Next-Generation Collocation

BOSTON (05/08/2000) - Every city has those central watering holes where movers and shakers converge to transact business and exchange news, views and ideas. An equivalent trend is occurring in the data network world, with central meeting points springing up where ISPs, application service providers (ASP), carriers, Web hosters and content providers can congregate on neutral turf to purchase each other's services and exchange traffic.

Until recently, the only collocation options were either investing time, energy and money to build your own facility and then inviting in business partners; or forgoing your choice of partners and using a facility owned and controlled by a carrier or Web-hosting company.

Thanks to a new breed of critter with the unwieldy name of vendor-neutral (or carrier-neutral) collocation service provider - a term so new it has yet to be acronymed - the landscape is now changing in a way that will improve life for companies and service providers alike.

Hilary Mine, an analyst at Probe Research, calls them next-generation central offices. "Vendor-neutral collocation facilities are a key feature of the next-generation public network, not only in the U.S., but internationally as well," she says.

These facilities are located close to carrier fiber, and feature an abundant supply of power, sturdy floors, plenty of headroom, redundant systems, tight security and ways for tenants to interconnect with one another easily and quickly. In addition to space for tenants, there are work areas where customers' technicians can perform staging and maintenance. Customers bring their own equipment, with collocation facilities providing a choice of connectivity from carriers and ISPs as well as cross-connection services within the facility. Collocation vendors also provide on-site technicians who can serve as "remote hands" to perform routine tasks such as system reboots.

The list of tenants includes ISPs, incumbent local exchange carriers, competitive local exchange carriers, long-distance carriers, content providers, e-businesses, data storage companies, content distribution services, ASPs and Web-hosting companies. "The common denominator is that our customers have convergence needs. They need access to telecommunications circuits and Internet services," according to Gabriel Cole, president and founder of collocation service provider CO Space.

StorageNetworks, a data storage service provider, tried to go it alone and then turned to CO Space. "We built our first data center ourselves, but we realized that we spent a lot of time and effort, and weren't particularly expert at it," says John Clavin, senior vice president of marketing and corporate development.

"We would have gotten to market a lot sooner if we had used CO Space."

Steve Janzen, vice president of sales and marketing for Switch and Data Facilities, says his firm's services extend the reach of his customers into new markets and new services. "At the end of the day, it's not the most glamorous part of the network, but it's a must-have," Janzen says of collocation facilities. "You must have a place to put new points of presence and new services. We're like batteries. Without them your service doesn't work."

For businesses and consumers, vendor-neutral collocation services will offer a host of benefits, such as:

-- Users will have more choices among Internet and other types of service providers. Vendor-neutral collocation facilities make it easier and less expensive for ISPs to add POPs in more cities.

-- Web content will be delivered more quickly. Increased use of collocation facilities by content providers and content distribution services, such as Akamai, will cause content to traverse fewer hops on its way to users, accelerating content delivery.

-- Hosted applications will be delivered more quickly and efficiently. For performance reasons, ASPs are increasingly choosing to house their applications in vendor-neutral collocation facilities close to end users.

-- Prices for Internet and other services using vendor-neutral collocation facilities should decline. Why? Because collocation facilities make it less expensive for ISPs and other service provider types to expand into new markets.

They can also easily swap carriers to obtain the best transport prices, and they can deliver service competitively in terms of cost. Also, because more Internet and other service providers will butt heads in more markets, competition should drive service prices down.

-- Service availability and reliability will be increased. These facilities enable tenants to interconnect with multiple service providers. For a Web site this means that if one connecting ISP's network goes down, content will still be delivered via other ISPs' networks.

Patrick Henkle, vice president of business development for Telenisus, a managed security, virtual private network and Web-hosting service provider, says his enterprise customers are better off as a result of his company's use of Switch and Data Facilities' collocation services. "Because we are now carrier-independent, we have a lot of flexibility in who we use for IP transport. We use two carriers, and we couldn't do that if we were collocated with one incumbent carrier as we were in the past," he says.

StorageNetworks provides secure, off-site backup storage via local fiber. If it weren't for the ability to house its storage servers in local vendor-neutral collocation facilities, it would be impossible for StorageNetworks to offer its service from as many locations in as many markets. "Because we do all backups electronically over a network, it's essential that off-site storage be local to our users, or our service isn't useful," says Rhea Touch, StorageNetworks' director of services and field marketing.Among the players in the vendor-neutral collocation business are CO Space, Switch and Data Facilities, Equinix and The total number of facilities currently running is modest, but all the players have ambitious plans to be in as many markets as possible by year-end.

Vendor-neutral collocation facilities do not negate the need for traditional Web-hosting companies such as Exodus and Global Center. These traditional hosting companies will continue to satisfy hosting needs for clients who are not in the position to procure and manage their own connectivity. For large content sites and e-businesses, however, neutral facilities should prove a better and less expensive solution because customers can competitively procure both collocation and network services. Traditional Web-hosting companies link these two pieces, so when you choose a Web-hosting company, you automatically commit to using its network or one of its choosing.

Clients of traditional Web hosters may find themselves in vendor-neutral collocation facilities in any case because Web and applications hosting firms are increasingly using vendor-neutral collocation facilities as a new base of operations. This is especially true as service providers extend their reach into new U.S. markets as well as overseas.

Wetzel is an industry analyst, consultant and writer. She can be reached at

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