In the beginning, there was one – one carrier, that is – Bell. What was competition like in the US then? Not good – it simply didn’t exist. How did competition come to be? At first, it was a series of nouns and verbs on several pieces of paper – the Consent Decree. This was an agreement executed by AT&T and US District Court Judge Harold H Green that broke up a powerful monopoly that was detrimental to the long-term success of the US. Although just paper, without this legal groundwork the physical manifestation of competition would not have been possible.
Starting with the very first AT&T-MCI physical interconnection in New York City, an entire industry was born and several others have come into being as a result. One such industry segment is the data center business.
We all live in a time where we have the benefits of the OSI model and its several layers. This allows for a best-of-breed and choice in protocols, and even providers of various services in the higher layers – layers 2 and up. Layer 1 does not have this luxury. The physical networks of legacy copper, COAX and fibre are not able to be switched like wavelengths of light, Ethernet frames, or Internet Protocol packets. That limitation plays a key role in the success, or failure, of physical layer interconnection facilities such as data centers.
In a data center owned by a carrier or service provider, it is almost a given that the facility will be supplied by network services in the higher layers by that same owner of the facility. This model has proven to be somewhat of a success for those that only seek a single source for all their outsourced networking needs, including server-based managed services, but not very effective for those needing direct interconnections to multiple networks. This is where the issue of neutrality comes into play.
A data center that is not owned or controlled by a carrier is commonly referred to as being neutral. This means the tenants of said facility can interconnect to whomever they wish that is within the facility. The value of many of these types of facility is significantly increased by having a greater number of network choices, and is therefore more attractive to those seeking choice for quality, service level and competitive cost.
In either case, neutral or not, the facility and the network(s) are inextricably linked. The data centers need networks and the networks experience demand growth based on buyers having a place to house their equipment. This is all very logical and understood because it is what we know to have evolved over the past 10 years.
The buyer’s demands are changing, though. Ten years ago, a DS3 was considered an enormous amount of capacity; today, there are content providers that request a minimum direct interconnection level of 40Gbps to last mile access networks. What was once considered the realm of only a few elite carriers – ownership of dark fibre – has now become commonplace with even the enterprise network operators. It is this demand growth, skillset improvement and risk mitigation/tolerance that has caused an increase in the appetite for dark fibre.
Based on this reality, the continued success of neutral data centers will be hinged on the presence of dark fibre available for lease to serve the needs of the buyers within the data centers. The buyers will no longer be able to cost-effectively manage their businesses without it, and they will seek and select data center locations based on where they can gain access to dark fibre. If you doubt this just consider what made the successful carrier hotel and data center facilities popular in the first place – lots of fibre available for lease. Then in came the transport networks. Then the IP transit networks, and finally application layer networks such as VoIP and video. From that, critical mass was borne.
Today there is still a decent supply of dark fibre for lease in the major metro areas, but not as much as there was just a short five years ago. Metro fibre is very important for certain applications, but increasingly it is the long-haul, major city pairs that are in demand by the Tier 2 and 3 carriers, as well as enterprise networks that are moving up the ladder looking to take more control of their underlying operations. Ironically, long-haul fibre and transport are the two areas that have seen the most consolidation in the past five years, making that segment much more difficult to source for the buyers. All of this is connected as the growth of networks feeds the growth of data centers globally. Based on history, more growth will occur in the coming years in sites where dark fibre is available than in sites where it is not.
MORE DETAILS
Hunter Newby is CEO of Allied Fibre. He is contributing to the panel session, ‘How Will the Information Superhighway and Data Center Fabric be Reshaped by New Demands of Content and Data?’ at DatacenterDynamics Washington, 21 April.
