Strong growth for e-deltacom

Data center services provider e^deltacom said it experienced 40 percent growth in 2003, driven by increased demand for hosted storage, backup and disaster recovery services.

Atlanta-based e^deltacom is a division of ITC Deltacom, with a customer base focused on the ISP, financial services and healthcare sectors. Financial services was the strongest individual sector with 80 percent growth, while the company's ISP and application service provider (ASP) grew by about 50 percent, according to e^deltacom.

"We experienced tremendous growth in our e^deltacom division during 2003," said Larry F. Williams, ITC^DeltaCom Chairman and CEO. "ITC^DeltaCom saw a 32 percent increase in operating revenues in our core integrated communications business in 2003. e^deltacom is part of this growth, providing value-added data services to those customers that no other CLEC can compete with in this market."

ITC^DeltaCom, headquartered in West Point, Ga., provides telecom and technology services in the southeast, with a fiber optic network spanning approximately 14,500 route miles.

eBay for Data Centers?

Do folks shop for potential mission-critical facilities on eBay? The owners of an unusual Washington State facility say that listing their property on the popular auction site has attracted some serious inquiries.

The eBay listing for the Titan Missile Complex near Moses Lake, Washington is an advertisement rather than an actual auction, and lists a price of $3.95 million. The property, part of a former Air Force site designed during the Cold War to withstand a direct nuclear strike, is being marketed as a possible disaster recovery site for companies seeking secure data storage. (NOTE: The site is different from the nearby Titan I LLC facility,which was bought by several former Microsoft executives in 2002 and is now a working data center).

The Moses Lake site includes three missile silos, each more than 150 feet deep. A number of such bunker-style underground properties marketed as "ultrasecure" disaster recovery space in the wake of the Sept. 11 terrorist attacks. But the expected flood of business continuity tenants never quite materialized.

The Titan property is still being marketed as a potential data storage site, but also positioned for alternate uses including an "Ultra Secure, Ultra Private, Personal/Corporate Retreat" or as a youth summer camp or even a winery ("Plant Vineyard above, Store Vintage below").

Is it working? The eBay counter on the site shows 279,000 hits. Bari Hotchkiss, who is listed as the contact, told a Seattle paper that the ad has led to more than a dozen "serious inquiries." But do these potential buyers have $3.95 million in their PayPal account?

Rubio's to Host With Inflow

SAN DIEGO, CA — Today, Inflow, Inc., a leading provider of outsourced technology services, announced new business continuance customer, Rubio’s, the leader in the high quality fast-casual Mexican grill restaurant sector. Inflow assisted Rubio’s in implementing a strategic long-term business continuance plan and provides the company with managed data storage services from the Inflow-San Diego Internet Data Center (IDC). Read the full release ...

D1 Athletes Locates at 365 Main

SAN FRANCISCO, CA - 365 Main today announced that D1 Athletes, the Bay Area's premier recruiting site on the Web for athletes, has chosen 365 Main as the co-location center to protect their company's infrastructure. Equipped with ten 2.1 Megawatt continuous power systems, an N+2 facility-wide redundancy, an award-winning base isolation system, and 60,000 gallons of fuel on-site, 365 Main's structural resiliency is rapidly becoming recognized as the industry's leading state-of-the-art data center. Read the full release ...

SAVVIS Powers Emmy Judging

CANNES, France - SAVVIS Communications today announced that the International Academy of Television Arts & Sciences, producers of the International Emmy Awards, will enable their 500 judges to screen this year's award nominations at home over the SAVVIS network and power sixteen judging centers. The International Emmys are awarded to the best television programs produced outside the United States. Read the full release ...

Enclave Acquires Waltham Facility

The first time Gabe Cole and his team of executives considered buying 115 Second Avenue in Waltham, Mass., it was the spring of 2000, the high-water mark of the Internet bubble. Cole and his colleagues from CO Space didn't get the deal.

But they didn't forget about the property, either. Cole is now the CEO of Enclave Properties, which Tuesday announced that it had acquired the 70,000 foot Waltham data center. Enclave is backed by the principals of New England Development and includes four former executives of CO Space.

It bought the 115 Second Avenue site from Telecom Realty/CTC Communications, which outbid CO Space in 2000 and then invested $33 million outfitting the building as a data center. Enclave plans to divide the facility into multiple, private data center suites ranging from 200 to 10,000 square feet, and market them to technology firms requiring secure space for their IT operations.

"We're targeting Global 1000 companies, government entities, hospitals and institutions," said Cole. "In some cases, we're working with service providers who may bring one or more clients into the facility.

"We are developing multi-tenant data centers that provide all of the cost benefits of a shared data center, but which give customers 100 percent control of their own private data center suite," said Cole. "New England Development saw a unique opportunity to apply a real estate-based model to the data center marketplace."

"We believe that there is tremendous value in owning the underlying real estate and being able to grant customers leases on their data center suites that run directly to the property and which can protect them from the failure of third-party operators," said Gregory Sullivan, Executive Vice President of Corporate Development at New England Development.

At CO Space, Cole engineered an exit strategy with fortunate timing, selling the company and its four data centers to Internap in May 2000 for $244 million. Enclave Properties has been patient in choosing the right opportunity to re-enter the data center business, making the Waltham deal after months of studying the marketplace.

"We were looking for some fundamental bottoming in the industry," said Cole. "We were looking for some level of capital spending to return among our target customers. We like what we see when we look at the activity for Cisco and HP. People are starting to buy boxes again, and those boxes will need a place to live."

Cole said it also took some time for the price of some of the available facilities to align with his sense of the market value. "There are any number of surplus data centers, and it took people a while to come to terms with the fact that these buildings were never going to sell for anywhere near what it cost to build them," said Cole."What we wound up with is a classic real estate opportunity where we could acquire a quality property for 15 to 20 percent of the construction cost."

Enclave, which also includes industry vets Donato DeNovellis, Steven Gunderson and Catherine Davies, said it is examining other data center acquisitions as well. "We see a lot of opportunity," said Cole. "Our ideal is really to grow it in the Northeast first."

Founded in 1978, New England Development is a premier real estate development and management company in the Northeast.

Sage: Provider Confidence Surges

Telecom and hosting companies believe industry conditions are improving rapidly, according to Sage Research's Service Provider Confidence Index, which has reached its highest level since it was begun in early 2002.

