Industry Spotlight: Fred Cannone of TELEHOUSE America

March 12th, 2012 by · 15 Comments

The carrier neutral collocation business just keeps on growing quarter after quarter, and with all the movement toward cloud-based services across the globe it seems very unlikely that trend will change anytime soon.  With us today to tell us more about TELEHOUSE America’s position in this space and its plans for the future is Fred Cannone, Director of Sales and Marketing.

TR: The data center market has become increasingly complex, with some focusing on construction and real estate, some on pure collocation, some on interconnection, and some now on their own cloud services.  What is TELEHOUSE America’s position in the food chain?

FC: TELEHOUSE at this time is truly a data center services provider, and one of the cornerstone features of a TELEHOUSE facility no matter where it is on the planet, is that it is carrier neutral, notwithstanding our KDDI ownership. The whole mission is to provide as broad and inclusive a communications capability as can be had, traditional colocation or dedicated data center suites, scalable IT support or managed services, facility engineering consulting and management.

TR: What is TELEHOUSE’s relationship with Japanese telecommunications giant KDDI?

FC: TELEHOUSE is a privately held company, approximately 66% owned by KDDI, a distant 8% by AT&T, and the rest belongs to Japanese financial companies and one construction company.  The mission when created back in 1987 was to go build carrier neutral data centers around the world.  The first facility was actually our Teleport facility on Staten Island, which opened in 1989.

TR: You also operate several peering exchanges, e.g. NYIIX and LAIIX, how do these fit in to your model.

FC: These peering exchanges are a direct investment in TELEHOUSE America’s carrier neutrality. In about 90% of TELEHOUSE facilities around the world, where permitted, there is some sort of exchange, whether ours or privately held.  The peering exchanges are supplementary to our model and we see them both as a convenient, cost saving network architecture enhancement for our direct customers, along with those colocating in other sites; and a central fixture that demonstrates our carrier neutrality.

TR: A year ago you bought a new facility in the Chelsea Center, how has that rollout gone?  What’s next?

FC:  We didn’t acquire the property itself, of course, we leased the space on the 7th floor that was previously a Lehman Brothers facility.  It did have to undergo reconstruction, which we took in phases.  Customers started moving in pretty quickly, and about 40% of the space is committed, so it’s coming along  but still has quite a bit of space left to expand into.  The NOC rebuild is the last phase for now.

Any new phases will be to augment the power profile based on demand. The really convenient feature about the Chelsea facility is that it delivers a slightly higher standard power density capability than you typically find in Manhattan.

TR: How does TELEHOUSE view further expansion?  Do you prefer to build brand new facilities, or to repurpose existing ones like Chelsea? 

FC: We do both. In London, the new Telehouse West facility was brand new construction.  The Paris facility was a former munitions facility that had to be completely rebuilt, although the buildings had thick walls and there was a lot of power available.  So it depends on the market.  In Manhattan, a new build would be very expensive, but possible depending on the site’s telecommunication and power profile.

TR: Will you be moving beyond New York City and Los Angeles?  What types of locations would interest TELEHOUSE?

FC: We do have interest in expanding beyond New York City and Los Angeles.  We had been looking in New Jersey and the West Coast for a little while now, for instance. The ideal location has to be close to a confluence of connectivity and have abundant power capacity.  Although we’re capable of building a data center out in the middle of nowhere, it doesn’t mean that we should of course.

TR: The cloud revolution is in full swing, will you be seeking to power the development of your customers’ cloud efforts or will you be offering your own cloud services?

FC: Actually, we really want to do both.  We wish to continue being a data center resource for “cloud” services.  We want to service their interests, and are certainly doing so already.  Our clients are excellent at what they do, so why would we want to reinvent the wheel?  If anything, we may augment that capability in delivering it effectively in areas or forms underserved or as our clients wish, which may include using existing clients resources. Our philosophy is not necessarily to be the first to market, but to rationalize what’s available in the marketplace.

But we also have been offering cloud services on our own or via partners, depending on geography. Where there is no strong presence or there is a requirement by our clients, we may offer public and private cloud solutions.

TR: How is the overall economy affecting the collocation business? 

FC:  I’ve seen a couple of cycles now; and there’s no doubt that after the 2008 economic crisis, growth has been steady since 2010.  In 2011, we saw increased demand internationally above 2010, and in 2012 we continue to see the same.

TR: Is supply keeping pace with demand? 

FC:  Certainly demand is strong.  We see a lot of our competitors building out, and I haven’t heard anyone complaining they can’t fill a data center. But at some point we should expect some leveling off. At this time, it is a very competitive so we have not seen pricing spiking upward, so apparently demand is still outstripping supply.

This is due in part to wholesale space offerings, historically servicing the larger space and/or power requirements of single tenants, moving down closer to the retail market.

TR: Thank you for talking with Telecom Ramblings!

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Categories: Datacenter · Industry Spotlight

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15 Comments So Far

  • level3 says:

    Thank you Rob Powell for shinning the spotlight on TELEHOUSE America & KDDI.


    Upon opening, Chelsea 85 10th Avenue Customers’ will have telecommunications service available from the following carriers/ISPs, available at low introductory cabling and cross connect rates.

    AboveNet Communications
    KDDI America
    Level 3 Communications
    Sidera Networks
    XO Communications

    * Level 3 New York 1 Gateway (111 8th Avenue)

    * Level 3 New York 2 Gateway (85 10th Avenue)

  • level3 says:

    KDDI Corporation, a growing communications carrier with a proven track record in Japan and a longstanding reputation for quality and reliability, is the only telecom company to make Citigroup’s ‘top 20’

    Ideally positioned to be the world’s “one-stop solution provider,” KDDI Corporation is the parent company to KDDI America, its U.S. Division, and TELEHOUSE – the world’s leading data center provider, delivering optimized global networks through 42 state-of-the-art data centers in 22 cities.

