IMN CONFERENCE:
Meet-me Rooms Attracting Attention
Interconnection a key attraction in El Paso's Lakeside deal

July 31, 2001 (San Francisco) -- El Paso Global Networks' purchase of Chicago's Lakeside Technology Center in April was one of the first sales of a major carrier hotel. Was the deal a vindication of a new real estate asset class?
Not necessarily.
"We're not so much interested in the real estate as the interconnection and the meet-me rooms," said James Row, senior vice president of El Paso Global Networks. "We're really focused on interconnectivity, and that's why we got involved in the real estate space. Our base strategy is meet-me rooms."
That message should be an attention-getter for facility owners contemplating whether to develop a meet-me room. Meet-me rooms were the focus of a panel discussion last Friday at the IMN Summer Conference on Developing and Financing Carrier Hotels and Internet Data Centers in San Francisco.
Meet-me rooms are centrally located within carrier hotels, and allow tenants easy access to one another's networks, usually through physical connections using cables. These facilities are key to facilitating the emerging market for bandwidth trading.
Meet-me rooms have been in the news this year. El Paso purchased Lakeside from The Carlyle Group as part of a larger partnership in which the two companies will develop meet-me rooms in three other major carrier hotels - the Atlantic Telecom Center in New York, One Wilshire Boulevard in Los Angeles and Market Post Tower in San Jose.
Meanwhile, LighTrade is currently building their first LighTrade pooling points within MetroNexus carrier hotels in Houston and Jersey City. Both are expected to be operational in the fourth quarter of 2001. In New York, FiberNet is building and managing a meet-me room for the owners of a major carrier hotel at 60 Hudson Street.
Meet-me rooms can be significant revenue engines. Greg Hilz, executive vice president of Pittsburgh-based LightSpeed Developers LLC, estimated that their meet-me room could generate $10 million a year within two years.
They serve an organizational purpose as well, according to John Wilson, CEO of San Francisco-based Wave Exchange, a 350,000 square foot carrier hotel.
"We view the meet-me room as a service to our tenants, and a way to avoid chaos in the building," said Wilson.
But managing a meet-me room can be a complicated undertaking, according to Jeff Moerdler, a partner at Mintz Levin Cohn Ferris Glovsky & Popeo, P.C., who specializes in telecom law.
There are many real estate developers in the carrier hotel space who are learning on the fly," said Moerdler. "They don't belong operating a meet-me room. The challenge is finding an outside provider who is carrier-neutral."
El Paso's relationship with Carlyle gives it a platform for meet-me rooms in some of the nation's busiest facilities. The company, a unit of Texas-based power company El Paso Energy, will be marketing its meet-me rooms under the EBConnect brand.
"Our base strategy is to have an MLA (master licensing agreement) that will cover any EPconnect facility where a customer might possibly locate," said Row. "We're focused on racks rather than cabinets or cages."
Another provider developing multiple meet-me rooms is LighTrade, which has seven "pooling points" operational and another seven under development.
"The current approach to connecting up is not practical," said Peter Varani, LighTrade's vice president for market deployment. "It often requires multiple physical cross-connects. Meanwhile, bandwidth contracts are shortening.
"These two trends are really driving the need to have an automated platform for interconnection within a meet-me room," he added.
But how high-tech do these cross-connects need to be? Row said El Paso will be rolling out photonic switching, a fully-optical technology that can eliminate the bottlenecks that occur when optical signals must be converted to electrical signals for routing purposes.
Optical switches are being offered by network equipment makers including Ciena, Lucent and Nortel. But Row insisted the demand isn't driven by vendors.
"We've actually been approached by carriers to do this (photonic switching)," said Row. "We have about four or five carriers chomping at the bit. It's not like I'm pushing this."
Varani said optical switching will supplement current technology, not replace it. "We believe there will continue to be a need for physical cross-connects," he said.