The Analyst's Corner: Bunking can be fun at the carrier hotel

When my brother and I were young, we shared a bedroom for a while. It was in the furthest corner of the house--as far from the front living room as you could get. So when bedtime came, it wasn't really time for bed. It was time for play. 

I can remember getting tucked in, snuggling under the covers and pretending to be really sleepy. We'd catch the eye of one another and wink, signaling that the games would begin as soon our that night's "tucker-inner" made that long march all the way back to the living room. 

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We'd pillow fight; jump up on each other's bed and one time even had a squirt gun fight--until that fateful day when Dad brought in the bunk beds. Dad figured the whole key to getting us to go to sleep at bedtime was to make sure we didn't lie across from one another. If you couldn't see each other, he figured, you couldn't scheme together. At least, not as easily.

I remembered how those bunk beds ended our nighttime hijinks the other day when I read that Switch and Data Facilities Co. received a huge infusion of venture capital cash--more than $100 million. 

Today, bunking (at least for carriers) is fun. Companies like SDFC are using cages and risers-- telecom versions of bunk beds--to help Internet carriers play together better. SDFC is a carrier hotel, a new breed of carrier-neutral co-location facility that has been a growing in popularity. And the enthusiasm is not just among investors. Carrier hotels like SDFC are also becoming a favorite rest stop for long-haul carriers and Internet providers. 

Preferred by many to the traditional phone company central office, the carrier hotel lets long-haul carriers and Internet providers more quickly and cheaply buy and sell capacity and services from one another. 

"It's very possible that many of our customers find us more attractive to work with than the phone company because we offer so many roommates," said Steve Kelley, SDFC's CEO.

As the name suggests, the carrier hotel is a converted building in which interexchange carriers such as MCI WorldCom, Williams Communications and Level 3 Communications place their switching equipment. These guys bring the idea of "bunking" side-by-side to a new level. 

By bunking, or co-locating, with one another in private buildings not controlled by the phone companies, these carriers can use non-RBOC cabling and avoid the associated costs and delays of working with the phone company. Not surprisingly, as word has gotten out, the popularity of the carrier hotel has skyrocketed among a new class of Internet provider. 

Once you get out beyond the big cities, for instance, carrier hotels are as not easy to find as Hiltons. That problem has given birth to a new class of competitive exchange carrier willing to do ambitious build outs. 

"Real estate is the real bottleneck as we see it today," said Frank Macefe, president of Penn Telecom in Cranberry Township, PA. 

Macefe's company is a registered CLEC in Pittsburgh that is shifting its business from broadband reselling of DSL capacity to offering ISPs and other retail Internet providers carrier hotel services.

"Even if you wanted to do business with the phone company, you'll be lucky to get 100 square feet and in that you need to get your equipment installed and then run the interconnect with the local exchange carrier," he said.

Others service providers are building their own carrier hotels. 

"We will provide our own carrier hotel in some markets and in other markets we work with CO. It will just depend on the market and the place," said Suzanne Aldrich, director of IP Transport Services at ConnectSouth Communications, a full-services Internet provider based in Austin, Texas. 

The company is getting a CLEC certification that will enable it to deploy the first and last mile. "We want to deliver a simplified solution and also get close to the customer," Aldrich said. "I want to be able to put all my network elements in one building, and I want to be connected to public Internet in that building. That cuts time and expense in deploying my router, ATM, DSLAM or whatever ever I need.."

ConnectSouth didn't start out to be in the carrier hotel business, Aldrich said. "But, we were building data centers anyway, and we find we're ending up providing carrier hotel services, anyway," she said. 

A similar situation faces providers looking to expand internationally. 

In Europe, SDFC faces the same lack of facilities that ConnectSouth faces in the less populated parts of this country. So, like ConnectSouth, SDFC will enter the carrier hotel construction business, Kelly said. "In Europe, where deregulation has come of age and where there are not carrier hotel buildings we will help create them to build a carrier-neutral co-location options. We're going to be in the ownership and sponsorship business in Europe."

Inter-continental bunk beds, Wow! I wonder what Dad would think about that.
Vance McCarthy is Editorial Director for aspRegistry.com, a Web-based information service for the ASP industry. His e-mail address is mccarthy@batnet.com.
This column originally appeared on the internetTelephony.com website.

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Penn Telecom

ConnectSouth Communications 

Colosource

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