On Rad's Radar? - colocation Archives

CenturyLink Merger Mania Does Add Up

2012-08-15T20:57:58Z

"CenturyLink Inc.'s (CTL) second-quarter earnings fell 36% amid early-debt extinguishment and weaker margins, though the telecom company's revenue was boosted by an acquisition," writes the WSJ. "Revenue increased 4.7% to $4.61 billion, mostly as its Savvis acquisition added $278 million, as well as growth in demand for digital services."

What amazes me is that these giants keep getting bigger and the only metric growing is debt.

It is going to take some big CAPEX to beef up cloud, data center, EoC, broadband and TV services for CLT. How do they focus on that when CAPEX will affect their financials, that is tied to their debt?

Cloud isn't selling as well as the hype that goes with it. Yet. CLT is banking on a big bright future. Truth is CLT, while still headquartered in Monroe, Louisiana, is far removed from its rural ILEC days. It's future lies in federal cloud and WAN contracts; Fortune 5000 MPLS based on its fiber network; global sales for cloud, data center and networking; and data center services. None of these services were on their balance sheet 3 years ago.

Interesting corrollary is that 3 years ago, CLT didn't have a channel either. Now it's channel will be looked upon to drive a lot of cloud and data center sales.

I wonder if the CAF, ARRA and USF funds show up as revenue?

Good News from CenturyLink Channel

2012-07-10T18:21:05Z

Sat in on the CenturyLink Channel Alliance - Get back in the Game Roadshow in Tampa this morning. It was nice to see Stacy Conrad from Microcorp; Josh Anderson and his co-workers from Telephony Partners; Dale Tucker from CCA; and put a face to an old Qwest SE, William Hobbs, now a CCA Emerging Sales Technology Consultant (ETSC) for Florida. Hobbs did a nice job on Why VPDC and The Benefit of Cloud over Colo. The roadshow had 3 parts (Hobbs did part 2):

New Savvis-CenturyLink Phase II Rules of Engagment overview;
Cloud/Hosting Solutions portfolio;
Third Party Data Center Updates/E-Line;

Dale Tucker went over the Rules of Engagement, You definitely need charts and glossaries to follow along the categories and acronymns. Basically, colocation, managed hosting, virtual private data center (VPDC), public cloud, private cloud, and managed servcies (like Hosted Microsoft Exchange) are all available to the Channel to sell at full commission - unless you engage an account exec - then it is HALF!

For agents used to working with AE's, this will be a bummer. However, half is better than zero. Also, with the ETSC as your godfather inside the C-Link-Qwest-Savvis beast, you won't need the AE.

A lot of colo and data center business comes from the Channel.

And for those that do not know how to sell Colocation and Data Center, the TCA has done quite a few webinars, including Getting Your Arms Around the Cloud by Allan Watkins of Total Telecom Management n Atlanta and Let's Talk Colo, moderated by Khali Henderson of Channel Partners magazine and featuring Dany Bouchedid of COLOTRAQ and Chris Palermo of GCN.

Tucker did mention that Savvis is working on a sales certification for colo and hosting. This silo will be a huge focus for C-Link it seems, especially with 54 data centers

Hobbs spoke about not talking about the technology of cloud, but about the business side of cloud, especially cloud services like VPDC and Compute-on-demand. It's about right sizing the data center. It's about OPEX versus CAPEX. It's about DR/BC. It's about getting out of the IT business and back to their own business focus.

C-Link also has an initiative to light up data centers with C-Link network - wave, IP-VPN, MPLS and Internet Bandwidth. There are 154 data centers now. In Jacksonville, FL, C-Link is putting in a ring to connect CSX, Peak10, Colo5 and the C-Link data center on a metro fiber ring. C-Link is also connecting 4 data centers in Charlotte on a metro ring. AboveNet did something similar in Atlanta by connecting almost all the data centers on a metro fiber ring. Agents can easily sell ELine, IQ Port, Private Port and WAVE into these 154 lit buildings.

Hobbs pointed out that the integration is going well with CenturyLink-Qwest-Savvis.

Fiber and Data Centers

2012-05-28T22:38:13Z

For fiber today, it is all about 3 things: exclusive route, low-latency and data center access.

We see a number of fiber operators talking about low latency routes now, something that AboveNet was already capitalizing on - that and its unique (non CO-based) network design.