The Sage survey, which gathers data from 101 service providers, showed sharp improvement in sentiment about industry hiring, revenues and capital spending.

Significantly, the benchmark measuring overall Current Conditions jumped 9 points (from 46.2 to 55.2), its highest measure ever and the first time the index has surpassed the 50 rating that defines "high" confidence levels. The Current Conditions index stood at 35.9 last May

The sector showing the most strength was employment, where the current conditions index jumped from 13 to 34, while the gauge of future expectations also rose, from 41 to 51. Also showing gains were the sub-indices for capital spending expectations (from 65 to 70) and revenue expectations (from 73 to 77).

Founded in 1993, Sage Research is an independent full-service market research and consulting firm providing global demand-side research to technology product and service providers.

VoiceGlo Locates at Miami NAP

MIAMI & FORT LAUDERDALE, Fla. -- Terremark Worldwide, Inc., a leading operator of integrated Tier-1 Network Access Points (NAPs) and best-in-class network services, today announced that Voiceglo, a worldwide full service Voice over Internet Protocol (VoIP) communications company, has signed a three-year contract with a base value of $900,000, to make the NAP of the Americas the anchor connectivity hub for their global VoIP infrastructure. Read the full release ...

Brightmail Relocates to 365 Main

SAN FRANCISCO, CA -- 365 Main announced today that Brightmail, the global anti-spam market leader, has relocated its core infrastructure to 365 Main. Equipped with ten 2.1 Megawatt continuous power systems, an N+2 facility-wide redundancy, an award-winning base isolation system, and 60,000 gallons of fuel on-site, 365 Main's structural resiliency is rapidly becoming recognized as the industry's leading data center. Read the full release ...

MMR-FONE Cash-Flow Positive

MMR-FONE, LLC announced this week that its Cleveland Meet Me Room (MMR) is now cash flow positive after six months of operation. The facility is located in the T-Rex Technology Center, a four-building, 274,000 square foot telecom complex.

MMR-FONE provides low-cost network interconnection to all tenants located at the T-Rex Technology Center @ Cleveland, which include ICG, CITYNET, XO, Allegiance Telecom, SBC, American Fiber Systems, Level3, and McLeod USA and Qwest Communications.

The MMR facility is operated by Fiber Optic Network Exchange, LLC, a company headed by Peter Berns, the founder and first CEO of Colo. com. Berns later served as VP of Business Development for Universal Access, one of the leading provisioners of fiber optic network capacity.

New York-based T-Rex Capital, LLC has invested in more than $600 million worth of commercial real estate. Its signature property is a 1.8 million square-foot facility at Boca Raton, Fla. Last year the company purchased a large former Lockheed-Martin facility in Manassas, Va.

Taffet Joins telx Board

NEW YORK, NY – telx is proud to announce that David M. M. Taffet is joining the Company’s Board of Directors and spearheading the Company’s mergers and acquisitions activities. Mr. Taffet, the former President and Founder of MeridianTelesis, brings years of industry, financial, and operational experience to telx. As the head of MeridianTelesis, Mr. Taffet raised institutional money, built a nationally recognized enterprise-oriented carrier neutral colocation platform, reported 12 consecutive EBITDA positive quarters and ultimately sold his company in January 2004 for a multiple of cash flow. In his new position at telx, a company that operates EBITDA and net income positive, Mr. Taffet will help select facilities and operations for acquisition, provide Board-level leadership and support for the mergers, acquisitions and due diligence teams and help coordinate the various financial alliances interested in funding telx’s targeted acquisitions. Read the full release ...

Outsourcing To Get Cheaper

Outsourcing technology jobs to India is likely to get even cheaper, as the cost of bandwidth between the U.S. and India is poised to fall dramatically in coming years.

A new report from TeleGeography notes that bandwidth to India currently "comes at a premium price," a function of India having missed out on much of the underwater fiber buildout of the 1990s. Capacity prices from the U.S. to India are still five to 10 times higher than on the U.S. to Hong Kong route, according to Alan Mauldin, Senior Research Analyst at TeleGeography, a unit of Primetrica..

But TeleGeography's research found that India's international submarine cable capacity has grown from 31 Gbps in 2001 to 541 Gbps by the end of 2004. As that trend accelerates, prices to move data backl and forth from the U.S. to India will head lower. "Inevitably, the increase in capacity and number of competing cable systems will drive down the price of bandwidth to India," said Mauldin. "In other parts of Asia, prices declined by
60 percent or more in the last year- this could easily be repeated on Indian routes for years to come."

With a skilled labor force that speaks English, India has among the prime beneficiaries of the outsourcing trend, with many U.S. companies saving money by "offshoring" tech jobs to Bangalore and other emerging Indian tech hubs.

Managed services market leaders IBM , Hewlett-Packard and EDS have all moved significant chunks of their operations offshore, a trend that has created challenges for U.S.-based firms pursuing IT outsourcing and managed hosting business.

200 Paul Unveils Channel Program

SAN FRANCISCO - eXchange @ 200 Paul announced today a comprehensive channel partnership program to significantly expand the range of services it delivers to its customers. Initial partner members include ACS, Big Byte, Ficus Engineering, HPM, Hula Networks, ManagedStorage International and NEXL. These seven companies will provide eXchange @ 200 Paul's colocation customers with expanded levels of services ranging from custom application development and management to disaster recovery. Each of the channel partners will in turn be able to offer its customers access to eXchange @ 200 Paul's premier carrier-neutral colocation facilities. Read the full release ...

Switch and Data Acquires RACO

Almost exactly a year after announcing plans to buy PAIX, Switch and Data has completed the acquisition of Remote Access Company (RACO), a privately-held company providing neutral colocation services for the service provider and enterprise markets. Through the RACO deal Switch and Data, the leading neutral interconnection, Internet exchange and colocation provider, expands its footprint to include RACO’s four sites located in New York City, Toronto, Chicago and Buffalo. The New York City facility is located at 60 Hudson St., one of the premier carrier hotels in the United States. RACO generated $8.3 million in revenue in 2003. This transaction extends Switch and Data’s customer base to more than 650 customers. Read the full story ...

