The tide is shifting for data center facilities owned and operated by large telecommunications providers. Data centers once offered a tremendous opportunity for telcos to diversify their business model and expand their growth profile. Therefore, providers made investments in their data center offerings, which allowed them to leverage their assets and build another layer of business. Over time, these companies found that it takes more time, energy, and money than they bargained for to deliver these services in a way that drives profit for the business. With growing pressure on their core offerings, telcos are left trying to decide how best to allocate capital and drive further growth.
We’ve seen how this has played out across the industry in headlines. In 2017 alone, Peak 10 acquired ViaWest from Shaw Communications for $1.67 billion; Digital Realty Trust announced its acquisition of DuPont Fabros Technology for $7.6 billion; CenturyLink sold its data center business to investors for $2.2 billion and launched a data center provider called Cyxtera; and Equinix acquired a massive Verizon data center portfolio for $3.6 billion. Data center providers are acquiring telco business all in the name of scale.
Given the fast-paced nature of the business world and growing workloads that enterprises are tasked with handling, a business must feel secure in knowing their provider can scale to meet its needs with little to no downtime. Security and latency are prevalent concerns. A private connection is becoming increasingly important. And with latency also being a concern, businesses are becoming more inclined to move their workloads to the network edge and leverage IT infrastructure strategies that eliminate the delay.
Every company needs to carefully consider who is running its data center environment. Large, global brand recognition has become a significantly less relevant factor for organizations deciding where to house their IT infrastructure. Rather, by making sure you’re working with a partner that is laser-focused on growth, scale, and investing in its infrastructure to build a data center and connectivity ecosystem, you can feel confident that they will remain committed to meeting the current and future needs of your business.
With this shift, mid-sized data center providers are coming into closer competition with larger national providers. But perhaps there’s something in it for telcos and data center providers alike. Could it be a win-win situation? What does the future hold for telco and data center industry decision makers as they manage this transition? As both businesses continue to consolidate their offerings and approaches to create more value, scale, flexibility, and security, what should data centers and telcos focus on to achieve exceptional growth and long-term success?
Make sure you attend the Executive Insight Roundtable on this topic at PTC’18 to better understand the industry shift happening in the telco and data center industries, why it has been a win-win for both sides, and how these businesses should stay one step ahead to support future customer needs.
Learn more about Chris Downie, the CEO of Peak 10 + ViaWest.