"Zayo Group announces it is enhancing its low latency service between Seattle and Chicago." In addition, Zayo added 60 miles in Richmond that will connect to a data center campus. Data centers need fiber. Apparently, they also need low-latency routes, which, by the way, means staying on one carriers network end-to-end.

Sidera is offering ultra-low-latency fiber in Toronto, NYC and London.

Exclusive routes are the key to high margins. When you have a route, say, from Chicago to NYC, there are a number of carriers, so it becomes a commodity, unless there are differentiating factors, like low-latency or diverse paths. A number of fiber providers, like FiberLight, have been building out their network. This gives them reach and, in some cases, exclusive fiber paths.

To that point, Lightower Fiber Networks has announced a new 21-mile network expansion n Providence, Rhode Island. Lightower is also expanding its existing colo facility in RI. (Who knew RI had a data center?) In February, "Lightower Fiber Networks opened a new office at 101 Eisenhower Parkway in Roseland, New Jersey. The office will support the increasing demand that Lightower is experiencing in the region for end-to-end fiber networking."

Data center space is just exploding. Most of that growth is due to more cloud services, more data storage, and the pervasive utilization of IT by companies big and small.

To wit, the Palm Beach area of Florida is getting some new data centers. "Both Equinix and Peer 1 are set to open up in Blue Lake in Boca Raton in a few months and they will dominate the Palm Beach market which previously only had Host.net," according to S. Chris Palermo of GCN, a telecom agency that specializes in data centers. Cloud South took over a data center that was designed and built by Global Crossing in 2003 on 424 Hampton Road, West Palm Beach, FL. "Enterprise Florida, the official economic development organization for the State of Florida, reports South Florida as among the world's Top 5 Internet gateways." That explains the Miami NAP and the numerous data centers in the Miami-Ft. Lauderdale corridor. Host.Net is an established player in South Florida with a data center in Boca Raton and another in Ft. Lauderdale (the old Hostway and Affinity Internet/ValueWeb space). Host.Net also owns WV Fiber, which gives them up to 10GB of connectivity across the US and Internationally. Most data centers can not claim that.

Owning the network is a security benefit, according to this video from PEER1

And in a last nugget of news: "Data centre solution provider Digital Realty Trust has entered into a joint venture with Savvis, a cloud infrastructure and IT solutions company, to provide next generation, large co-location and managed cloud services to Hong Kong," according to LBO.

Data centers are booming. Cloud services are taking off. Do you still want to stand on the sidelines?

Is it Cloud versus Agents?

2012-05-02T16:45:52Z

Is it Cloud versus Agents?

As an Agent, I sell bandwidth and transport almost exclusively. I am learning that the Channel does not want that business. The carriers do, but on the wholesale/carrier side. No 10GB private lines. No 1GB ports. Nope. The Channel wants Multi-site multi-access customers. That's fine. Just stop talking about your fiber map then. It's irrelevant for that kind of sale.

The CLEC's also want Agents to sell Managed Services and anything Cloud. That's nice but who cares?

Cbeyond announced that they are "no longer recruiting traditional telecom agents". well, they already signed up the biggest masters - CMS, Telarus, Microcorp, TBI, etc. So what they are really saying is that traditional agents will have to use a master agent to get paid. That's becoming Normal in telecom. Carriers just want to deal with master Agents. I guess, they think that is more effective or efficient. I have no idea if it is either. We'll see, I guess.

Like so many other providers, Cbeyond thinks that the answer to its cloud strategy will be VAR's. That's not likely to happen.

VAR's don't trust telco. (Heck, I'm still waiting a month for an FOC from XO on an Internet T1, so I totally get the attitude.) VARs already have relationships with VAD's like Ingram and Tech Data, who can provide most of what Cbeyond is offering - or they can provide it themselves. Would you go to Rackspace or Cbeyond or EarthLink for hosting? That's basically what it comes down to: who is doing the hosting.

Right now Microsoft itself and carriers are getting into the traditional VAR space (offering hosted Microsoft products and data backup). Why would VAR's shift from a reseller model to a sales agent? It's kind of like, do you want white-label or straight resale?

The thing that most miss is that it is all about Control. In white-label, you can build a branded business that you have a decent amount of control over, especially in Hosted PBX. In straight resale, the bill, the brand, everything is in the carrier's name. No control at all.