Revenues Improve at NaviSite

Andover, Mass. - NaviSite, Inc. today reported financial results for its second quarter of fiscal year 2004, which ended January 31, 2004. For the second quarter of fiscal year 2004, total revenue increased 19% to $22.3 million from $18.8 million in the second quarter of fiscal year 2003. Gross profit grew for the second quarter of fiscal year 2004 to $5.6 million (or 25% of revenue), compared to a gross profit of $1.8 million (or 9.3% of revenue) in the second quarter of fiscal year 2003. Net loss for the second quarter in fiscal year 2004 totaled $3.4 million, or a loss of $0.14 per share, versus a net loss of $20.2 million, or a net loss of $2.07 per share, in the second quarter of fiscal year 2003. Read the full release ...

Mirror Image Selects Equinix

FOSTER CITY, Calif. - Mirror Image Internet, a leading adaptive network for online content, application and transaction delivery, and Equinix, Inc. (Nasdaq: EQIX), the leading provider of network-neutral data centers and Internet exchange services, today announced that Mirror Image has selected Equinix to expand its global Content Access Point (CAP) network to handle the increasing customer demand for its Web Computing solutions. Mirror Image selected Equinix's Silicon Valley, New York and Washington, D.C. area network-rich Internet Business Exchange centers for this expansion in order to provide customers with increased capacity and superior network connectivity. Read the full release ...

Chapter 11 in the Rearview Mirror

For much of the data center industry, the last two years felt like a bad case of literary deja vu. No matter how many times you tried to turn the page, you kept encountering Chapter 11.

Few landlords or service providers were untouched by the flood of bankruptcies, which peaked entering 2003 with WorldCom, Metropolitan Fiber, Exodus, PSINet and Global Crossing all operating in Chapter 11.

By year-end, all but WorldCom had emerged, some with new ownership. Pundits predicted that Chapter 11 survivors would slash prices to rebuild market share, but that scenario hasn't materialized.

"It seems to have been less disruptive (than expected)," said Ed D'Agostino of CRG West, which owns a portfolio of telecom buildings, including One Wilshire in Los Angeles. "The changing of hands of facilities seems to have gone smoothly, irrespective of whether they were bankruptcy-driven. The weak have fled and left some nice assets in the hands of the committed."

As providers sold surplus facilities, many data center buyers and tenants became focused on finding bargains in distressed sales, both in and out of Chapter 11.

"Bankruptcies have created our competition by providing lots of raised-floor busted colo for the market," said Alex Twining, the CEO of MetroNexus, a New York-based developer of carrier hotels.

But not all facilities are alike. With surplus inventory, investors and customers have focused on the best-engineered properties, especially data centers built by WorldCom, Exodus and AboveNet. Older facilities and those in disaster-prone areas have struggled as disaster recovery became the primary focus for buyers.

Many carrier hotel landlords found several of their largest tenants in Chapter 11 at the same time. Properties with a larger tenant base fared best in this scenario, while it was make-or-break time for buildings' whose profitability hinged on one or two large providers.

The bankruptcies "have illustrated the difference between mature established carrier hotel facilities housing critical infrastructure and those less-established latecomers," said Robert Guller of Bandwidth Exchange Buildings in St. Louis.

"Where bankrupt tenants maintain economic value, the leases have been continued through bankruptcy and after to the new, better credit successors," Guller added. "Where raw or even improved space was unused, leases were terminated and placed back on the market. Those landlords with a balanced mix of tenants have been able to survive the temporary cash flow interruptions of bankruptcies relatively unscathed."

That's not to say the Chapter 11 filings had little effect. Financial stability became a key selling point, and prospective customers wanted to see more than promises.

"I'm sure every operator has had to bend over backwards in regards to sharing financials that they normally wouldn't have in order to secure business," noted Rich Lee, CEO of of Springboard Managed Hosting in the Research Triangle market.

"The first set of bankruptcy filings in 2000-2001 created a search for financially secure data centers," said J.P. Balajadia of 365 Main in San Francisco. "There was a lot of movement in the industry from one provider to another, with shorter contract terms and provisions written in for automatic out provisions if there was change of ownership."

As more providers entered bankruptcy, the urge to flee the sinking ship diminished somewhat, and providers got better at reassuring skittish customers.

"As colocation companies continued to file for bankruptcy, they also became more aggressive at customer retention - getting court stays and threatening with legal proceedings if leases were broken," said Balajadia. "Customers also became more callous to the fact that their providers were in Chapter 11 protection and did not want to bother with the pain of moving colocation spaces."

Fears of price wars turned out to be largely overdone, according to John Wilson of eXchange @ 200 Paul in San Francisco. "We do see lower circuit pricing from post-Chapter 11 telecoms, but these formerly bankrupt companies seem to be lacking (operations) personnel and capex budgets to be truly price-disruptive competitors," said Wilson.

Rory Cutaia, the CEO of New York's tel^x, said that over the long run the bankruptcies will be seen as "disruptive in a positive sense."

"It forced management to prove their business models, drive toward near-term profitability, and in turn, create stability for the foundation - the infrastructure - of the world's communications systems and networks," said Cutaia. "Without such stability, without a foundation, the development and introduction of some the most exciting and promising communications products and services would be delayed indefinitely."

Cautious Optimism About 2004

If there's a consensus view on the near-term outlook for the data center business, it's cautious optimism.

A recent sampling of industry chief executives found growing confidence that the bankruptcies and scandals that have beset the telecom sector have run their course, leaving a field of lean-and-mean survivors poised to benefit from gains in technology spending.

On the real estate side, the recent sale of two prominent carrier hotels - 111 Eighth Avenue in New York and 151 Front Street in Toronto - demonstrates that exit strategies are available for choice assets.

"I believe we are finally beginning to see signs of the long awaited turnaround," said Robert Guller, president of Bandwidth Exchange, which operates two carrier hotels in St. Louis. "The customer base is finally budgeting for new capital expenditure, while the demand for hosting and managed services from the middle-market has steadily continued to grow, driving the demand for data center space from providers in this area."

"The industry has begun it's climb back from its descent of the past two-and-a-half years," said J.P. Balajadia, vice president of the 365 Main data center in San Francisco. "We definitely see a renewed interest in outsourcing data centers by companies of all sizes, and a new level of sophistication in the people shopping for it."

But make no mistake - the growth that lies ahead will be nothing like the helter-skelter expansion of the dot-com boom. Tenants and customers are shopping carefully, taking their time, and driving hard bargains in a buyer's market.

The telecom sector "appears to be out of intensive care, but is still recovering," said John Wilson, president and CEO of eXchange @ 200 Paul, which operates carrier hotels in San Francisco and Santa Clara. "We see more activity and an increased willingness to consider telecom commmitments in 2004. But capital expenditures are still a major obstacle, even when there is a confirmed revenue opportunity associated with the build-out."

