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March 2018

The Meet Me Point: Queen Bee of the Wholesale Networking Hive

The Meet Me Point: Queen Bee of the Wholesale Networking Hive

All networks lead to important destinations.  Cow paths lead from barn to pasture.  Highways and railroads lead to cities.  Merchant ships travel shipping lanes to major ports.  And telecom networks lead to meet me points where they connect with many other networks.

Telecom meet me points (or carrier hotels), are quite simply the most valuable per-square-foot properties in wholesale ecosystems.

And interestingly we can compare the organization of wholesale networks to that of a bee colony.  Now bees are not solitary insects who can survive on their own.  Bees are more like humans: they are social creatures who specialize in certain tasks and can only live by networking with each other to build/maintain the hive and bring the honey home.

But though thousands of worker and drone bees can live in a colony, there’s only one queen bee.  In fact, the queen bee is the very reason the other bees are networked together in the first place.  For the entire colony’s mission is to support the queen bee’s job of laying eggs — as many as 250,000 a year.

And if the queen bee should die, well, the bees go absolutely crazy and there’s a mad scramble to find another queen bee to become the center of the hive and allow the network to sustain itself.

Well on a recent trip to Long Island, New York, I met a veteran networking entrepreneur with a long history of planning, architecting, and creating the “queen bee” interconnection points that are central to every wholesale hive.

He’s Hunter Newby of Newby Ventures, a strategic advisor for 1025Connect, one of the most important meet me points on the East Coast. [ And irony of ironies: Hunter Newby’s name describes his profession: Hunter (and creator) of sites for New Bee hives for the wholesale world! ]

In my interview with Hunter, he not only discusses the value proposition behind 1025Connect but also reviews the strategies and deal-making principles essential to creating successful meet me points in the first place.

Dan Baker: Hunter, from the outside of 1025 Old Country Road, you could easily confuse 1025Connect with a data center.

Hunter Newby: Yes, Dan, we are not in the data center business.  Our mission is to be a core interconnection point.  Data center space and services hive around meet me points and physical fiber junctions.

Now there are plenty of meet me points that do substantial data center business.  But to call a carrier hotel a data center is to do it a great disservice.

Yes, a carrier hotel typically has servers in it, but that is not the best and highest use of the space.  The value is in the cross connects.  People want to get close to the fiber.  Data centers, meanwhile, are a dime a dozen, especially in a place like Ashburn, Virginia.

How many companies build data centers?  Probably a hundred or more firms build them in the US.  And what are all those data centers in Asburn doing?  They are connecting back into the meet me point at 21715 Filigree Court, the original Equinix building in Ashburn.

Another prominent hybrid carrier hotel is at 1950 Stemmons Street in Dallas.  Now Stemmons is a giant place with big rooms chock full of servers, but those servers came there primarily because the meet me point was there.

In fact, when you think of it, it’s rare when a carrier hotel was really built from the ground up for that purpose. 60 Hudson Street was built for telegraph.  Rights of way, fiber paths — even dumb luck — are the catalysts for meet me points forming.

So please tell us about the value proposition behind 1025Connect.

Dan, 1025Connect began in 2007 with a deal between the building owner and myself to create a meet me point for the submarine cables that land on Long Island, New York.

At the time those cables were being backhauled directly to 60 Hudson Street in New York, the home at the time of Telx, a company which I and others started up from nothing in the old voice days.

The inspiration for 1025Connect was that a mid-span meet point was needed for the cables out here on Long Island where, if a catastrophe ever happened to Manhattan, we could bypass the city.

There are also big costs in connecting one submarine cable to another in a large building of a big city like New York.  The wiser thing to do is to connect those submarine cables closer to where they land on the beaches in eastern Long Island.

So being in Westbury, Long Island, in a county of 2 million people, we were only about 35 miles east of the city.  And from a non-regenerated light perspective that’s another advantage.

Strategic Location of 1025Connectd

On your point about regenerated light, I’m curious about latency.  I know that firms such as financial traders and banks are keen on having super low latency connections, but it sounds like demand for very low latency has expanded.

Dan, the big content providers are fanatics about low latency.  One study I read said even a 2 millisecond delay costs big content providers like Amazon, Microsoft and Facebook billions of dollars a year because people navigate away from pages if there’s any delay at all.

Latency losses occur at multiple levels.  Router hop latency is a very big deal.  Even on your home TV there’s some latency loss from the connectors.  It all depends on the distance, the framing, and the protocols.  You’re talking milliseconds here, and those milliseconds add up.

So this is why the content guys are keen on building their own data center, their own submarine cables, their own long haul fiber, their own edge nodes — they simply can’t rely on carriers to do it for them.

Content providers basically want to get as close to the eyeballs as they can — whether it’s fixed line or mobile.  Investing a few hundred million dollars to cut out latency is a very good investment for them.

Hunter, can you walk us through your strategic thinking as you launched 1025Connect?  What are the factors that have made it a successful meet me point?