My clients - CLEC, ISP and ITSP - want the illusion of control - or at least as much control as they can get. VAR's want the same thing. In the case of the ISP and the VAR, they like technology, but selling and marketing not-so-much. And you won't have much success forcing them into a sales+marketing shop - any more than you will trying to get T1 slingers become Consultative Sales people pitching cloud. Why? Motivation. Comfort Zone.

Robin Robbins has a very successful business offering turn-key marketing programs to VAR's. Cloud providers need to plug in to that kind of a system.

XO just re-launched its old hosting brand, Concentric, probably to get some space between the telco and its cloud services. (XO has to do something about its reputation in the telecom space and re-branding buys them time until someone buys them.)

Some Agents will obviously move into this space. Some already have making money on Cloud Comm like Hosted PBX, UC, IVR and conferencing. Some have sold collocation - although its a big leap to PAAS and IAAS from colo. But virtualization might be a nice tool in that box. It will come down to who you trust to deliver it.

I'm not saying Agents shouldn't be shifting their business. Lord knows that the way it is now, it is extremely tough to make the living we are used to while selling what we are used to. So a shift has to come. I just don't think it will be to the same carriers that make it in the future. When you look at things like commission adjustments, contract disputes, channel segmentation, and the like, Agents might want to try another silo of vendors to see if they get a better shake.

There is a tremendous amount of competition for the attention of Agents and VARs. That means that there will be price competition, commission shopping, and other things that the providers do not want to have to deal with right now.

The only providers who can afford to be exclusive right now are vertical cloud providers and cablecos - both have an almost exclusive product to offer.

Everyone else is selling the same stuff - MPLS, SIP, backup, managed network security, blah, blah, blah. That means the Channel can shop around. And as you can see from the ecosystem diagram, there are a lot of places to shop - VAD, Microsoft, Google, Amazon, ILEC, CLEC, Cableco, MSP, Rackspace, Web hosts, Parallels, ITSP's, and so much more. And Agents can just partner up with a VAR or MSP to sell their own services, leaving the CLEC's out to dry.

It's a matter of control. Do you want to build yourself a business with white-label partners (like VAR Dynamics) or do you want to trust that the telco that is having trouble delivering telecom services reliably will be able to provide you and your customers with unparallelled service delivery of cloud services?

We'll see. In the mean time, be nicer to the Agents. They may be all you have left.

Correction: Savvis Comp

2012-02-03T06:14:51Z

I blogged about Savvis/Qwest halting MMR commission to the Channel. However, Dale Tucker of the CenturyLink Channel program was at CVX before my panel telling me his people had read the blog post and that I was wrong. CenturyLink/Savvis/Qwest are paying MMR on hosting but it varies.

Check with your CCA channel manager.

Thanks for reading!

End Caps

2012-01-21T14:49:32Z

This was the week that we learned that online protesting can work -- if enough people get involved and if you get the support of some powerhouse websites like Google and Wikipedia. It looks like SOPA was dropped and the vote on PIPA was delayed. (It is still alive due to Democrat lawmakers who are beholden to Hollywood like Florida Senator Bill Nelson. If he knew how to turn on his laptop by himself I could understand it, but come on!)

We don't really need any more copyright laws. If we did, would the feds have been able to fly to New Zealand to arrest the owner of MegaUpload? What was he arrested and renditioned for? Online piracy.

Not for nothing, but don't we have more important things to be spending federal dollars on? We are a nation with lost priorities.

And yet another carrier joins the CLOUD: "US Signal recently released an Infrastructure as a Service (IaaS) product offering, what US Signal calls Managed Data Center. Customers have increasingly requested US Signal to host their applications, for financial reasons, scalability, security, and more."

Yesterday, TCA held its monthly agent webinar with Netwolves presenting on Managed Services. With most of the telcos offering Managed Servcies, we at TCA thought it was time to give an overview of what Managed Services are from carriers, who is buying them and how does an Agent sell them. How does an Agent start that conversation with the prospect about managed services? The webinar was recorded and TCA members can play it back at any time.

Nemertes Research predicts a shortage of colocation space in the U.S. beginning this year. That is likely because some colo space is being used for PAAS and IAAS. Also, some colo houses don't want to sell colo any more because there is more cash in xAAS. (Or so they say.) I have seen that trying to find single rack colo slots are getting more difficult. Personally, I thought that when Amazon, Facebook, Google and others built their data centers, a lot of space would be opened up in other data centers.

