core business, managing your own facilities makes sense.

"The largest guys are going to do it. They have the footprint. It's about being as close to the customer as you can be," Roseboro says. "But if you're a smaller operator that may not have as complex a service offering, it might not make sense."

5. Exploring new geographic markets
If a telco is exploring new geographic markets, it makes sense to test the waters first with a hosted/outsourced facility before committing capital resources and hiring employees. "You don't want to spend $10 million or more until you know you have the customer demand," says Gourlay.

Find out more about key developments related to the systems and technologies deployed in data centers on Light Reading's data center infrastructure channel

6. Skills shortages
"Do they have the expertise?" asks Roseboro.

Data center operations requires DevOps skills, not generally a strength in carrier teams. "The telcos don't have the same DevOps staff as Google and Amazon."

Data center skills are in scarce supply, and you just might not be able to hire enough people to do the job. "It's an employees' market right now," Gourlay says.

— Mitch Wagner,

, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to [email protected].