Cavalier eyes cloud services with data center deal

Competitive carrier Cavalier hopes to expand colocation and managed services offerings to its mid-Atlantic customer base through its acquisition of the assets of data center operator NET Telcos.

“We’re not just a dumb pipe provider anymore,” Michael Rees, Cavalier senior vice president of corporate development, told ConnectedPlanetOnline. “We’re trying to get more of customers’ IT and telecom business.”

Cavalier previously offered managed services on a more limited and piecemeal basis, Rees explained. “Where customers needed it, we’d do it,” he said. “But it wasn’t something you would give to your salespeople and say ‘Go forth and conquer.’ What this does is it gives us more of a process and stability in an offering that’s already baked and a nice customer base. Some customers have been with them for a number of years.”

While larger, tier one telcos like AT&T and Verizon have made a lot of noise about offering cloud services and virtualization via large, next-generation data centers, the deal shows that the same opportunity exists for smaller, Independent telcos as well.

The NET Telcos data center has more than 4,000 square feet of colocation space that supports managed services such as server virtualization, data backups, firewalls and email hosting. Previous NET Telcos customers include web site design company BizNet Internet Services and furniture retailers RoomStore.

Traditionally the managed services business has been a capital-intensive one. So how does a smaller carrier like Cavalier expect to compete in that market?

“The data center is largely built out,” Rees said. “We’ll probably add some capacity. But if you look at it, you get payback fairly quickly.”

Customers have shown strong interest in what Rees called “virtualized machines” such as outsourced servers and storage, and Rees said Cavalier’s investment would likely take the form of additional equipment to support such offerings.

Rees believes virtualized machine services will have strong appeal to small to medium sized business customers that already have a T-1 or Ethernet-over-copper connection from Cavalier because in some cases, the customers will be able to add those services without increasing connection speed.

Cavalier, which operates voice, data, Internet protocol and fiber network infrastructure, also hopes existing NET Telcos customers will shift connectivity from other carriers to its network, while also retaining route diversity. Currently Cavalier is one of three carriers providing connectivity to NET Telcos.

Rees said Cavalier would consider other acquisitions of this type, but added that NET Telcos was particularly appealing because, like Cavalier, it was headquartered in Richmond, Virg.

NET Telcos was created in 2001 out of the merger of Baby Bells and New Millennium Technologies. In 2005, NET Telcos joined Continental Broadband, a managed network services provider founded in 2000 with several business units operating in several major metropolitan markets.

Cavalier acquired the NET Telcos assets from Continental Broadband, which has chosen to focus on other metro markets, Rees said. The price was not disclosed.