May 7, 2003 -- There's more than digital bits and packets flowing through the cabling in tel^x 's two data centers in the 60 Hudson Street in New York.
There's business in those pipes, which allow the 100-plus telecom providers in the landmark carrier hotel to exchange traffic between their networks. The tel^x facility, known as a "Supernode," forms what the company says is the world’s largest marketplace for communications services.
Further growth lies ahead, according to tel^x president and CEO Rory Cutaia. After a strong 2002 and a record first quarter of 2003, tel^x is profitable and actively seeking acquisitions. "We've just had the best quarter in the history of the company," said Cutaia.
It's also launched a push into the enterprise market, offering large New York corporations the chance to slash local loop costs by connecting their telephone closets directly to 60 Hudson Street.
"This idea really appears to be getting a lot of traction," said Cutaia, who called it the "near-term future for tel^x ."
For tel^x , success has been driven by two factors: a great location, and an intense focus on the needs of their carrier customers.
"Our philosophy is that if our customers grow and prosper, we'll grow and prosper," said Cutaia. "We make it our business to understand our customers' business."
tel^x learned about carriers' needs in its early days in 1997 as a reseller of long distance to calling card companies. Those were the go-go days for that business model.
"Because we were doing such an extraordinary amount of business, many of the carriers built out and extended their networks to our facility so they could compete for the business," Cutaia recalled. "It became a magnet for those carriers, because they knew there would be business for them."
As the calling card business waned, customers began asking tel^x to help them connect to other network providers at 60 Hudson Street - most of which already had fiber into the tel^x data center. The company quickly developed a service menu based around interconnections.
" Here was a new business where carriers who were otherwise competitors had equipment next to each other," said Cutaia.
tel^x had the opportunity to expand, but Cutaia didn't see the economics of a having data center on every corner.
"We focused on our core assets," he said. "We didn't subscribe to the concept of 'build it and they will come.' No carrier wants to incur the costs to build out to a facility and then be the only one there."
Fortunately, tel^x was able to build its business at 60 Hudson, one of the most wired buildings in the world. With more than 100 telecom providers in the building, Cutaia didn't have to look far for customers. Between two data centers on the third and ninth floors, tel^x manages 40,000 square feet of space which serve as a neutral marketplace in which customers’ products and services are cross-marketed to one another.
Recently tel^x has formalized that process with quarterly Customer Business Exchanges, which being customers together over wine and cheese and allow each provider to make a one-minute pitch highlighting its services and needs. Attendance has grown from 50 for the first event to more than 300 for the most recent exchange.
It's also reaching out to large enterprise companies in NYC, offering to connect their site to 60 Hudson so they can connect directly to network backbones. Then tel^x organizes an RFP process in which existing networks at 60 Hudson can compete for business of large enterprises, with benefits to both.
The business model has reached a stage where Cutaia thinks it can work - selectively - in other markets.
"I'm looking for us to be in several cities beyond New York by year's end," said Cutaia. "We're aggressively pursuing that."