Toronto connectivity centre almost doubles in size

The ever-expanding amount of data pouring across the Internet has forced one of the country’s major network interconnectity data centres to almost double its size.

Switch and Data, a Tampa, Fla., company which calls itself a network-neutral owner of 34 North American facilities where carriers and content providers can interconnect, opened its expanded Toronto facilities opened this week. Another 22,000square feet of space has been added to the site, bringing its size to 58,000 square feet.

“If the building had more I’d take more,” said Ernie Samperi, the company’s senior vice-president of marketing.

Toronto was one of four sites that just swallowed US$157 million in expansion funding, although the vast majority of that (US$120 million) went for an entirely new facility in New Jersey.

Samperi and Chris Reid, Switch and Data’s vice-president of marketing and communications, said Toronto’s exploding growth demanded the investment. Its major customers, telecommunications service providers including Bell Canada, Telus and MTS Allstream, as well as cable companies such as Rogers and Shaw, are spending so much on expansion Switch and Data had to keep pace.

Samperi wouldn’t give detailed figures, but said Toronto revenues jumped 40 per cent over 2006. By comparison the company’s overall revenues increased 26 per cent in 2007 over the previous year. “It’s a market with very strong demand,” said Reid.

“We’ve got a very competitive market offering,” he added, “a facility in the best building in town, got a great installed customer base.” Eighty per cent of new sales come from that base, he added.

Founded in 1998, the company’s only Canadian site is in Toronto. Others are in major U.S centres.

This week it announced total revenues for the quarter ended March 31 were up 27 per cent over the same period a year ago to $39.8 million. That translated into net income of $300,000. For the year it expects to pull in US$168 million.

The company doesn’t run its own network, that is, interconnect its sites. Instead it acts as a neutral host where providers can connect either directly or through peering platforms such as TorIX, the Toronto Intenet Exchange, or, in the U.S., Switch and Data’s own PAIX service. Tier 1 providers in Toronto include Rogers Telecom (formerly Sprint Canada), Cogent Communications and Global Crossing.

Switch and Data gained the Toronto facility in 2003 with the acquisition of Buffalo-based RACO (Remote Access Company).

What’s driving demand is obvious: File sizes being shipped across the Internet, particularly MP3s and video streaming applications. But Samperi also noted businesses shifting to software-as-a-service models are also contributing to the jump. As a result the number of cabinets customers are installing has been increasing across all of its sites since the end of 2006.

To meet demand for reduced latency and quality of service – as well as to cut costs – many content providers are looking for direct connections to networks rather than pay fees to Tier 1 providers, said Samperi. And the definition of content providers is constantly expanding – it includes everyone from television networks to sports franchises. So, Samperi said, it’s not unlikely that a TV network wants to interconnect to a cableco to make it easier to transmit IPTV content.

The Toronto facility is ideal for American providers who want to reach Canada, he said.

The Toronto facility is in the International Telecom Carrier Hotel on Front Street, which is cooled from water drawn from Lake Ontario. The expansion included putting in raised floors in what had been office space, a fire suppression system, physical security and backup power.

“We had to build everything from the ground up for it to be a data centre,” said Samperi.

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