When operating a data center, enterprises frequently look at the closely coupled costs of operating the facility — power, maintenance contracts, and sometimes staffing. However, network expenditures are frequently seen as an “IT expense” and not truly data center related. That is an unfortunate misconception — what most data center decision makers don’t realize is that your data center is the largest contributor to enterprise network costs. Furthermore, those network charges are often considerably higher than all of the other costs of operating your data center — combined.

What are the ingredients for expensive network connectivity in a data center?

  • A small number of carriers – One or two carrier facilities – especially if one is the local exchange carrier (LEC) – will lead to much higher costs for all services. Be wary of “strategic partners” in the carrier sector.
  • Lack of dark fiber availability – How much dark fiber and from which carrier is available in the facility? If the answer is “there is fiber,” then you should dig deeper.
  • Poor proximity and connectivity to carrier hotels – Do you know where you metro region’s carrier hotels are? And how good is your connectivity to them? Network costs in carrier hotels are 90 to 95% lower than in commercial buildings.
  • Lack of competitive carriers – While many enterprises rely on the major carriers like AT&T or Verizon, the presence of smaller, more competitive carriers like Zayo, XO, and GTT will have a strong impact on pricing.
  • Small data centers – Carriers are attracted to volume business and will create pricing models to recoup their costs with an acceptable margin. If they feel a data center is small, the prices will go up to recoup fixed costs.
  • Single tenants – If a data center only has one organization as a tenant, it becomes tougher for carriers to properly model fixed costs being amortized across many customers. This will keep the most competitive carriers out, driving up prices.

What is the ideal carrier network solution for the data center? A large data center with multiple competitive carriers, with direct dark fiber to the nearest carrier hotels that offer high speed wavelength services will lower network costs by 75 to 80% monthly. Conventionally, this architecture is found in carrier-neutral colocation facilities, but is also present in the sort of data centers operated by webscale providers like Google, Microsoft, and Amazon. It’s not impossible for enterprises to replicate this sort of arrangement in their own facilities, but it is difficult, and requires strong subject matter expertise, employment of capital, and negotiating sophistication.