Top-tier facilities and providers in major Internet markets are best positioned to benefit from increased activity. Among the likely growth drivers mentioned are VoIP, grid computing and storage.

But expectations often zoom ahead of actual spending. An example is the market for disaster recovery infrastructure, which was expected to grow rapidly after the Sept. 11 terrorist attacks. Corporate business continuity has proven to be a complex market, with decisions influenced by tight corporate IT budgets and uncertainty on regulatory guidance on backup facilities.

"The market is still slow and plodding," said Alex Twining, CEO of MetroNexus, a New York-based carrier hotel developer. "After all of the post-9/11 moves are completed in metro New York City, it should slow even more. Major financial institutions, while still functioning on band aids, and are not interested in spending money on IT unless they absolutely have to."

While landlords are seeking to fill vacant space, service providers are hoping to fill their existing data centers.

"I'm very bullish on how 2004 is shaping up for those of us in the managed hosting sector," said Rich Lee, CEO of Springboard Managed Hosting in the Research Triangle. "I think customers in general are starting to feel comfortable that data center operators left standing are in pretty good shape, and feel much more comfortable outsourcing mission critical services."

Perhaps most importantly, it's now possible for data center providers to raise financing, as demonstrated by public offerings by Equinix, NaviSite and Internap.

"The runup in stock prices of some of the players in our space also bodes well for everyone and providers that are generating positive cashflow will continue to do well," said Lee.

HostWorks Chooses Inflow

Inflow Inc., a leading provider of outsourced technology services, announced that HostWorks, Inc. has selected it to provide managed hosting services. HostWorks, a leading provider of shared, dedicated and colocated web hosting, managed web services, custom web site development and software products, will move its servers and other equipment to Inflow this month. "Inflow provides the caliber of security and connectivity HostWorks demands for our clients," said HostWorks president Paul Gilpatrick. "We have 400+ e-commerce clients who depend on HostWorks to optimize their web application performance 24/7. Inflow has a world-class infrastructure we can rely on." Read the full release ...

Peak 10 Hosts Finance Clients

CHARLOTTE, N.C. – Peak 10, Inc. today announced that it is gaining significant traction within the financial services industry for managed services and infrastructure hosting. Companies like UVEST Financial Services, Gunn Allen Financial, Equifirst and LendingTree are among a growing list of financial services companies choosing Peak 10 as their technology partner. Read the full release ...

Switch and Data Raises Funding

Switch and Data in Tampa, an Internet exchange and colocation provider, announced that it has closed a $110 million senior bank financing package. The new financing will be used to replace the company's existing credit facility and enable it to fund growth and expansion plans. Read the full story ...

Equinix Connectivity Service Grows

Foster City, CA - Equinix, Inc. today announced that more than 60 enterprises, content providers and network service providers have signed on to the company's Equinix Direct™ multi-network connectivity service. The company also announced the expansion of the service to Equinix's Chicago Internet Business Exchange™ (IBX®) center effective April 1, 2004.
Equinix Direct is the first and only service that enables buyers and sellers of Internet network connectivity to quickly, easily and cost-effectively establish business relationships with each other. Bandwidth purchasers, such as enterprises and content companies, can use the service to diversify their IP connections to any number of network providers in order to reduce connectivity costs and to achieve more reliable performance through the "network insurance" of a redundant connectivity infrastructure. For bandwidth providers, Equinix Direct offers a convenient and low-cost channel to acquire new revenue through the aggregation of bandwidth buyers in a single location and on a single service. Read the full release ...

Looking Glass Lights ServePath Center

OAK BROOK, Ill. - Looking Glass Networks, Inc., a facilities-based provider of metropolitan telecommunication transport services, announced today that ServePath, LLC, the West Coast's leading dedicated server specialist, selected Looking Glass to provide lit bandwidth services for its key Telecom Center SF location in San Francisco. "We are extremely pleased that ServePath chose to utilize our FastGLASS(SM) services at its 360 Spear Street location," said Nick Lenoci, Vice President, Sales and Marketing, Looking Glass Networks. "In doing so, Looking Glass was able to light one of the premier telecommunications buildings in San Francisco and help ServePath expand its service offerings to customers." Read the full release ...

SAVVIS Integrating CWA Assets

SAVVIS Communications says it expects "substantial infrastructure and operating synergies" as it integrates the assets of Cable & Wireless America with its own network. SAVVIS closed on the purchase of CWA today after receiving federal regulatory approvals.

SAVVIS said it will eliminate jobs as part of the consolidation, and would "optimize' the hosting and network operations of CWA. SAVVIS assumed the leases on 15 former Exodus/Cable & Wireless data centers, but gave no specifics on its consolidation and whether all 15 would continue to be used.

SAVVIS said the acquisition adds more than 3,000 customers and the combined company is projected to have annualized revenues of approximately $700 million by year-end 2004. About 1,000 of those customers are believed to be hosting clients.

"We are moving swiftly to integrate the highly complementary SAVVIS and CWA assets, and apply our business model to the combined enterprise," said Rob McCormick, Chairman and Chief Executive Officer of SAVVIS. "We have added thousands of enterprise customers, high performance infrastructure, and outstanding consulting expertise. We are focused on continuing to provide the highest levels of service and a seamless transition for the CWA customer base.

"Going forward, we are excited to introduce this large base of enterprise customers to the benefits of virtualization as an option for high performance services and the potential for additional cost savings for their hosting, network and application services," McCormick added.

Infocrossing Will Acquire SMS

IT outsourcing provider Infocrossing, Inc. said today that it will acquire ITO Acquisition Corp, a data center outsourcing company doing business as Systems Management Specialists (SMS), for $36.5 million in cash and Infocrossing stock.

SMS is headquartered in Orange County, California, and will provide Infocrossing with a West Coast operation to complement its existing presence in Leonia, N.J., not far from New York City.

SMS is expected to add approximately $33 million to Infocrossing's gross revenue during the first year after the deal closes. The two companies' organizations will be integrated throughout 2004, and Infocrossing said the purchase will be "accretive on an earnings per share basis in 2004."

To fund the acquisiton, Infocrossing plans to raise $35 million by issuing new debt and equity.

