Telx: Expanding presence in US metro networks

18 June 2012 |

Telx is taking the fight to Equinix where it really counts - in the high density US metro networks. Alex Hawkes investigates how new facilities such as the Vantage data centre in Silicon Valley are supporting its services.


Equinix may stand head and shoulders above Telx in the international data centre and co-location space, but in the US market the gap is getting tighter.

Telx operates 17 interconnection and co-location facilities across the US, mainly concentrated in what can only be described as the nation’s premier data centre hotspots. The company owns no less than five facilities in the New York metro area, where it is also headquartered, as well as facilities in the likes of Los Angeles, Chicago, San Francisco, Atlanta, Miami and Dallas.

In the last 12 months, the company has been expanding its data centre portfolio either by extending existing facilities or acquiring new sites. Yet rather than expand into new markets, the company has instead built on its existing presence in high density metro networks.

“We are always interested in areas where you have dense interconnection and in particular markets where you have strategic offerings and strategic buildings,” says Ron Sterbenz, vice president of marketing at Telx.

Last November, for instance, the company announced plans to construct a new facility adjacent to its 100 Delawanna Avenue location, which serves carriers in the New York City and northern New Jersey markets. Adding over 100,000 sq ft of co-location space, Telx began construction of the $200 million cloud connection centre in May 2012 and it is scheduled for completion in late 2012.

“Constructing a facility is a new move for us,” says Sterbenz. “I think it’s possible we would do another one if it was in the right market and at the right price points.”

Likewise, the company has looked to build on its presence in northern California, which is the second largest market for co-location in the US after the New York metro. Most recently, Telx announced that it had added 20,000 sq ft to its San Francisco data centre in a bid to attract new clients across the west coast.

In December it also added 32,000 sq ft in Los Angeles, by becoming the anchor tenant at a new Silicon Valley data centre. The green-designed Vantage data centre campus located in Santa Clara will enable Telx to tap into Silicon Valley’s social networking, e-commerce, gaming, cloud services, storage and internet connectivity needs.

“The Vantage facility is a great example of how we have grown our presence in a dense metro network by establishing a location further down that peninsula. We find that our customers want to have more than one location, and we are now able to offer them multiple sites in those markets,” says Sterbenz.

Sterbenz feels the growth rate of Telx’s expansion in markets such as New York and northern California reflects the accelerating demand from carriers and service providers. It also means the company is able to compete in the prime US markets against data centre and co-location providers with a larger nationwide footprint.

“The great thing about going up against Equinix is there are always customers that want to divert some of their spend into different areas, and we can catch that demand and develop good working relationships with them,” says Sterbenz.

He points to the example of Infrastructure-as-a-Service (IaaS) provider Unitas Global, which in early May deployed private managed hosting facilities within two Telx data centres in Dallas and Miami. A month prior to this announcement, Unitas had selected Equinix as a partner for its Asia-Pacific operations – and so the decision to opt for Telx as its domestic partner is seen as something of a coup at the company.
“Unitas needed to be in strategic markets with high carrier density, and for that we are a good fit,” says Sterbenz. “We don’t have an enormous footprint but we are in the right markets that enable service providers access to critical mass. We are still growing and with that comes a flexibility to enter a new market if our customers require.” Such flexibility, he says, also helps the company support new entrants to the market: “If you’re entering a market, say Chicago or Atlanta, with a new product and you need to test it, our team can help support that move.”

Catering to the vertical markets

As well as expanding its data centre portfolio, 2012 has also seen Telx refine the structure of its senior management team. Sterbenz joined the company in January of this year, having previously worked for rival Equinix where he was responsible for building and executing the segment strategy for two of its largest verticals; cloud & managed service providers and enterprise & alliances.

At the same time, Joe Weiman also joined the company as SVP of cloud services and strategy. Weiman is a prominent figure in the cloud space having held executive leadership positions at HP, AT&T and Bell Laboratories. As well as owning 15 US and international patents in fields as diverse as pseudoternary data communications and distributed storage architectures, Weiman is also renowned for founding cloudonomics – a multidisciplinary approach to valuing the cloud.

Some four months later and the duo have already made a visible impact on the company’s operations. Sterbenz has introduced, for instance, a number of general manager positions each targeting different vertical markets.

First, Shawn Kaplan joined the team as general manager of financial services in April. He was quickly followed by Ken Kajikawa and Tim Byrnes, who were appointed as general manager for content, media and entertainment and general managers for strategic alliances and partnerships respectively. “It’s a model that I worked with before during my time at Equinix and Switch & Data,” says Sterbenz. “It provides a focus for the sales team to sell, and allows the GMs to do the foundation work and pull all the parts together.”

The company, he says, is now looking to strengthen its vertical strategy by possibly creating more general manager positions: “Other areas we hope to explore with stronger dedictaed focus are networks and managed IT providers,” Sterbenz adds. “There are also a few areas we may go after in the future, such as banking, insurance and healthcare as possibilities.”

Building an online community

In late April, the company also launched its new online portal designed for clients to explore Telx’s ecosystem of global network and cloud providers as well as connect with other financial services, media and enterprise customers. Taking elements of social networking, the interface allows participants to build searchable profiles to market services or discover products and request quotes from potential business partners as well as content or cloud providers.

The move reflects a growing trend among data centre and co-location providers attempting to build an online community that helps connect its customers, with Equinix launching its own marketplace in October 2011.

“I think our folks have done a remarkable job of creating the marketplace and I think the response from our customers and the press has been more positive than what some of the larger players have put together,” says Sterbenz.

The Telx Connect Marketplace already has 700 customers and was showcased at this year’s International Telecoms Week (ITW), where Capacity was able to experience firsthand the impressive functionality of the site.

An indicator of how the marketplace might evolve in the future, Telx struck a deal with Global Capacity which enables Telx clients to access Global Capacity’s online pricing platform directly via the site. “Global Capacity is the first company we have worked with to do this. It means our clients are able to receive real-time pricing, place orders and track provisioning for access network services.’ says Sterbenz. “It proved really popular at ITW.”

Going global?

With rival Equinix extending its global reach further through the recent acquisition of Ancotel, does Telx have any ambitions to break out beyond its domestic US markets in the coming years?

“For Telx, it’s a case of which do we do first? Europe, Asia or expand in our existing market?” says Sterbenz. “We are interested in Europe and Asia but a decision hasn’t been made on those two regions yet. We are of course exploring new partners there, but we’ve found brand recognition is particularly important, and so between now and the end of the year raising our brand awareness will be important.”

As a potential starting point, Sterbenz comments that the company is starting to see interest from inbound traffic to the US from Asia. “Expansions in your own markets are always easier because you have an existing customer base and brand recognition. But at what point does that growth start to get shadowed by growth in new markets?”

Key Facts: Telx

History: Telx is a portfolio company of the Boston-based investment firms ABRY Partners and Berkshire Partners. The privately held company was founded in 2000 when it built what it claims is the largest carrier-neutral, physical layer interconnection facility at 60 Hudson Street, New York.

CEO: Eric Shepcaro is responsible for leading and directing the strategy, growth and operations of the company.

Customers: Telx offers network-neutral interconnection and co-location facilities to more than 1,000 carriers, ISPs, content providers and enterprises.

Network: Telx now operates a national portfolio of 17 strategically located interconnection and co-location facilities. The company is headquartered in New York City with five facilities in the New York metro area, two facilities in Chicago, two facilities in Dallas, four facilities in California (Los Angeles, San Francisco, and two in Santa Clara) as well as facilities in Atlanta, Miami, Phoenix and Charlotte, NC.