Windstream's Hosted Solution acquisition targets managed services

Windstream’s announcement today that it plans to acquire data center operator and managed hosting provider Hosted Solutions is aimed at jump-starting the telco’s entry into the managed hosting market. Although Windstream already has seven data centers of its own spread across the country, the company to date has earned virtually no revenue from what it calls Infrastructure-as-a-Service (IaaS), Windstream Chief Operating Officer Brent Whitington told Connected Planet.

“We had picked up some locations through acquisitions and were bringing them together into one central management structure,” Whitington said. “A lot of them were more co-location centers. What we love about hosted services is that a lot of it isn’t about co-location but about managed services. They’re taking us to another level.”

Accordingly, Windstream expects to leave Hosted Solutions’ existing product lineup intact and to begin offering that product lineup in its own data centers. The Hosted Solutions acquisition will bring five new data centers in Raleigh, N.C.; Charlotte, N.C.; and Boston into the Windstream fold.

Plenty of capacity

Although we’re beginning to hear about space shortages in the data center market, Whitington said the Windstream data centers and the Hosted Solutions data centers all have plenty of room for additional customers. Most of those data centers have "modest capacity" of between 10,000 and 15,000 square feet, he said, which the company can begin to fill up before “ante-ing up” again.

“And with hosted solutions, we will be doing it with higher margins beyond colo and floor space but other services that involve greater utilization of that space,” he said.

Whitington said the company would look at other acquisitions but is “real pleased with what we have.”

Business market is critical

With access line losses mounting industry-wide, tier 2 carriers are emphasizing the business market more than ever before. Windstream’s acquisition of Hosted Solutions could be viewed as a smaller scale version of what CenturyLink hopes to accomplish by acquiring Qwest.