The other issue with colocation is that Equinix, InterNAP and now Savvis have cut the channel out of selling their space. Other data centers - like Vegas' SwitchNAP - are difficult to deal with. That kind of affects colo sales, too. Luckily, ViaWest and TELX are still agent friendly.

Code 42 Software, a cloud backup service named Crashplan, got $52M in funding from Accel Partners. It seems a massive amount of funding for an online backup company.

Is 5G around the corner? Heck, most of the US is still in 2.5G-3G land.

Savvis Changes Comp Plan

2012-01-10T20:58:37Z

I just received confirmation that channel compensation for hosting under CenturyLink will no longer be residual. Savvis, which is owned by CenturyLink, took over management of the Qwest Cyber Centers.

At a time when cloud providers want agents selling, data center companies - Equinix/Switch&Data, InterNAP, now Savvis - has changed up the game on agents at a time when agents are trying to adjust to the whole cloud ecosystem. It just doesn't make sense.

From a purely CFO perspective, sure, that commission line item on the balance sheet keeps increasing because agents keep selling stuff and, by golly, they still want to get paid for it three or more years later. Really? Selfish b@stards. The CFO is scratching his head, thinking, "How do we reduce that number?"

The one thing that most sales organizations can tell you is that changing compensation plans can be disasterous. Salespeople loss trust in the organization. They stop selling your services - and start looking for ways to turf their clients to somewhere that WILL pay that.

Now I know that sounds like agents only care about the commissions, but that's not the case. Imagine going to a pro athlete and saying, "Hey, I know we said we would pay you $5 mill, but we changed our mind. You only get $3 mill." That's the exact same thing.

One reason it boggles my mind is that Savvis is still making bank on data center sales and can absorb the commissions in the price, since data center sales are not usually about price, but location and other factors.

Once again the Channel takes it in the chops. Thanks CenturyLink!

Data Centers Make the Big Time

2011-09-27T16:12:31Z

When USA Today starts talking about data centers, the sector has hit the big time. The USA today ran a piece about the secret rooms that run the Internet. You'd think they were talking about the NSA rooms that read every single piece of email.

QTS Atlanta Metro Data Center is the second largest data center in the world with 990,000 square feet of total space (of which 300k sf is raised floor space) and its own on-site Georgia Power substation.

There is a lot of talk about green when it comes to data centers. (See this article about dirty data centers in InfoTech mag.) As data center space grows, so too does power consumption. I got to speak with Tom Burns of Greenhouse Data in Cheyenne, Wyoming, "the planet's greenest data center". Greenhouse offers managed hosting, vCloud, virtualization,and collocation, utilizing "40% less energy than its traditional data center competitors -- all while being powered 100% through renewable wind energy." Burns explained that the data center space will soon have a larger carbon footprint than airlines. That might be true but the two industries are inversely growing - data centers are increasing due to the unlimited hunger for data and apps while airlines are cutting routes and flights to stay as close to profitable as they can get.

Data centers consume power twice: once for all the hardware housed in racks throughout the space and again to power the air conditioning to cool that same space that is heated by the hardware housed there. See that cycle? Power is the limiting factor for most data centers (not space). Greenhouse Data does a few things here differently. One, they re-use the heat to warm up office space. Two, some utlity equipment is outside the building; thus not adding to the heat inside the building. Lastly, they design the hot and cold racks more efficiently to contain the heat and send it above the drop ceiling for re-use.

When we talk about data centers, it's location, location, location. Most colo customers want to be within 4 hours drive of their colo space. There are about 7000 data centers in America. How do you differentiate? Greenhouse Data uses its green initiative as its brand. What do you use?

PS Energy efficiency means more margin, too.

BTW, COLOTRAQ, the foremost global sourcing advisory firm and master agency for colocation, managed services and cloud computing, proudly announces successfully completing its one thousandth project. This milestone brings the total value of business that COLOTRAQ has brought to the industry to more than 45 million dollars in annually recurring revenue. Congrats!

