Obtaining Central Office Facilities

Network operators can obtain suitable central office facilities in a number of ways. They may
simply utilize leased space in a commercial building after obtaining the owner’s permission to
make the necessary physical modifications to house the equipment. They may purchase a
building or an office condominium. They may lease rack space in a large data center or “telco
hotel.” Or they may collocate in the central office of an incumbent carrier.
The first two ploys entail heavy initial expenditures for construction and installation. If the
central office is of any size, and the operation lacks staff with the requisite installation experience,
the network operator may need to retain the services of engineering design and
construction firms specializing in building network hubs, and such services do not come
cheaply. Design and installation fees will generally run well into the tens of thousands of dollars,
but I cannot be much more specific because installation requirements vary so markedly
from one site to the next. Such services can and should be solicited through competitive bids,
but price should be only one consideration. Special expertise is required for telecommunications
installations, and firms whose experience has been limited to small corporate LANs are
likely to be deficient in skills and experience.
Commercial data centers and telco hotels can save the network operator much time and
labor because many of the necessary amenities are already in place, particularly in the case of
the latter. Physical security, backup power, and the situation of the equipment racks will have
already been addressed in most such facilities, and varying connections to the public switched
telephone network (PSTN) and the Internet will already be in place. The more elaborate facilities
may even broker specific arrangements with owners of long-haul fiber for ensuring that
service-level agreements can be maintained and that latency through the Internet can be confined
to a certain maximum value.
Leased facilities of this nature have little uniformity. A telco hotel, for instance, is an operation
that has been designed from the ground up to serve the needs of service providers,
particularly competitive service providers. Other ventures specialize in serving Internet service
providers (ISPs) or in providing Web hosting facilities for private companies, and they are not
apt to stress long-distance peering to the same extent. Still others are intended to provide
space for enterprises to place their data centers or data storage equipment, and these may provide
no carrier-to-carrier interconnectivity.
The problem with all such entities is, of course, recurrent cost. Well-constructed and wellmanaged
data and telecommunications centers are expensive to build and operate and often
occupy prime real estate, thus imposing high recurrent costs on the operators of these centers—
costs that must be recouped by charging tenants top dollar. And, at least in the United
States, the number of such centers has been diminishing sharply after reaching a peak in 2001.
With the wave of bankruptcies afflicting the dot coms and competitive local exchange (CLECs),
both of which had acute if often temporary needs for such facilities, the business case for operating
them grew steadily less favorable. Still, a number survive, and for the wireless network
operator attempting to launch a network, they may fulfill a need. I suggest, however, that the
ownership of one’s own central facilities is a desirable long-term goal.
As for the collocation of one’s central office facilities in someone else’s central office, avoid
it. Telco incumbents do not want to have interlopers on their premises, and if forced to do so
by regulation, may do all in their power, up to and including outright sabotage, to impede the
competitor, and, as you have seen, DSL independents have made numerous allegations to that
effect. In any case, a wireless operator has far less reason than a DSL operator to be in a telco central office and should not contemplate doing so in spite of the excellent facilities maintained
by the incumbents.