Qwest consolidates hosting operations

Qwest Communications International Inc.’s recent decision to shutter half of its 16 hosting centres shouldn’t have a dramatic effect on customers, according to the company.

“No one is going to be left out on their own,” says Tom Schill, general manager of Qwest Hosting.

Qwest will help customers in the centres it is shutting find another local hosting provider or move them to one of eight hosting centres that Qwest will maintain. Qwest will close the other eight centres gradually over the next several months.

The centres that will be shut down include the Atlanta, Dallas, Miami, Philadelphia and Seattle operations. In Columbus, Ohio, Qwest will continue to support existing customers but does not plan to add customers to its data centre. Customers in Qwest’s Weehawken, N.J., centre will be moved to the Newark, N.J., centre, and Qwest’s two Sterling, Va., data centres will be managed as one entity.

Occupancy rates at Qwest’s remaining eight data centres – in Burbank, Calif.; Chicago; Denver; Newark; Tampa; Sacramento, Calif; Sterling; and Sunnyvale, Calif. – range from 60 per cent to 75 per cent, Schill says.

Courtney Quinn, an analyst with The Yankee Group, says Qwest is doing the right thing in consolidating its hosting operations.

“It was something they needed to do,” Quinn says. “A lot of carriers have been [prioritizing] their resources in this economy.”

Qwest built out its hosting centres during rosier economic times, Quinn notes. Once the economy began slowing, Qwest couldn’t meet its occupancy goals.

Quinn says she doesn’t believe there’s any risk that Qwest will exit the hosting market, despite the company’s problems this year, which include a U.S. Securities and Exchange Commission investigation into accounting irregularities, a growing debt burden and disappointing revenue results.

The sale of Qwest’s directory business should solve its well-publicized financial woes, at least for the short term, she says.

That there aren’t a lot of financially stable alternatives to Qwest in the hosting market means the company shouldn’t have a hard time retaining its customers, Quinn adds.