From Brad Feld: "StillSecure has been nailing it in the service provider segment with deals with XO, ViaWest, CoreSite, and others recently. StillSecure fundamentally believes that service providers - telcos, datacenter, cloud providers - will be the channel to market for security solutions and I agree. They have built an amazing set of solutions for colocation and dedicated server environments and have solutions that can apply to some higher-end cloud users. Today they are announcing a new host-based firewall management solution in conjunction with SoftLayer - a leader in the cloud market. Aimed at all cloud users, StillSecure's new solution is the start of a major initiative for the company and is also a new category of solutions."

One last tidbit: Datapipe launched PCI Certified Cloud.

Colo Agency is 45th

2011-08-31T20:08:25Z

Inc. Magazine has notified Global Communication Networks that the firm ranks number 1,347 on Inc.'s fifth annual Inc. 500|5000. In addition, GCN was ranked as the 45th fastest growing telecommunications company in the nation, as well as one of the fastest growing companies in Florida. (You can read the whole press release here.) I just wanted to take a moment to give props to a fellow agent (and TCA member) and fellow Floridian. Congrats! Chris Palermo!!

GCN is one of the few agencies that handle project management for data centers and collocation. [One other one is my fellow TCA Board member COLOTRAQ.]

Another Florida telecom company on the list (at # 195) is Star2Star - a TCA vendor member - that sells a hybrid Hosted/on-premise IP-PBX systems for SMB. They are doing almost $11M in revenue and just released a new box.

CenturyLink Buys Savvis

2011-04-27T14:42:20Z

It hasn't even finished swallowing Qwest and CenturyLink makes a deal to buy Savvis for $2.5B plus the assumption of $700M in debt. From the press release, "With the addition of Savvis, CenturyLink will achieve global scale as a managed hosting and colocation provider and will accelerate its ability to deliver quality managed hosting and cloud capabilities to its business customers. The combination of CenturyLink's hosting and network assets with Savvis' proven solutions in colocation, managed hosting and cloud services substantially enhances CenturyLink's capabilities and provides the company with a solid platform for future growth." So they want to be global?

"Together, CenturyLink and Savvis will operate 48 data centers located in North America, Europe, and Asia with more than 1.9 million square feet of gross floor space; a robust, national 207,000 route mile fiber network; a 190,000 mile global access network; and have a customer list that includes a majority of the Fortune 500 and Fortune 1000 companies."

Everyone is chasing cloud and global. It's interesting because while there are 1000 companies in the Fortune 1000, there are over 5 million other businesses who are looking for business services. It is almost like the telcos are all chasing the same Corporations and Federal dollars, and have given up on small business to cellcos and cablecos.

I don't know how this Cloud play works out long term. (I'm still working on a blog post about my cloud views.) I look at the Cloud space and see the federal government consolidating its data centers. So too is HP. Meanwhile Google, Facebook, Microsoft and others are building their own data centers - and exiting others. It just seems to me like telco business moves from telco to reseller to reseller to telco - without really growing. Cloud, I fear, will become that as well.

How do you buy Savvis for over $3B total and pay it back with $10-14M in income? Or worse, since Savvis runs in the red.

A CDN With Channel?

2011-03-29T02:46:21Z

Image via CrunchBase

Highwinds is a CDN player out of Florida. The only reason I know them is that I track tech funding in Florida. Highwinds had a booth at the Channel Partners Expo, which made me scratch my head. Why?

CDN is really a channel opportunity. CDN is a content delivery solution for media companies. Level3, Akamai and Limelight are slugging it out with VZ for that business.

Two things made a lightbulb go off in my head. One Highwinds bought Bandcon last year. Calling Bandcon a CDN player is funny because the branding was about cheap bandwidth reseller like its peers (who have all since gone away too).

The other was that Highwinds is now offering all the services that Level3 and others offer: collocation, network and IP. So its bring in revenue time for Highwinds - any revenue cuz our VC's are hungry.

My EarthLink Strategy

2011-03-04T14:38:37Z

When I analyze the four CLEC components of the new EarthLink Business, I wonder what Atlanta will do with it.

Deltacom had a huge fiber network (IFN) that essentially went under-utilized. In my experience, many employees did not know about IFN. Assets like lit buildings, collocations, colo gear, and the fiber maps are crucial to revenue generation from those hard cost assets.

Essentially, Deltacom was competing on price in the T1 space. It's two core products - Metro-E off IFN and the MVNO - were not marketed well. It's Channel strategy was bipolar - first terminating agents, then out courting them.