"The acquisition of SMS is an important step in solidifying our position in the outsourcing market," said Zach Lonstein, Chairman and Chief Executive Officer of Infocrossing. "The deal strengthens our capabilities, expands our market reach and provides the operating infrastructure to target additional growth opportunities.

"With the addition of SMS' experienced leadership team, we have the infrastructure and skills to deliver improved value for our clients and shareholders, and realize our vision of becoming a recognized leader among providers of strategic outsourcing services in the United States," Lonstein added.

Upon completion of the deal, SMS Chairman & Chief Executive Officer Patrick A. Dolan will become President & Chief Operating Officer of the combined companiy. Robert B. Wallach, current President & Chief Operating Officer of Infocrossing, will be promoted to the position of Vice Chairman.

Founded in 1981, SMS is a provider of IT outsourcing services to medium and large enterprise companies. SMS was sold to Marconi, plc in June 2000. When Marconi began divesting operations, Dolan and other SMS managers partnered with private equity firm Riordan, Lewis & Haden to acquire SMS in February 2003.

EV1Servers Opens New Facility

Showcasing the dynamic growth in the dedicated server sector, Houston's EV1Servers this week opened a new data center, which the provider aims to fill with at least 1,000 new servers each month.

That might seem an outlandish prediction for some hosts. But EV1Servers - previously known as Rackshack - has experienced explosve growth in the past year, maxing out both space and power in its existing facility.

Since January of 2003, EV1Servers has grown from hosting about 140,000 hostnames to more than 700,000, according to data from Netcraft. In terms of actual servers, the company has gone from about 1,200 machines to more than 20,000, according to CEO Robert Marsh. In August it maxed out the power supply available from the local utility and had to expand.

The new data center, also in Houston, provides a total of 48,000 square feet of expansion space, which will eventually accommodate another 34,000 servers, according to EV1Servers, which has built out 20,000 square feet of raised-floor space in its $3.5 million first phase.

The extra space allows EV1Servers to add substantially to its inventory of available servers, which has been limited while the company managed the remaining space in its first facility.

EV1Servers has been a pioneer in the discount dedicated server market, pricing servers as low as $99 a month, along with aggressive pricing on add-ons including domain names ($6.49 per year) and secure certificates ($49 a month).

CentrePath Gets Venture Funding

Massachusetts data center provider CentrePath said today that it has received a $4 million investment from a group of venture capital investors, including EMC co-founder Roger Marino and VC firms Greylock and Pilot House.

CentrePath is a privately-held company that provides business continuity consulting to enterprise firms. Founded in 2000, it is based in Waltham, Mass. and has a European office in London. CentrePath's offerings cover the assessment, design, test and implementation of a data transport network.

The funding provides another sign of the investment community's growing confidence in the data center sector and its prospects for future growth.

"CentrePath is well positioned in a fast growing market," said Bill Helman, General Partner of Greylock. "The data center networking market continues to grow as businesses are forced to conform to regulations mandating data availability and recovery.

"CentrePath has demonstrated their ability to execute and has an impressive customer list to prove it," Helman added. "They have used their first mover advantage to develop key, proprietary technologies which will allow them to increase their lead in the market."

"This round of financing will augment our rapidly growing revenue stream and allow us to expand our customer base – which is over 75 to date," said CentrePath CEO Jim Sullivan.

Greylock is a private venture capital firm, with committed capital of over $2.2 billion under management, which has invested in more than 250 companies. Marino co-founded data storage company EMC Corporation, and has invested in tech ventures since his retirement in 1992. Pilot House Ventures invests in the broadband communications industry, including voice, video and data.

RagingWire Wins DR Contract

SACRAMENTO, California – RagingWire Enterprise Solutions, Inc. today announced it has been awarded a contract with Pacific Coast Companies, Inc., a Sacramento-based building supplies manufacturer with annual revenues approaching $800 million. Under the terms of the undisclosed multiyear agreement, RagingWire will provide disaster recovery services that support the building supplier’s North American business operations. Read the full release ...

Ebbers Indicted in WorldCom Case

Bernard Ebbers, former CEO of WorldCom Inc.— now doing business as MCI— was indicted today for conspiracy and securities fraud for his alleged role in inflating the value of the company's stock in light of its weakening financial condition. The charges came shortly after the company's former chief financial officer, Scott Sullivan, pleaded guilty to related criminal charges.
Read the full story at eWeek

Q&A: Alex Twining, MetroNexus

Alex Twining is President and CEO of MetroNexus, a Morgan Stanley Real Estate Funds Enterprise developing 3 million square feet of mission critical data centers in Atlanta, Houston and metro New York City. Twining previously managed $3 billion of Morgan Stanley’s most complex office, apartment, retail and hotel investments, with a focus on large scale development properties. Prior to joining Morgan Stanley in 1998, Mr. Twining was a real estate developer for over 20 years.

1. What's your take on the "State of the Industry?" What do you see as the most important developments and trends of the past year?

The most important trend in metro NYC is that almost all of the existing busted colo facilities were absorbed. In Atlanta, there are still many to go. Amazingly, companies like Citicorp have committed to build a brand new mega data center in NJ instead of taking up some of "carrier hotel" space like our 1.2 million square foot facility (in Jersey City). The financial services industry is still quite muddled about the appropriate response to the SEC regulations. There continues to massive confusion in the market, and people are still not making a lot of commitments.

2. How have bankruptcies and their outcomes affected the competitive landscape? Has it been more or less disruptive than you expected?

Bankruptcies have created our competition by providing lots of raised floor busted colo for the market.

3a. For landlords and property owners: What's your assessment of the current market for leasing of data center space? What trends are you seeing in demand for space and lease rates?

The market is still slow and plodding. After all of the post-9/11 moves are completed in metro NYC, it should slow even more. Major financial institutions while still functioning on bandaids are not interested in spending money on IT unless they absolutely have to. The SEC has as mentioned above added even more confusion.

4. Give us your outlook for 2004. What are the key trends you see affecting the industry?

When will the big guys at IBM, HP, EDS start really picking up steam for outsourcing? When will this drive demand for "mission critical data center" space like those owned for MetroNexus? It should be happening, but it's very hard to predict, since the outsourcing can also mean re-tooling existing corporate facilities.

Q&A: John Wilson, eXchange

As a founder of eXchange @ 200 Paul, John Wilson was an early developer of carrier hotel and colocation facilities. He has 30 years of experience in real estate and has an economics degree from Georgetown University and a MBA in corporate finance from The University of Michigan.

