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

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

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.”

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