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Telecity Acquires Globix UK As London Data Centre Market Booms In August 2006, Telecity announced the acquisition of the two UK Data Centres of Globix UK in a deal worth US$62 million. It is the latest example of consolidation taking place in the Data Centre sector. We spoke to the CEO Mike Tobin about the outlook for the Data Centre sector and where the next stage of growth is coming from. Telecity was attracted to Globix because of its two London Data Centres. The main Data Centre is a 7 storey building of which only two areas have been fitted out, but does have existing power feeds and room for expansion. Over the next 12 months Telecity intends to add another 75,000 square feet of Data Centre space in London. “The market in London is very strong, with demand outstripping supply,” says Tobin. Telecity has increased their prices for racks (in the 1 to 5 to 10 racks range) in London by 60% this year but “still finds a queue forming at these prices,” he adds. Telecity has revised its sales strategy to concentrate on the one to ten rack requirement, and not the large space requirements as it believes that margins are better at the mid-range sector. For this space range customer sectors are varied, and include the high end hosting providers (such as AT&T and Verio), smaller ISP’s and media providers like Virgin Radio. Forty percent of Telecity’s sales growth comes from existing customers. The core of Telecity’s business remains colocation “the sticky part which keeps the customer with you.” In this Globix is different, providing connectivity services rather than colocation. The key to Telecity’s future growth is to up-sell additional services such as security (firewall management and DDOS protection). But Telecity does not see its future in providing application hosting services. It prefers to move into the provision of media and content distribution services and work with companies such as Akamai or an NTT. In essence as Telecity in the Docklands already has connectivity to 150 ISP’s and telecommunications providers, it wants to build on this strength. By acting as a meeting place for so many providers, Telecity’s customers can benefit from a full range of connectivity options. Currently Telecity resells Level (3)’s wholesale service as its own backbone, but is building its own Telecity IP backbone to connect its European operations which is to be completed within the next six months. Into 2007 Telecity will be able to use this backbone IP connectivity to see a range of services, for example VoIP connectivity for an SME or Enterprise customer or multiple connectivity for the smaller ISP – who by connecting into one site will have the option of peering at multiple locations on the Telecity network, or perhaps streaming on demand to a number of locations for a special broadcast event. Mike Tobin believes that the London, Paris and Amsterdam markets are all benefiting from an increase in demand from their core markets. Enterprise customers are also looking for more third party advice on security services, as DDOS attacks become more sophisticated specialised help is required. Later this year Telecity intends to recruit a former Interpol expert on security to act as a consultant to its largest customers in this field. The company sees growth as a result of changes in the business model of the Systems Integrator, who is moving away from the business of owning its own infrastructure and providing basic maintenance service up the value chain to providing applications management and consultancy. This means that the SI company is keen to use a third party Data Centre provider. market is fragmented over a series of centres - no Munich user would ever consider hosting in a centre like Frankfurt and vice versa - and the German economy has experienced low growth,” says Tobin, all factors that have hindered the recovery of the Data Centre market. But the future in London, Paris and Amsterdam looks bright. Even though London remains relatively expensive the demand continues to grow. And the Data Centre provider is responding by using existing space, converting “brown field” space and looking for acquisition opportunities.
Have you also seen our other consultant articles? Too Much
Greenwash?
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