1. What's your take on the "State of the Industry?" What do you see as the most important developments and trends of the past year?

eXchange @ 200 Paul is a provider of carrier hotel space and colocation space in our owned facilities. These tend to be two different industries with somewhat different demand characteristics. With respect to telecom, it appears to be out of "intensive care" but still recovering. We see more activity and an increased willingness to "consider" telecom commitments in 2004. But capital expenditures are still a major obstacle, even when there is a confirmed revenue opportunity associated with the build-out.

2. How have bankruptcies and their outcomes affected the competitive landscape? Has it been more or less disruptive than you expected?

For telecom, less disruptive so far. We have few competitors in the Western U.S. for our core interconnect facilities. We do see lower circuit pricing from post-Chapter 11 telecoms (who have extinguished debt), but these formerly bankrupt companies seem to be lacking ops personnel and capex budgets to be truly price-disruptive competitors. Although circuit prices have certainly continued to decline.

For colocation/data center space, the bankruptcies and dislocations continued throughout 2003. This sector has been hit harder than I would have expected. Still, there are signs of optimism, as fewer "retail" competitors remain in any given geographic area.

3a. For landlords and property owners: What's your assessment of the current market for leasing of data center space? What trends are you seeing in demand for space and lease rates?

It's still looking pretty dismal for most owners. Enterprises will hopefully take large blocks of second generation data center space in 2004. At the retail level, there are fewer suppliers of cabinets and cages in operational colocation centers. We see retail prices for cabinets and cages starting to stabilize, while wholesale prices for large blocks of data center space (to be managed by the enterprise/user) continue to be offered at (or near) shell rents as if no data center improvements have been made to the space.

3b. For service providers and analysts: What's your assessment of current demand for data center services? What products and services are getting the most customer interest?

Demand for retail data center services is still weak but starting to improve. eXchange @ 200 Paul is not a typical colo provider because we operate a Core Interconnect Facility with over 40 carriers in our Meet Me Room. Consequently, we have interest among customers who demand true global connectivity from a wide variety of telecom and IP providers. As such, we do not have too many competitors.

Customers want to know that their colo service provider is financially stable, able to maintain the infrastucture, and able to continue delivering the contracted services well into the future. Carrier neutrality is also very important. Customers want to know that they will not be artificially restricted from gaining access to the broadest range of carriers.

4. Give us your outlook for 2004. What are the key trends you see affecting the industry?

Our views are tempered by the fact that we provide both carrier hotel and colocation services in our owned facilities. Because of this combination of services and our conservative balance
sheet, we are optimistic about our business activity in 2004. However, if we just provided colo space with say three to five carrier POPS, then I would be very worried about the next 12 to 24 months.

With respect to colocation, key trends will be further consolidation, with fewer survivors. Those providers who are committed to spending money to insure quality and reliability of services will eventually prosper.

On the telecom front, we look for no more than 15 metro or regional Core Interconnect Facilities in the U.S. This means that there will be continued removal of marginal carrier hotels from the competitive market place. Any facility that doesn't have a wide variety of fiber providers, metro networks, and IXCs already in place is probably not going to survive as a true carrier hotel.

Q&A: Joshua Snowhorn, Terremark

Joshua Snowhorn is Director of TerreNAP Data Centers, a unit of Miami-based Terremark Worldwide, the developer and operator of the NAP of the Americas, Inc.

1. What's your take on the "State of the Industry?" What do you see as the most important developments and trends of the past year?

I see a strong pick up in colocation outsourcing but the deals are still viciously limited by budgets that have not grown. The core carriers are simply going to neutral data centers like the NAP of the Americas, Equinix, PAIX or Telx for their needs rather than even considering building out their own Central Office PoP's.

Important developments are definitely VOIP and Disaster Recovery. The VOIP guys take small spaces but they are making money which means rapid growth and more players coming into the market. The Enterprise Disaster Recovery space is a monster and is reaping benefits for the high end colo facilities but not as much for the basic colo's like legacy Switch & Data sites, etc.

2. How have bankruptcies and their outcomes affected the competitive landscape? Has it been more or less disruptive than you expected?

We have been only minimally affected by bankruptcies other than Global Crossing. The remaining clients that were NAP specific have simply been acquired by some other existing NAP client (so we just get a bigger single client) to they keep the NAP space out of bankruptcy because of our importance for their network.

3a. For landlords and property owners: What's your assessment of the current market for leasing of data center space? What trends are you seeing in demand for space and lease rates?

Traditional data center clients are virtually non-existent. The client demand we are seeing tends to be public sector or enterprise looking to be close to the center of the Internet. If you do not have a viable and easy Meet-Point-Room, you will lose these clients. The mothballed data center space at 10 cents on the dollar will kill new data center builds for years to come. Rates are dropping to the lowest pro-forma numbers the real estate owners ever considered when they purchased their properties. If you are not "the core property" in a city you should re-tool for other lease tenants.

3b. For service providers and analysts: What's your assessment of current demand for data center services? What products and services are getting the most customer interest?

I can only speak for the NAP of the Americas in Miami which is rocketing every day. We have so much demand from carriers, ISP's, enterprises and the public sector that we are strained to keep up with the RFP's and contracts. Again, if you are the core site for a city then the client almost walk into your door with little effort. Evidence of this is the doubling of the size of the NAP to 300,000 square feet, making us the single biggest NAP in the world as far as space goes. Clients are looking for peering, disaster recovery including hot, warm and cold site colo, data Storage including live mirroring and off-site back-up, enterprise network management and hub and spoke links.

4. Give us your outlook for 2004. What are the key trends you see affecting the industry?

BULLISH!!!!! This year the budget hounds are being released!

Q&A: Rich Lee, Springboard Hosting

Rich Lee is CEO of Springboard Managed Hosting in Cary, N.C., and owns 14 years of experience in the systems integration and Internet data market space. In 1996, Lee founded MPInet, which grew to become the largest privately held ISP in Florida before being sold in 1999 to Duro Communications, where Lee became President. He graduated from Auburn University in 1987 with a bachelor's of science degree in building sciences.

1. What's your take on the "State of the Industry?" What do you see as the most important developments and trends of the past year?

I'm very bullish on how 2004 is shaping up for those of us in the managed hosting sector. I think customers in general are starting to feel comfortable that data center operators left standing are in
pretty good shape and feel much more comfortable outsourcing mission critical services now. The runup in stock prices of some of the players in our space also bodes well for everyone and providers that are generating positive cashflow will continue to do well.

