The New IP is reshaping the edge of the network, creating a mesh of public and private IP connections into data centers and content caches. In the process, it's shifting network operator business plans to create new revenue opportunities while challenging old business models.
That was very apparent last week at the Comptel Plus event in San Francisco, where the organization unveiled a new name -- Incompas -- that is an effort to put itself squarely in the middle of the New IP landscape. Many of the network operators that traditionally attend this show have already made significant adjustments to their business plans, and many of the newer attendees reflect the new reality.
For example, Colo Atl is a company building its entire business case around providing power and space to companies that need to have data storage close to a network interconnection point. This isn't a data center, as owner and founder Timothy Kiser points out, it's a colocation spot for companies such as Akamai Technologies Inc. (Nasdaq: AKAM) to cache data very close -- in this case across a short dark fiber bridge that Kiser provides -- from a major network interconnection location. And most of his customers are large network operators.
The closest interconnection spot is owned by Telx Group Inc. , recently acquired by Digital Realty Trust Inc. , and is right next door to Kiser's ColoAtl location in downtown Atlanta. That's not accidental -- he partners with Telx.
"I operate a neutral carrier colocation and I offer power and space like a landlord, either in a cage or in a cabinet," Kiser told me in an interview in San Francisco. He doesn't have the power or capacity that data centers offer, but his footprint is ideal for those caching content for video or cloud connections close to the network.
His business is booming. Kiser started leasing space at 55 Marietta St., across the street from the Telx facility at 56 Marietta St., in 2001 and had 1,100 square feet of capacity. Today, he's up to 25,000 square feet and ready to grow as that space begins to fill up.
He operates the dark fiber links to Telx, but collects only administrative fees from that operation for handling the billing. Instead, he's building his business on the expanded need for power and space close to where networks connect.
Because his expansions are success-based -- as available capacity dips to 20%, he leases new space -- Kiser is operating without debt, and prepared to grow as needed. Currently, he has about 8,000 feet of capacity unused.
His tenants include a wide variety of network operators, big and small, such as CenturyLink Inc. (NYSE: CTL), Windstream Communications Inc. (Nasdaq: WIN) and Zayo Group Inc. (NYSE: ZAYO). Kiser laughingly admits the number of tenants is dropping, not because anyone's leaving, but because of consolidation within the industry is reducing the total number of network operators with which he's engaging.
ColoAtl's business model may not work everywhere, but as data centers are popping up in more locations and closer to the edge of the network, this is one approach that is likely to become more common. Colocation is no longer limited to one or two spots in very large cities, it is going to be a function that is more widely dispersed going forward, though not necessarily by small companies.
Kiser admits his own long-term strategy may well be an acquisition by a larger player but it's not in the cards just yet.
— Carol Wilson, Editor-at-Large, Light Reading