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RealTime IT News

Sprint Colo Demand Strong in Competitive Market

While some collocation enterprises languish with empty facilities and few customers, Sprint's E|Solution's program is running along smoothly and fueling the growth of more Internet centers around the nation.

Sprint has signed a bevy of customers in the recent weeks, notably Yahoo! on Monday and eBay last month, a sign that while the colo market might be negatively affecting some companies, others are doing just fine.

With 10 Internet centers scattered throughout the U.S., (their southern California center will have a grand opening next week), the recent deals fill up space in Sprint's 93,000-square-foot facilities and give officials ample reason to believe they will expand in other cities.

Keith Paglusch, president of Sprint's E|Solutions division, said the unit has been a success since all of Sprint's IT functions were brought together to assist in capturing the growing number of businesses looking to outsource their Internet functions. The demand in the market, which has waned with the dot com crash, has only slightly modified Sprint's colo plans.

"What we did was we went in and ended up buying or leasing more space in the cities than we had intended because the space was there, it was available and it was reasonably priced. What you will see us focus on in 2002 is you will see us looking to expanding the usable space in (existing) cities, which in essence gives us the same square footage as we would have if we had built in those 18 cities.

He added that plans are in the works to expand in a couple other cities, if customer demand calls for space in those cities.

Kevin Timmons, Yahoo! director of operations, said the Sprint service provides the necessary tools their Web site needs to bolster future growth in data-intensive applications.

"Sprint demonstrates that it meets our requirements for the reliability, stability, expandability, and flexibility of our hosting needs," he said. "Sprint E|Solutions provides an Internet Center infrastructure, power scalability, and direct Tier 1 IP backbone connectivity on a highly reliable network that Yahoo! needs to support our growth into the future."

The competition is fierce for companies with millions invested in collocation facilities and leasing agreements around the U.S. Finding customers is hard enough in an economy that has seen many online ventures go out of business or not even get a start, finding customers when you have rivals like UUNet and AT&T makes it even harder.

Companies like Sprint, UUNet and AT&T have been able to carve out a dominant position in the colo market because of name recognition and the fact they can migrate existing customers from their long-distance, Internet connectivity and burgeoning consulting services divisions. What they don't pick up, the local telephone companies usually have a lock.

Competitive pricing strategies, superior service and access to the same Tier 1 (nationwide) backbone as other companies gave upstart colo companies an entry in the market, but have been seeing a sharp decline.

Broadwing is a perfect example of the downturn experienced by some of the nation's colo ventures. Hoping to build on the success of their nationwide, fiber optic network, the Cincinnati Bell launched an ambitious nationwide, 11 facility deployment.

While initial demand seemed to suggest they would find success in the market, otherwise why build in the first place, Broadwing had an abysmal time trying to find customers. Officials announced back in November they would close eight of the 11 centers.

While no word has been given on an exact date, customers are getting notices of the shutdown.

Paglusch's credits the success and manageability of their current facilities as one of the reasons Sprint is still around to provide colo services today. Sprint, he said, has a history of fiscal responsibility that helped avoid a "build it and they will (hopefully) come" mentality.

"We've been a lot more careful about how we've gone about this from a financial perspective," Paglusch said. "What we've done differently is that we might have 150,000 square feet of Internet space in a facility, but we've not built that all out. What we've done is built out the first 12-15,000 feet and add to that as market demand allows us. We didn't go in and invest more capital than we could see fit and sell, this way we will grow at a much more measured pace than I think others have done."

Shutdowns like Broadwing's are a severe hindrance for application service providers (ASPs) and fledgling online ventures, whose very presence online determines whether they stay in business or not.

Two small Massachusetts companies, Centra and PerkinElmer, Inc., are pinning their online hopes to Sprint's ability to stay open and provide a good place to park their Internet equipment.

Centra, a Lexington Mass.-based provider of business software for live eLearning and collaboration, selected Sprint to provide managed Web hosting for Centra's ASP services.

Under the terms of the agreement, Centra will re-locate its network of hosted collaboration servers to Sprint E|Solutions' Boston-based Internet center.

The move, says Centra, will provide its ASP customers with access to Sprint's Tier-1 IP backbone, its global fiber-optic network.

"Today's business climate has increased interest in cost-effective, easy-to-use Internet solutions to augment traditional business meetings, conferences and training events online," says Deborah Kiyo Louis, Centra's Vice President of eBusiness Operations.

PerkinElmer executives, looking to expand their product line of scientific equipment outside the Boston area, see the Internet as the logical place. By providing business class services and access to a global network, Gary Lee, PerkinElmer IT operations director, sees Sprint as the company to provide those services.

"Sprint's global reach and technical expertise were the primary reasons we selected Sprint E|Solutions as our e-business solutions provider," he said. "These are savvy people that have demonstrated they truly understand our business and how to make it better."