Startups Put Twists on Hosting

FRAMINGHAM (08/07/2000) - You've probably heard of Level 3 Communications Inc.

Now say hello to Chapter 2 E-Services Inc. and LayerOne Inc.

These new companies are among numerous startups filling increasingly specialized niches in the worlds of Web server hosting and collocation - such as locating floor space, providing back-office support or supplying customer service.

According to analysts, the rise of such companies means that application service providers (ASP) and companies placing servers directly onto carrier networks will be able to buy key support functions from specialists. But it also means ASPs and firms will have to monitor an increasingly complex trail of vendors, each of which is outsourcing one function to the others.

Consider the Dallas firm LayerOne, which began operations in January, offers what it calls "neutral collocation sites" in Chicago and Miami.

Many hosting and Internet backbone companies also offer collocation - the ability of another service provider or business to place its Web servers directly in the primary provider's Internet data center. But those collocation offers aren't "neutral" because they often require a transport contract with that provider and don't provide direct connections to other IP backbones, says LayerOne CEO Alexander Muse.

LayerOne's sites, called Nexus Collocation sites, are generally in buildings or campuses known as telco hotels, with direct links to all backbone providers that maintain points of presence in the same facilities. LayerOne does not provide transport, much less any protocol-specific WAN services or higher-layer application services.

"We are not a carrier ourselves," Muse says.

Muse says an emerging service provider or Web-centric enterprise would contract with LayerOne because some brand-name transport providers either don't have collocation space available or are rationing it by hiking their customers' minimum dollar commitments.

While backbone carriers are busy fattening their pipes, LayerOne specializes in scouting real estate, even purchasing companies for their leases in prime telecommunications locations.

LayerOne is constructing Nexus Collocation sites in Boston, Dallas, Detroit, Los Angeles, Minneapolis, Phoenix, San Francisco and St. Louis. Muse says the company has identified no fewer than 127 cities where it could place Nexus sites during the next few years.

LayerOne's name, like Level 3's, is an allusion to the protocol stack in the network model, because LayerOne is concentrating exclusively on physical facilities rather than switching or routing. By contrast, San Francisco start-up Chapter 2 e-services, while overlapping some of LayerOne's functions, is looking to capture ASPs' attention via a historical metaphor.

Labeling itself "the ASP infrastructure company," Chapter 2 officials say the company's name reflects a philosophy that "Chapter 1" of Internet data centers was Web hosting, while "Chapter 2" is more intense applications management.

While not promising route diversity or a big geographic buildout, Chapter 2 rents space at Exodus' Web hosting center in Santa Clara, and places its tech staff in the Exodus facility for on-site support. Then it adds a call center with help desk and other capabilities to answer questions from the ASP's own end-user customers.

"We give them instant-on infrastructure capability," says Craig Harper, Chapter 2's chief technology officer. Harper and Chapter 2 CEO Ritu Raj cite ASPs that specialize in human resources benefits management for corporate customers as an example of the kind of company that could use Chapter 2's services.

At the initial 20-seat call center and the Exodus data center, Chapter 2 uses Aspect Communications' automatic call distributor, Oracle customer relationship management software and Hewlett-Packard's OpenView network management and Praesidium Enterprise Security package.

LayerOne: www.layerone.com; Chapter 2: www.chapter2.net.

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