"Chain" Survivors

The boom years of the Internet saw a horde of companies pursue the "McDataCenter" approach, building at least a dozen facilities in markets across the country offering colocation and managed services. The chain concept, with its front-loaded costs and high overhead, has been beaten up pretty good in the marketplace. But two early players, Inflow Inc,. and Switch and Data, have survived and are making news this month with milestones.

“Inflow’s total IDC operations are cash flow positive today,” said Mark Hughes, Inflow’s chief financial officer, in announcing this week that the company's Portland, Oregon data center was now EBITDA-positive. It has previously announced EBITDA profitability for centers in San Diego, Minneapolis, Denver, Raleigh, Atlanta and Austin.

The success didn't come without some pain. Back in May, the company closed data centers in Sacramento and Irvine, sold facilities in Dallas and Dublin, and laid off several hundred employees. But in taking those steps, Inflow has earned continued support and funding from its backers.

Meanwhile, Switch and Data is in expansion mode. The Tampa-based colocation provider has made a bid to purchase the PAIX.net subsidiary of Metromedia Fiber Network in a bankruptcy sale.

Naming Names, or Not

The New York Times didn't name the telecom hotel in TriBeCa which is under scrutiny by New York officials, who are concerned about the generator fuel stored on site. But if you've worked in this industry for any amount of time, you know which building they mean. That fact underscores the problematic nature of these kind of media articles.

The New York Times said it wasn't disclosing the address of any of the telecom hotels at the request of city officials, who cited "their potential as terrorist targets." I suppose The Times can say it's being prudent - that so long as a street address isn't mentioned, the building's location remains a secret.

I'm afraid that genie is already out of the bottle. Virtually every major carrier hotel is identified within the industry by its street address. If one has any Internet research skills, these buildings are not invisible.

Telecom veterans are used to speculation about terrorism. Many building owners and managers are understandably reluctant to discuss security or draw attention to themselves. And yet, in a distressed industry, landlords must continue to market their facilities to fill space vacated by tenant bankruptcies and lease rejections.

To be sure, carrier hotel landlords and tenants must be accountable to existing building codes and guidelines. If willy-nilly growth at a particular building has led to improvised solutions that don't adhere to code, public officials can and should seek corrective measures.

But as The Times acknowledges in its story, the tank positioning in the carrier hotel in question may be perfectly legal. The story - which identified an entire class of buildings as potential terrorist targets - wound up on the front page before anyone found out for sure.

Was this article driven by legitimate concern by public officials about terrorists' motives? Would the presence of generator fuel in these buildings have been an attraction to terrorists if they hadn’t read about it on the front page of the New York Times?

Consider another possibility – that the terrorism issue has been used to pump up a local controversy and gain traction for other long-standing complaints. The city’s inquiry seems to be driven by neighborhood groups unhappy about the noise from generators and air conditioners at the building. The resulting inspection provided a springboard for The Times’ story.

Terrorism needs to be taken seriously. Examining potential vulnerabilities is part of the process, but should be conducted responsibly. Any public discussion of terrorism and carrier hotels involves both challenge and risk. In this case, the New York Times hasn’t quite risen to the challenge. Let’s hope it has not amplified the risk.

Exodus List Leaked

The top of the memo says, in capital letters, "DO NOT DISTRIBUTE OUTSIDE CABLE & WIRELESS." So naturally, it's on the Internet already. The document is attributed to a senior VP for hosting services at C&W, and includes a list of Internet data centers it says the company plans to shed.

I've learned over the years that you have to be really careful about placing full faith in "memos" that you see leaked on the Internet. The web site in question is a sister site of a familiar Internet rumor mill with an unprintable name. The information on this site has often been accurate, but not always.

Keeping those caveats in mind, the memo names 10 sites targeted for disposition, identified as BO3, BO5, NY1, NY3, DC9, AT1, MM1, SN3, SC3, & SJ1. If my Exodus shorthand serves me, that means two in Boston, two in the New York region, and one apiece in the DC market, Atlanta, Miami, Sunnyvale, Santa Clara and San Jose. There are two other sites mentioned (DL1 & AU1, presumably Dallas and Austin) which the company will "continue to evaluate and will make a decision within 4-6 months."

Is it legit? You can read it and judge for yourself. At the very least, it will be of interest to customers in these data centers.

Building Again?

This week I came across two stories of companies planning to build brand-new data centers from the ground up. As my 13-year-old son would say: What's up with that? Given the large amount of finished data center space available for sale, it's hard to understand what would prompt new construction at this point in the life of the industry.

First came the story in the Washington Business Journal about Recovery Point, a Gaithersburg, Md. disaster recovery and data storage company that plans to spend $41.2 million to build a 120,000 square foot facility in Germantown, Md. The site will be designed with a data center to accommodate up to 4,000 servers and enough seats for 1,000 temporarily displaced employees. Companies will pay a monthly fee for the option of using the space in the event of a disaster, and additional fees if they ever need to use it.

The notion of getting paid for empty data center space is appealling. I've talked with a number of industry veterans working on similar business plans, but in each case the idea is to take advantage of existing facilities acquired dirt cheap.

Today the Morning Journal of Columbiana County, Ohio has a story about plans by Fiber Media Inc. to build a brand new 70,000 square foot data center to serve as a switch site and disaster recovery center.

"The project we're discussing has the potential to put the county on the map like Silicon Valley" and Boston's high-tech corridor, said Columbiana County Port Authority Executive Director Tracy Drake.

I think we've all heard that one before. It leaves one wondering if Drake has spoken recently with anyone in Silicon Valley or Boston about what's happening in those markets. Still, I suppose that if you're determined to have a data center to serve Ohio towns like Lisbon, East Liverpool or Leetonia, your options are pretty limited. While the telecom crash has left any number of built-out data centers available in the greater Washington area where Recovery Point operates, perhaps the same can't be said of Columbiana County, Ohio.

Maybe I'm the one that's crazy, and this is the right time for contrarians to step forward and build rather than buy. Or perhaps, if you try to stand conventional wisdom on its head for too long, you wind up with dizzy ideas.