Well, the rules for launching a meet me point will vary quite a bit by location.  The unique geography of a city and current network assets can make all the difference.  But looking at 1025Connect, here are some of the thought processes and principles I followed:

  • Forecast with market research and intelligence — You can’t make money building in places where there’s weak networking growth.  When we planned 1025Connect 12 years ago, we figured the demand for mobile and wireline content would continue to grow massively, which it has.  We also banked on New York remaining a major networking entry point to other continents.
  • Locate the meet me point closer to the subsea landing — My ultimate goal was to create a subsea meet point.  But it takes a long time to reach that goal.  The key insight, then, was recognizing that for latency and other reasons, customers would want to shift their interconnects to a meet me point that’s closer to the undersea landing point on Long Island.
  • Avoid the network risks of landing in a large city — In a mega-city like New York you have many points of potential failure: bridges, tunnels, manholes, backhaul restrictions, and more.  There are many tricky problems you face trying to get into Manhattan.
  • Deliver cost savings and economies of scale — Fiber routes in the city essentially followed in the footsteps of copper and telegraph before that.  The largest meet me point in Manhattan is the former Western Union telegraph building of the 1920s.  But getting to that building adds costs. 

    Nigel Bayliff, CEO of AquaComm saw the logic of cost savings.  That’s why he made 1025Connect the first meet me point for AquaComm’s 2016 trans-Atlantic cable, and they are supported by a number of the large content providers.
  • Develop a neighborhood networking revenue stream — First things first.  To get rolling and help the meet up point become commercially viable, it’s key to also deliver networking at the local neighborhood level.  Here we are very fortunate: Long Island has a large population. 

    So it’s the best of both worlds.  If we were located further to the east on Long Island, we’d hit rural areas where there’s not much demand.  Conversely, as you get closer to Manhattan, your cost of doing business gets too high.
  • Get in the trenches with the metro guys — To drive neighborhood-level networking and prepare the meet me point for bigger customers to come, its crucial the metro fiber providers to support you.  If the only facility in the neighborhood is owned by an RBOC, the incentives are just not there. 

    The metro guys know how to tame the ugliness of the last mile — the manholes, poles, conduits, access points, tying into the RBOC, you name it.  So we sat down with the metro guys, looked at their maps and made our deals. 

    Today, all eight of the local fiber providers are in the facility.  At 1025Connect, the Metro guys also built the fiber from the landing systems and all the way to Manhattan.  And today we sit on top of the mobile backhaul aggregation point for Crown Castle, the largest fiber and wireless tower company in the world.
  • Reach out to Undersea and Cable Providers — Once we had three metro fiber providers supporting 1025Connect, people began to see a vibrant interconnection facility in-progress. 

    So it’s at that point I reached out to Jim Poor of Global Crossing and said, “Hey, the same fiber you used to go from your landing station in Shirley [eastern Long Island] all the way to 60 Hudson Street should stop at our meet me point building first. ” At the time, Jim was running their whole global network strategy — and he loved the idea. 

    Then when Level 3 bought Global Crossing, we eventually got three subsea cables of theirs — MAC, Yellow, and AC-1.  And at that point, one win started to follow another.  Pretty soon we attracted Cablevision who had a core router in Hicksville, one town over.  Pretty soon we had multiple tenants here providing competitive access metro and competitive international.
  • Double down as a submarine cable hub — Our pivotal strength today is our submarine cable interconnection facility.  There’s nothing like this on Long Island. 

    Today we connect to multiple submarine cable paths from 1025Connect to Europe and Latin America.  That’s quite unique: not many buildings have direct access to submarine cables.  We are also the eastern-most interconnection point in the New York area, reducing latency for those coming from Europe.  And in 2016 we became the landing meet me point for Aqua Comm’s high capacity AEC1 cable from Ireland.
  • Deliver a fiber bypass around big cities — Another crucial thing we did was ensure we had multiple bypass fiber routes around New York City.  They can go direct to New Jersey, White Plains, Connecticut.  The MAC cables go to St. Croix and then back inland to Florida.  It goes to Hollywood, Florida, then down to Miami’s NAP of the Americas, the gateway to South America.
  • Don’t nickel and dime your customers — Once your neutral interconnect facility is built, we don’t charge monthly recurring cost connection fees.  That’s a big deal: customers hate those recurring charges.
Hunter, many thanks for giving us the inside story on meet me points and the history behind 1025 Connect.  Great stuff.

Sure, Dan.  In fact, the action never stops.  We’re excited about Altice from France who has a couple million subscribers and growing right here on Long Island, and Altice is highly attractive to the content providers.

We also announced an agreement with the German internet exchange DE-CIX who came to New York three and a half years ago and is now the second largest internet exchange here.

They are well-positioned to become the largest: they have a distributed fabric with multiple core and edge nodes in and around New York and New Jersey.  This month they are installing their new switch, which will be the eastern-most nodes in their New York/New Jersey mesh.

So, I think you begin to work the logic in your head.  Hmm.  I wonder which meet me point the Europeans should use to pick up their U.S. content?

Copyright 2018 Top Operator Journal

 

About the Experts

Hunter Newby

Hunter Newby

Hunter Newby has amassed a deep subject matter expertise as an owner and operator in the network real estate business over the past 18 years.  He is the Founder and CEO of Allied Fiber and is a strategic consultant at 1025Connect.  Hunter is also an investor and partner in several other neutral colocation businesses including; Colo ATL, Fibre Centre, Netrality and NJFX.  Prior to founding Allied Fiber, he was a founder, Chief Strategy Officer and a Director of Telx.

Hunter has been involved in over $750 Million of transactions in the space.  He is a recognized authority in the industry, has served on several Advisory Boards, is a published author, public speaker and the recipient of numerous awards including being named to the Global Telecoms Business Top 40 Under 40 in 2010.  He earned a B.S. in Communications from Drexel University.   Contact Hunter via

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