Important developments and trends would seem to be where manufacturers are moving in regards to on-demand computing and virtualization of servers and appliances. We are keeping a close eye on this.

2. How have bankruptcies and their outcomes affected the competitive landscape? Has it been more or less disruptive than you expected?

Bankruptcies and their outcomes have been very disruptive in our space, and I'm sure every operator has had to bend over backwards in regards to sharing financials, etc. that they normally wouldn't have in order to secure business.

3b. For service providers and analysts: What's your assessment of current demand for data center services? What products and services are getting the most customer interest?

Demand for colo and managed hosting will continue to have strong demand, but we are starting to see more customer interest in managed services and business continuity from clents.

4. Give us your outlook for 2004. What are the key trends you see affecting the industry?

I think 2004 is going to be a bright year for data center operators that have momentum and have found a niche. We continue to stay focused on what we do well, and will be rolling out new products and services in 2004 which we are very excited about.

Q&A: Robert Guller, Bandwidth Exchange

Robert Guller is the Managing Member and Principal of Bandwidth Exchange Buildings, L.L.C., which operates more than 500,000 square feet of telecom and data center space. Their customer list includes the nation's premier long haul, local and data providers. Guller received a law degree from the University of Michigan at Ann Arbor and holds an M.B.A. and a B.A. in economics from the University of Texas at Austin.

1. What's your take on the "State of the Industry?" What do you see as the most important developments and trends of the past year?

I believe we are finally beginning to see signs of the long awaited turnaround. The customer base is finally budgeting for new capital expenditure. Meanwhile the demand for hosting and managed services from the middle-market has steadily continued to grow, driving the demand for data center space from providers in this area. The most important development has been the power grid failure and the reliability challenges arising from the failure. This leads to the trend of increased focus on power availability and reliability.

2. How have bankruptcies and their outcomes affected the competitive landscape? Has it been more or less disruptive than you expected?

The bankruptcies have had a clearly split effect. They have illustrated the difference between mature established carrier hotel facilities housing critical infrastructure and those less established latecomers. Where bankrupt tenants maintain economic value generating network operations etc., the leases have been continued through bankruptcy and after to the new, better credit successors. Where raw or even improved space was unused, leases were terminated and placed back on the market. Those landlords with a balanced mix of tenants have been able to survive the temporary cash flow interruptions of bankruptcies relatively unscathed. We have also seen local or regional I.T. companies or web hosting companies move up in prominence as replacement tenants for bankruptcy losses.

3a. For landlords and property owners: What's your assessment of the current market for leasing of data center space? What trends are you seeing in demand for space and lease rates?

Currently the last of the large overhang of empty but improved data center space is being absorbed. This has created pressure on the market as a whole keeping leasing rates stagnant. However, a tremendous amount of this overhang has been absorbed and once it is gone, it is gone. Little new space has been created and improved recently. We expect the demand that created the absorption to remain constant and a healthy upturn in price as the supply shrinks.

4. Give us your outlook for 2004. What are the key trends you see affecting the industry?

Increased capital spending driving new demand, grid computing (Google and similar applications) driving demand for the highest concentrations of power and cooling seen to date in large quantities, the absorption of the remaining abandoned improved data center space and a supply crunch thereafter.

Q&A: Ed D'Agostino, CRG West

Ed D'Agostino is an executive with CRG West, a unit of The Carlyle Group which owns and operates One Wilshire in Los Angeles, The Market Post Tower in San Jose, Calif. and 470 Vanderbilt in Brooklyn, N.Y.

1. What's your take on the "State of the Industry?" What do you see as the most important developments and trends of the past year?

I think that a trend to quality which has been going on for a couple of years continued. As boom era carrier hotels face large losses of business, the remaining business has fled to quality. So the established carrier hotels and their colocation providing tenants have continued to do well.

2. How have bankruptcies and their outcomes affected the competitive landscape? Has it been more or less disruptive than you expected?

It seems to have been less disruptive. The change of hands of facilities seems to have gone smoothly irrespective of weather they were bankruptcy driven. The weak have fled and left some nice assets in the hands of the committed.

3a. For landlords and property owners: What's your assessment of the current market for leasing of data center space? What trends are you seeing in demand for space and lease rates?

Our experience is that the demand for data center space has continued to improve. We have brought more and more conditioned space to the market and we have seen it continue to lease out ever more quickly.

4. Give us your outlook for 2004. What are the key trends you see affecting the industry?

Service offerings seem to be a greater and greater focus as the colocation market place moves from the telecom and ISP owned model to the neutral model.

Q&A: J.P. Balajadia, 365 Main

J.P. Balajadia is vice president of 365 Main, a mission-critical data center in San Francisco that was originally developed by AboveNet.

1. What's your take on the "State of the Industry?" What do you see as the most important developments and trends of the past year?

The industry, from my view, has begun it's climb back from its descent of the past 2-1/2 years. We definitely see a renewed interest in outsourcing data centers by companies of all sizes and a new level of sophistication in the people shopping for it. There have been many important developments over the past year.

On the connectivity side, we have seen the rapid fall of bandwidth pricing from all of the major carriers and re-sellers, the cost reduction has been disproportionate to the decline of real estate prices for colocation.

On the hardware side, we have seen strong interest and growth in the SAN/NAS storage market. It seems that every customer requests to see pricing from our storage vendors.

On the infrastructure side, we have seen a definite reduction in the amount of available space on the market. Our company has toured many of the open data centers abandoned by their previous tenants. In California many have been converted back to their original use - warehouses and office space. Much of the space that has been brought back to original use was never fully built/deployed and would have cost too much in capital improvements to compete with the finished space available.

2. How have bankruptcies and their outcomes affected the competitive landscape? Has it been more or less disruptive than you expected?

The first set of bankruptcy filings in 2000-2001 created a search for financially secure data centers. There was a lot of movement in the industry from one provider to another with shorter contract terms and provisions written in for automatic out provisions if there was change of ownership. As colocation companies continued to file for bankruptcy they also became more aggressive at customer retention - getting court stays and threatening with legal proceedings if leases were broken. Customers also became more callous to the fact that their providers were in Chapter 11 protection and did not want to bother with the pain of moving colocation spaces. Now that everyone is back to square-one with their business plans, it has forced the market to be more aware of where each penny of expense is generated and paid for. Customers are more savvy in their negotiations for new license terms with guarantees, free rent, free move costs, etc.