Admittedly, I did not have much experience with ONE Communications. Based in the Northeast, it was a regional CLEC that did not have a strong brand; a market differentiator (like Deltacom's MVNO); or a powerful sales force. After the integration of CTC, Choice One, and Conversant, it was touting almost a billion in revenue, 700 collocations, etc. The purchase price of $370M including paying off the $285M of debt means that $800M in revenue sold for $85M. 160,000 business customers went for $85M, which is an acquisition cost of about $531 each.

When ONE talks about 10,000 miles of IOF fiber, it is talking about inter-office fiber between collocations ordered via a favorable inter-connect agreement with the ILEC. Although this IOF does mean that there is a solid network connecting the 700 colos.

STS Telecom was once a large UNE-P shop. Now it is a Broadsoft based VoIP Provider. This purchase by EarthLink was the quietest. STS is supposed to provide $15M in revenue to ELNK this year. It makes me wonder what the New Edge AX partners like Simple Signal do. STS telecom does provide ELNK with an experienced Hosted PBX team. That is certainly something that can be leveraged across the merged entity.

New Edge Networks does an adequate job of sticking to its knitting of DSL. It was shadowed in the last year by the Megapath deal. In fact, it has been all Megapath news that I have seen in this CLEC sector. NEN seems to be missing the boat on G.SHDSL. For a company that relies on its copper plant access, it seems to be missing the boat on Mid-Band Ethernet as a means to jump the T1 chasm and compete in the business bandwidth war.

New Edge has a good channel strategy with no channel conflict.

Launching the AX platform was a great positioning move. Following the idea of the smartphone apps stores, the AX was a chance for cloud partners to offer services on the New Edge Network in a "private cloud". Much different than the public cloud approach of so many today. It needs to add a number of partners in the data backup/storage space, merchant credit card processing, POS and business applications. I don't mean a connection to Salesforce, but more like practice management software, point-of-sale software, and other applications that are business process requirements for companies.

New Edge has a strong retail presence, showcasing itself as a PCI Compliance expert. It could take this a step further. Taking Skype's idea of partnering with Citrix for conferencing, NEN should partner with Citrix for POS software. Then when the bundle includes POS, merchant card processing, a SIP trunk and video surveillance over the MPLS network, agents can offer a turn-key solution for the retail sector that New Edge Networks already chases.

This integration of 4 CLEC's will be about how well the final entity, EarthLink Business, can leverage its assets: current customers; fiber network; collocation footprint; and channel partners. The back office system integration is another story and will certainly make the rest of this year uncomfortable in many areas: ordering, billing, provisioning, and commissions - while all of it moves to one system.

The future of EarthLink Business depends on whether they come to market with the same old products that ONE and Deltacom struggled to sell or if it develops new product offerings and bundles that will stand out from the CLEC competition. Brand Relevance is the key to the future. PAETEC attempts this with energy and MSP plays. With PAETEC, XO, Megapath, AireSpring, Windstream Business, Broadvox, Level3 and more all clamoring for business, EarthLink needs some unique ideas.

Deltacom hasn't marketed its MVNO play. Moreover, it is a move that Cbeyond was first to market with; now Tele-Pacific is also selling. Yet, it is a start in the business bundle program. The question becomes What next?

Like Cloud, Unified Communications, and Convergence, the CLEC space is filled with me-too offerings. Not just the resellers either. Even the facilities based CLEC's offer the same boring products that they have for years. Calling it a Dynamic T1 or IP-Flex doesn't make it sparkle. At the end of the day it is a T1. And we are near the death of the T1. To the business owner cable broadband speeds are faster and cheaper than T1. Is a T1 even adequate for a business that is moving deeper into cloud apps? And how significant is Internet Access to a business today?

Thousands of collocations when you count Deltacom, New Edge and ONE. That's a large copper footprint for Mid-Band Ethernet to reach a large footprint of businesses (prospects). But what is the Value Proposition?

After spending two days at Enterprise Connect where everyone was shouting UC, Cloud and Collaboration without being able to define it, clarify it or make it concrete in any way, I feel that too often in our industry we forget that we need to stand out - like a Kindle or a Prius - and have a tangible benefit and value to our intended target market. Another example, if your press release is titled Enterprise offering, then you should not be talking about businesses with less than 250 employees. It's confusing.

