Windstream may have sold its own data centers last year, but that doesn't mean data centers don't figure heavily into the network operator's future plans. In fact, for the last 18 months, Windstream's wholesale business unit has been strategically targeting data centers for expansion of its long-haul fiber network, and considers data center interconnection a significant market going forward.
Most recently, the network operator added McAllen Data Center in McAllen, Texas, a major hub for traffic coming to the US from Latin America, to its 100 Gigabit fiber optic backbone. Jeff Brown, director of marketing and product management for Windstream Communications Inc. (Nasdaq: WIN), tells Light Reading in an interview that the company is carefully evaluating DCI opportunities and has capital set aside for that purpose. (See Windstream Expands Long-Haul 100G.)
"As the company broke out in separate business units under our CEO Tony Thomas, we had a separate wholesale business unit," Brown explains. "It became very clear to us that there was a market opportunity for us to leverage that [100-gig] backbone by selling high-speed connections connecting to the major carrier hotels and data centers. We own the capital in the business unit to be able to add desirable locations to our network."
Windstream now leases space and buys power at the McAllen Data Center and is able to sell Ethernet services, wavelengths or other bandwidth services to the carriers or wholesalers who are located there.
Partnering with data centers is part of Windstream's strategy, as it evaluates market opportunities for expansion, Brown notes. "For example, we are relying on McAllen Data Center to understand the traffic and where it comes into the US and where it is headed," he says. "It is critical to our analysis in this case."
Establishing the presence there lets Windstream forge new relationships with Latam carriers in a market it is just getting to know.
Because it serves many secondary and tertiary cities, the carrier also is in position to capitalize on changes in the data center market which are seeing the facilities pushed closer to the customer and into smaller markets not previously considered data center hotbeds.
"A lot of those 'edge-out' centers are happening in tertiary markets we serve -- I'm thinking of Grand Rapids, Mich., who would think of that as a hot spot for data centers?" Brown says with a laugh. "But we have a very strong network footprint there, and we are working closely with some of the folks building there. That's a great example of how, once you get beyond major NFL cities, the number of transport providers is a lot lower than what you would see in the New York or Chicago areas. That works to our advantage."
Windstream focuses on data centers that are close to its existing footprint -- Brown admits that even otherwise attractive opportunities lose their appeal of the cost of running additional fiber gets too great. Interestingly, while some metro fiber companies say they're trying to combine applications on their backbone networks -- delivering cell tower bandwidth was well as data center connections, Windstream views those as "apples and oranges," he says.
"Wireless operators have specific requirements," Brown says, "Those tend to be custom-built networks with specific requirements, such as the number of nodes per ring."
Data centers, meanwhile, are looking more for a capacity fire hose.
Single-tenant data centers -- the ones mostly operated by web-scale companies for their own use -- are a different breed altogether and those relationships are generally negotiated directly between the web-scaler and the DCI provider. Brown acknowledges that the sheer size of these players, which dwarfs the rest of the industry, gives them buying power very different from that of other data center operators. Below that tier, "it is a much more typical pattern of wholesale relationships," he says.
— Carol Wilson, Editor-at-Large, Light Reading