Commodity IT Means Business for Service Providers
DALLAS -- Telco Data Center Summit -- As enterprises come to see compute and networking as commodities, that means increased business opportunities for service providers.
Enterprises are looking to cut costs by moving away from making IT capex investments themselves, Codero Hosting CEO Emil Sayegh said at a presentation here. "That means we, as operators, have to make capex investments," Sayegh said. "There is a feeling that these things are commodity and that we, collectively, have to provide them."
Operators need to build out their networks and data centers to meet the needs of consumers and enterprises. Mobile apps and the Internet of Things demand increased compute, storage and bandwidth capacities. Millennials now have 20-30 apps on their phones, plus a Fitbit on their wrists and Nest smart thermostats in their homes, all making increased connectivity demands. In the future, refrigerators, fitness monitors, bodycams for police and emergency personnel and even contact lenses will all be connected, Sayegh said.
These demands aren't just limited to "NFL cities;" rural users have the same needs, Sayegh said. Hipsters living in rural areas want to stay there, and yuppies want to move out the city, but can't now because of bandwidth restrictions. And "folks want to watch Netflix anywhere," Sayegh said. (See 32 Regional Telcos Buy Codero Cloud Hosting.)
To take full advantage of increased demand for IT services, service providers need data centers that offer physical security and resiliency, Sayegh and other operators said.
That's been a business driver for ITS Telecom , located in Indiantown, Fla. ITS's inland location is a competitive advantage for the service provider, says CEO and owner Jeff Leslie. "Most of the data centers in south Florida are located on the second floor of buildings because they're a block away from the water," he said. The data centers are equipped with pumps and other equipment to secure them from hurricanes. But Indiantown is protected by being 30 miles inland. The ITS data center is also located on a high elevation -- by Florida standards -- 40 feet above sea level and outside the tsunami zone.
"I like to say we're located on the Mount Everest of south Florida," Leslie says.
Data center services allow ITS Telecom to offer a complete business stack: metro connectivity, IT, cloud and colocation. Once enterprises have gone that far with ITS, it's a logical step to outsource IT to ITS Telecom entirely. "Why not just move your data center into our office?" Leslie says.
Similarly, Dakota Carrier Network LLC , which is owned by 15 independent telcos in North Dakota, provides disaster-resilient data center and physical security for enterprises including state government, medical and financial, CEO Seth Arndofer said.
To meet data center needs, DCN had to provide redundancy in its data center power supply. It has a 1-megawatt Caterpillar generator, and 3,000-gallon diesel tank. Similarly, ITS Telecom has sufficient electrical capacity to run for three weeks off the grid.
Physical security requires lockable cabinets with secure conduits and one-third- and half-racks with separate partitions, to keep each enterprise's workload separate from other tenants, Arndofer said. Separate entrances provide separate access. And ITS Telecom has 13 levels of security just to get into the data center.
Engineers wanted to install wooden doors in the DCN data center, but Arndofer said no. "I told them if you're going to design this building, if you wouldn't put it in a prison, don't put it in our data center," he said.
The data center markets itself. "Appearance is huge. We really put a lot of colors and different things into the data center," Leslie said. "If we're selling someone Internet, we tell them to come in and see the data center. It's a great marketing tool to have something done attractively."
All this investment pays off, said Brian Davis, market development manager, carrier data networks, Corning Inc. (NYSE: GLW) Optical Communications.
"Where we used to look at data centers as a cost -- that's where they sat on the balance sheet -- we now look at them as revenue generating assets," Davis said -- articulating the fundamental principle of the New IP without saying the words.
"And the faster we can get them up and running, the faster we can get the revenue benefit," Davis said.