    Telehouse America is part of the worldwide KDDI Corporation, our telecommunicaton parent company headquartered in Japan, and enjoys an extended reach with TELEHOUSE colocation and data centers found on nearly every continent.

  • level3 says:

    New York City’s newest colocation facility is TELEHOUSE’s latest addition at 85 10th Avenue site in Manhattan’s Chelsea district. Opening on January 24, 2011, the carrier neutral data center offers 60,000 square feet of colocation space on one floor with over 4mW of power.

    Level 3 Communications has been in the same building for a long time with 88,354 sq. ft. total space, so does Level 3 now have two locations in the same building at 85 10th Avenue?

  • Rob Powell says:

    level3, We get your enthusiasm for Level 3 and its impending world-conquest, but do you think you could maybe tone it down just a tad??

  • CarlK says:

    Rob, would you be so kind to explain to your board why the term “owner” is utilized on 51 of the 52 data centers listed here including the Google building that we know they, Google, bought somewhat recently? Are any of these buildings structured as “co ops” for example? tia

  • Karl says:

    The problem with Fred’s story is NYIIX, Telehouse’s weakest link. They were down again for a few hours last week. Hopefully Telehouse will invest in some competent leadership so they can match their industry-leading collocation with an industry-leading peering platform.

  • B says:

    I am not sure why CarlK is fixated on Google…maybe a hangover.

    Anyway, Level 3 and other companies sometimes fudge a little on ownership – they shouldn’t. 111 8th is/was so expensive L3 doesn’t have the horsepower – so some of us have to resort to common sense…sorry CarlK…

    Telehouse occupies the former Lehman Brothers data center and purchased the entire 85 10th building. Level 3 owned it and sold it in 2004 to a NYC real estate developer who developed Chelsea Market, across the street (Ira Cohen). This is the reason why Level 3 has so much space in the building, they used to own it, and I am surprised (as I am sure they are now regretting) they sold a critical piece of real estate in a down market…that now has a resurgence and effects Level 3’s upside in the biggest city in the country. AND, Telehouse is their landlord….the OPS guys are sick over this…

    • Rob Powell says:

      Telehouse didn’t purchase the whole building, just the former Lehman space.

      I wasn’t aware that Level 3 owned it back then, but anything they sold in 2004 would fall under the category of balance sheet survival.

      The industry as a whole definitely fudges the whole concept of ownership, both when it comes to fiber and data center space. They tend to own the business, but generally lease the real estate itself – with the exception of the REITs of course!

  • CarlK says:

    B, thank you for the review of Level 3 selling prime NYC real estate to Ira Cohen in 2004. Time really does fly, but do you recall the terms of their sweetheart, long term lease while you’re at it?

    Business of course is not linear for any company. Think of Google writing off its CLWR investment recently, recouping little more than ten cents on dollar one or a ninety percent loss having been booked. Think of WEB’s bad “natural gas” bet just as recently.

    If you want to pick on Level 3, there’s always the complete destruction of RCN equity on their balance sheet, as well as that silly two pronged hedge costing owners $62M in valuable cash that Crowe and Patel gave away to their investment bankers at Merrill Lynch prior to it being melded into B of A by their Goldman MANIPULATING friends, or implosion was sure to ensue $62M win from Level 3 or not!

    We all eat a little crow–life is TOUGH–from time to time, B. It’s part of the humbling effect to keep us human on the journey.

  • schmuckinsurance says:

    An idea Rob: WEB said you should invest as if you have a punch card with the ability to make 20 investments your whole life so do them wisely.

    There are now two posters out there that have resorted to endless spamming which detracts from this board. It made me think why don’t you limit the number of postings from each contributor to say 10 per month. That is a large enough allotment that people can still nearly freely post but it keeps the rest of us from having to deal with the constant visual pollution from the spammers that detracts from what your site I think is setup to do which is be a industry information repository.

    • Rob Powell says:

      The problem is that such a solution would require registration, and many valuable commenters here simply prefer not to go through that.

      On the other hand, I think we may finally be ready for a Ramblings Forum, which might create a better place for extended discussions amongst registered members and have features like ‘ignore’ etc. The underlying software has evolved to the point that it should do the job, while this site’s audience has grown enough to support it – I hope.

  • Carlk says:

    schmuckinsurance: If flawed analogies designed to signify your desires are what you excel in, you’re doing a fine job. In the future, I will try to avoid everything you write, because if I allow myself to fall prey to flawed analogies like you present, I will certainly lose my ability to look ahead by anticipating the horizon while robbing myself of investment opportunities which you are very good at doing.

    Your moniker makes clear your thinking skills tied to insurance, it appears. Spam or stupidity, stupidity or spam, which is worse?

    Define spam while you’re at it, because spam the way it is being presented here by how many posters again, may only be in the EYES of the BEHOLDER versus STUPIDITY which is rarely misunderstood? imo

  • schmuckinsurance says:


    Warren’s intending people to think before they act, I(and so does the rest of this board) wish you would think before you write.

    Rob knows I am serious and everyone but you realize that your brand of blabber crowds out informed or sincere opinions.

  • CarlK says:

    schmuckinsurance, although your moniker’s counterintuitive nature–you’re no schmuck on insurance related matters–might lead others to believe you are thinking before you act, what are the odds that the content in the comment sections of blogs like these as well as elsewhere, are not completely reflective of actions already taken, along with the corresponding biases supporting such actions?

    The rare exception might be the blog owner, I don’t know. It’s good to see him considering Fidelity’s stake over the pond with Colt as another MNA opportunity for those “consolidators” in the space still.

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