VZ Buys Terremark for $1.4B

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

VZ Buys Terremark for $1.4B

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I was shocked last night when I read that VZ had purchased Terremark for $1.4B. It reminded me of MCI Worldcom buying Intermedia just to acquire the Digex assets. It really is all about Cloud these days! Rackspace and Savvis are home counting out the stock options.

VZ did a deal with Terremark back in September to use Terremark's IAAS and CAAS (infrastructure-as-a-service and computing-as-a-service) to offer cloud services to the SMB market. I guess, VZ wants it all now.

I reached out to two people in the Channel that are deep into Collocation. COLOTRAQ's CEO, Dany Bouchedid who said, "I thought it was a very interesting move for a couple of reasons. The most obvious is that this acquistion instantly gives Verizon a world class enterprise grade cloud offering. The other theory I had was that this might perhaps be a hedge against possible net neutrality legislation not going their way. Terremark is home to some of the largest CDN providers in the world and by owning them, Verizon will reap the benefits of the expected rise in content rich media travelling over their network in one way or another. If net neutrality goes their way, they can charge and control content over their network to a certain extent. And if it doesn't go their way, well at least they can realize the revenue through Terremark."

Chris Palermo at Global Communication Networks Inc. stated, "This was a very good acquisition for Verizon. It gives them instant access to the Enterprise cloud while reinforcing their "everything as a service" cloud strategy." The $1.4B also nabs not just Terremark's 13 data centers across the US, Europe, and Latin America, but all of TWW's government business.

What's the net effect? According to Palermo, "Verizon will keep TWW management in place to continue to run the business. We [GCN] have been an agent for TWW for several years as their channel program has evolved from a referral program to a more mature agent based model. Historically, this has not been the case with Verizon who has not shown any allegiance to the Indirect Channel."

Maybe VZ will learn the lesson that Equinix got when EQIX completed the acquisition of Switch&Data and cut off the S&D channel program. Agents moved as many customers as they could to rebuff that move.

Tumulous times in the Channel with all of this M&A activity. Diversify people.

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