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Wholesale/transport services

CenturyLink Blurs the Lines Between Data Center & Carrier Hotel

CenturyLink today announced a significant increase in network connectivity options for its data center customers, underscoring a general industry trend that is making data centers a major focal point for network interconnection. (See CenturyLink Grows Data Center Connections.)

Even as it hopes to sell its own network services to businesses buying its hosted IT and cloud offerings, CenturyLink Inc. (NYSE: CTL) realizes the value to those businesses of network connectivity choices and is now offering an average of seven different network providers at each of its 58 data centers in North America, Europe and Asia Pacific, with some centers having as many as 20 unique carriers.

Those networks not only connect to each other, but interconnect within the data center -- something that has typically happened at carrier hotels and major points of presence -- often at a lower cost to the network operators, who can then pass those savings on to customers.

"That interconnection business is probably the fastest growing part of our business," says David Meredith, senior vice president of colocation services. With so many companies moving to software-based "as-a-service" offerings, the need for hybrid connection options continues to grow.

CenturyLink is playing on both sides of that business, operating data centers and delivering managed IT services as well as network connectivity options. The two efforts work “hand in glove,” Meredith says, with 99 different carriers and network operators connecting to its data centers, and CenturyLink offering its hosting and colocation customers on-net access to more than 260 data center facilities.


Want to know more about data center interconnection strategies? Check out our dedicated data center channel here on Light Reading.


Other recent announcements underscore this trend. Windstream last week announced expansion of its partnership with data center operator Cologix , for example, taking its networks into Cologix's sites. Such arrangements let Windstream Communications Inc. (Nasdaq: WIN) offer its customers a better experience, because interconnection within the data center is less complex and costly than those done within carrier hotels, says Jeff Brown, director of product management and product marketing. (See Windstream Expands Cologix Connections.)

"In some of the legacy places where we interconnect, the cross-connect portion within the building might be almost as expensive as the long-haul wavelength going across the country," Brown says. "And you have to add those costs into the total solution. Plus there often isn't programmable network provisioning -- it's a very swivel-chair process, which slows us down in trying to deliver services to our customers."

To attract network connections, data center customers are offering less costly and more efficient cross-connection within their locations. When it opens its newer data centers, for example, Aligned Data Centers users significantly lower network peering as a way to incent network operators to bring their fiber connections to its locations. (See Plexxi Brings Fluidity to Aligned Data Centers' Network.)

CenturyLink's initiative
CenturyLink set out to strengthen network connections to its data centers in recognition of its enterprise customers’ need for a hybrid connection environment, Meredith says. As more applications move to the cloud and "as a service" becomes the standard method of delivery, businesses need more diverse connections that can be managed and backed up.

"You have companies that are delivering payroll-as-a-service, Salesforce-as-a-service or infrastructure-as-a-service, and our customers need to connect to those," Meredith says. "We have launched this effort as part of our overall hybrid IT strategy, which includes a full suite of services to the customer, who may want to purchase our managed IT services as well."

CenturyLink is trying to carve out a unique niche as a provider of both network diversity and XaaS diversity, but also as a provider of private IT services, he says. "We are offering a best of breed approach," Meredith says.

CenturyLink began its data center interconnection initiative in 2012, and it now reaches 280 data centers, including CenturyLink's own. "Obviously, the majority of those aren't our own," says Chip Freund, colocation marketing director. "If we are to be truly well-positioned as a hybrid IT environment, it's important that we extend our reach, because our clients may have business partners in other data centers or want access to other providers or cloud nodes. We want to be that fabric that enables a hybrid IT environment, and provide low-latency network connections wherever they are needed."

That doesn't mean the carrier hotel business is going away, notes Windstream's Brown. "I don’t see that going out of business any time soon," he says. "There will always be a place for them. In fact, we are seeing a real blurring of the lines as carrier hotels also become data centers."

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

kq4ym 8/27/2016 | 2:21:32 PM
Re: Would this have happened 10 years ago? It does seem to make sense that CenturyLink would be moving along that path. It's just an economic necessity that they now have an "average of seven different network providers at each of its 58 data centers," and that's only going to expand with them and other competitors as well soon I would guess.
cnwedit 8/17/2016 | 3:38:48 PM
Re: Would this have happened 10 years ago? Mari, 

This does happen today, quite commonly, in carrier hotels and at PoPs, but until recently, it wasn't happening in data centers. And now it's happening in higher volume in data centers.

I think this is mostly a reflection of the fact that networks increasingly exist to connect data centers. 
Mitch Wagner 8/17/2016 | 3:16:47 PM
Re: Would this have happened 10 years ago? A big step in the race for service providers to go beyond mere dumb pipes while OTT providers siphon off the profits. 
msilbey 8/17/2016 | 3:02:00 PM
Re: Would this have happened 10 years ago? It makes so much sense. Why wouldn't you have numerous major network connections in the same place you have data center services? I don't follow this space closely, but I have to say I'm surprised it's not more common.
cnwedit 8/17/2016 | 2:59:00 PM
Re: Would this have happened 10 years ago? Ten years ago, folks were still figuring out the value of carrier hotels and interconnection in general. So no, this would have been out of the question. 

I think this shows the extent to which telecom is becoming less "special" - it's evolving to meet customers where they are and connect in the way that makes sense for them. 
[email protected] 8/17/2016 | 10:58:24 AM
Would this have happened 10 years ago? Would this have happened 10 years ago? I don't think so. But this is the tip of the iceberg in terms of how operators need to think in terms of putting customers first... and finding, of course, that they can then actually make money out of that approach.
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