3a. For landlords and property owners: What's your assessment of the current market for leasing of data center space? What trends are you seeing in demand for space and lease rates?

The current market has been gaining strength for the past six months. We have seen increased traffic through all the data centers in this area, and have been signing contracts weekly. This momentum has been happening in all sectors - government, private (traditional brick & mortar companies), education, non-profit, e-commerce, ISP, storage, ASP, etc. All of the deals have been structured differently. Because it is a demand-side market, colocation customers have been able to require complete break-out budgets for space, power, bandwidth, managed services, etc. and pick and choose which, if any, they will take. It is a much different market from 4 years ago, when providers of colocation were able to dictate a bundled price for all of their services without any competitive pricing for pieces of the contract.

4. Give us your outlook for 2004. What are the key trends you see affecting the industry?

We will continue to see growing demand for Tier IV data center space and a decrease of the older/obsolete and unfinished space. The increased number of requirements and decrease in available space may cause a slight increase in the rate colocation providers are able to demand. The regions of the country that will see the most growth will continue to be San Francisco (Bay Area), Washington DC, Seattle, Miami, Boston and Austin, TX.

Customer service will begin to drive where customers go. As the cost of available space equalizes and the lower level data center space is converted back to other uses it will be of utmost importance to the colocation provider to be able to detail where all costs are at and be flexible enough to tailor each contract. The days of the 300,000 square foot cookie cutter colocation boxes are long over.

Can An SLA Halt A DDoS?

If anyone doubted that Service Level Agreements (SLA) are marketing tools, they need look no further than MCI's announcement that it has introduced "the industry's first Denial of Service (DoS) Service Level Agreement." The new SLA includes a "DoS performance guarantee."

A denial of service (DOS) is an attack in which a flood of incoming traffic causes a web site's link to the Internet to be overloaded, making the site inaccessible. A "distributed" denial of service (DDoS) is an attack in which a large number of compromised systems attack a single target.

Okay, so what does a DOS provision really mean in the context of an SLA? Does it mean that your web site will remain online if a horde of zombie machines starts flooding your IP address with packets? It doesn't, as that's impossible to guarantee, given the volume seen in the recent MyDoom-related attacks on SCO and Microsoft.

What MCI is promising is responsiveness; the performance in question doesn't refer to your web site, but MCI's support staff.
"MCI guarantees its response to suspected DoS attacks within 15 minutes of a customer-generated trouble ticket," the company says in its release.

Don't get me wrong - speedy support is a wonderful thing, and MCI should be commended for building swift response into its SLA at no additional cost to its existing customers. But SLAs are famous for including guarantees that are beyond the control of the hosting provider. An example is the "100 percent uptime guarantee," which has become fairly common in the industry (offered by IBM, Inflow, EDS, Rackspace and C I Host, among others). What's being guaranteed is that the customer will get a credit in the event of downtime - which may be little solace if the downtime has cost you business.

It's worth noting that quickly identifying potential DDoS attacks is in the best interest of not just the web site being attacked, but the hosting company as well. The pipe-clogging effect of these attacks is rarely confined to a single site, but generally creates broader network congestion challenges for the service provider.

When it comes to finding and stopping large volumes of illicit traffic on its network, let's hope MCI is better with incoming traffic than outgoing traffic. On the same day MCI was announcing the new SLA, the company's UU.net unit was cited for being the world's most active haven for spammers, with 151 listings on the Spammers Block List (SBL) maintained by Spamhaus, including 34 known "spam gangs."

Peak 10 to Host eMASON

TAMPA, Fla. — Peak 10, Inc. announced today it has added Clearwater, Fla.-based eMASON to its diverse portfolio of customers. Peak 10 will provide eMASON with colocation and a full suite of managed services including security, monitoring and storage out of its state-of-the-art data center in Tampa, Fla. eMASON provides businesses with systems that deliver Internet applications through networked services. The company recently launched Law Firm Manager, an integrated practice management system for the legal industry. Read the full release ...

e-NC Signs with Springboard

Cary, N.C. - Springboard Managed Hosting has signed a collocation agreement with the e-NC Authority, a grassroots initiative to link all North Carolinians to the Internet. Terms of the deal are not being disclosed. Raleigh-based e-NC, founded by the N.C. General Assembly as the Rural Internet Access Authority, launched on Aug. 2, 2000 with the goal of improving the quality of lives of residents living in rural areas. Its original life span was for three years, but last August Governor Michael Easley signed into law House Bill 1194, which created the e-NC Authority and allowed it to continue the work of the Rural Internet Access Authority through 2006. Read the full release ...

New Carriers for eXchange @ 200 Paul

San Francisco carrier hotel and colo provider eXchange @ 200 Paul today announced agreements with two competitive local exchange carriers, Telekenex and Creative Interconnect.

The two San Francisco-area CLECs will build out their networks and locate their Class 5 switches and Internet routers at eXchange @ 200 Paul's San Francisco facility. The deal gives eXchange @ 200 Paul a total of 44 carriers and network providers within its San Francisco and Santa Clara carrier hotel facilities.

Telekenex is currently expanding its service offering to include bundled, hosted and managed solutions. Creative Interconnect, Inc., headquartered in San Carlos, Calif., targets the small and medium-sized business market and local governmental agencies.

"An increasing number of local, regional, national and international network providers are locating within eXchange @ 200 Paul because of our optimal access to key fiber routes, long term stability and growing list of colocation customers that are seeking ideal bandwidth services," said John Wilson, CEO of eXchange @ 200 Paul. "Telekenex and Creative Interconnect are excellent additions to our roster and reinforce our position as one of the nation's leading carrier hotels."

"eXchange @ 200 Paul offers sophisticated telecommunications and network facilities and strong, predictable financial performance, a rarity in any market," said Brandon Chaney, senior vice president, Telekenex. "Locating our equipment and network at 200 Paul Avenue will help insulate us from any regulatory changes and enable us to leverage eXchange @ 200 Paul's enviable list of network provider and colocation customers."

eXchange @ 200 Paul now houses more than 115 colocation customers and 40 Internet and telecommunications service providers including SBC Communications, Verizon GNI, NTT Verio, Qwest Communications, AboveNet, Time Warner Telecom, Global Crossing, XO Communications, WilTel Communications, Tech TV, Reliable Hosting and MessageLabs.