This is a perfect opportunity for EarthLink as most of the big boys are also integrating acquisition (Windstream, Qwest-CenturyLink, Paetec). It's a chance to be loud and stand out. (By the way, I would love to help you figure it out. I have plenty of ideas how to go-to-market; on bundles; on channel; and on sales strategy. Call my office at 813-963-5884).

VZ Buys Terremark for $1.4B

2011-01-28T18:30:44Z

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.

The Cloud is For Agents, too

2010-10-28T18:40:14Z

Khali Henderson of Phone+ and I are doing a webinar tomorrow for agents at TCA on The Cloud. One of the TCA Board Members, Emmet Tydings, President of AB&T Telecom, sent me this response:

"Voice is just another application in an IP world. Mobility is mandating a large portion of strategic service delivery changes within organizations. The consumerization of functions/applications in the business environment was accelerated with the iPhone and Facebook, but has moved far beyond just the momentum of those platforms in the last 12 months. Young workers in particular expect their employers to deliver the ability to work in at least as easy and accessible a fashion as they are already able to do their daily activities. Simultaneously and instantly collaborating and communicating with peers should not suddenly cease when they attempt to operate the same way with their work peers. Organizations need to enable their users while at the same time also providing security and control in such a way as to be helpful to the company while not being restrictive to the users."

"The need for visibility and control of applications is paramount for organizations taking functionality to the cloud. The ability for management to see what users have and what they are being billed is one important piece, but being able to move, add, change and delete those users on the fly is potentially more valuable. Enabling users to make changes themselves can be liberating for the users and more cost effective for companies. The ability to access a range of applications or functionality with a single login is essential for efficiency and security (i.e., many users just leave their applications logged in and exposed instead of logging out because they don't even know their user names and passwords for multiple applications)."

"The ability for companies to expand the functionality for a user with one tool is unprecedented in the cloud. The ability to take a UC user and let them upgrade to CRM, mail, desktop productivity, or virtual file server is dramatically more efficient than platforms of the past and present."

"The ability to work and communication anytime, anywhere on any device is where the bar has been raised for the efficient worker today, but few organizations have the true ability to operate this way because they have not embraced the cloud to its potential for these very things."

While I agree with Emmet on many points, that doesn't change that the Agent Community will have a hard time fitting into this space. Why? Three reasons.

(1) They are not Net-Heads. Most still think TDM, T1, LD, replacement services. Most agents don't even sell Conferencing which is the first voice app delivered as a service!

(2) You have to drink the Kool-Aid to sell this stuff. You have to embrace it. That means you have to actually use cloud apps and Hosted PBX to sell it. Not many do.

(3) The knowledge set to learn is huge. There's no clear way to get the proper knowledge. VAR's and Agents aren't solid in the belief that there will be space for them in the future (so why spend the time).

There is demand already for Hosted PBX (ask Speakeasy or Packet8 selling it online); SAAS is a proven market (ask Salesforce.com); and Cloud apps pop up all the time (ask Amazon, Google, Apple, Microsoft, et al).

Apple is building a $1B data center in North Carolina with 1 million square feet. Do you think they are gambling on cloud? How about all the data centers that Google and Microsoft have built? How about the expanding data center space being built by all the colo facilities?

You may have to morph your current business to sustain but change is inevitable.

You may hear a lot of No, due to corporate controls, regulations, fear, etc. But you will get ink on paper because businesses aren't buying bigger pipes just to get on Facebook.

Is the Time Up on Colo?

2010-10-12T20:51:47Z

Last week we saw restated guidance from Equinix about revenue for the year. All the sector stocks tanked, even Savvis although it raised its revenue estimate for the year.

One thing that stock pickers don't understand is, um, the business that they trade in. Do any of them even talk to people in the sector?

Equinix is seeing a downgrade in revenue, because they cut off their Channel partners. When they bought Switch & Data, they sliced the indirect channel off.

Now partners are moving business to other collocation companies like Savvis, Telx and others. Dany Bouchedid of COLOTRAQ states that his company is already experiencing a record year and that Equinix is experiencing unexpected churn, because they burned their partners.

It's not like the sector isn't still building out data centers or The Cloud dried up. I guess it's a good time to buy stocks in this sector because The Cloud is here to stay.