cross connects and their pound of flesh

Sun Jun 19 15:30:02 UTC 2016

Actually, back in the T1/T3 days, colos frequently asked what you ran on the cable and then charged you based on the capacity of the circuit - even when it was the same exact cable. Of course, none of us would ever ask for T1 xconn then run ethernet over it.

Colo providers are absolutely worried about drops in xconn revenue. Look at some large colo providers who are public and split out their numbers. You’ll see that the percentage of their profit from xconns is usually more than double the percentage of their revenue from xconns. Put another way, if xconn revenue drops by 10%, their profit drops by over 20%. How many public companies can shrug off a 20% drop in EPS? I submit: Not very many.

This is not surprising. When you build your business on the ignorance of your customers, you are in a world of hurt once your customers learn even a little bit more.

-- 
TTFN,
patrick

> On Jun 19, 2016, at 10:13 AM, jim deleskie <deleskie at gmail.com> wrote:
> 
> I don't buy this.  They sold you one cable before, they sell you cable now.
>  Little difference then we moved customers from a T1 to  T3 back in the
> 90's.  If Colo's can't understand more then 20+ yrs of evolution its hardly
> right to blame it on the market.
> 
> 
> -jim
> Mimir Networks
> www.mimirnetworks.com
> 
> 
> On Sun, Jun 19, 2016 at 11:07 AM, Mike Hammett <nanog at ics-il.net> wrote:
> 
>> Before 100G, you'd need ten cross connects to move 100G. Now you'd need
>> only one. That's a big drop in revenue.
>> 
>> 
>> 
>> 
>> -----
>> Mike Hammett
>> Intelligent Computing Solutions
>> http://www.ics-il.com
>> 
>> 
>> 
>> Midwest Internet Exchange
>> http://www.midwest-ix.com
>> 
>> 
>> ----- Original Message -----
>> 
>> From: "Brandon Butterworth" <brandon at rd.bbc.co.uk>
>> To: bross at pobox.com, dave at temk.in
>> Cc: nanog at nanog.org
>> Sent: Sunday, June 19, 2016 8:55:57 AM
>> Subject: Re: cross connects and their pound of flesh
>> 
>> Dave Temkin <dave at temk.in> wrote:
>>> And as colo operators get freaked out over margin compression on the
>>> impending 10->100G conversion (which is happening exponentially faster
>> than
>>> 100->1G & 1G->10G) they'll need to move those levers of spend around
>>> regardless.
>> 
>> If they've based their model on extracting profit proportional
>> to technology speed then they've misunderstood Moore's law
>> 
>> brandon
>> 
>> 