cross connects and their pound of flesh

Sun Jun 19 21:40:59 UTC 2016

> From: "Patrick W. Gilmore" <patrick at ianai.net>
> Colo providers are absolutely worried about drops in xconn revenue.
> Look at some large colo providers who are public and split out their
> numbers. Youll see that the percentage of their profit from xconns is
> usually more than double the percentage of their revenue from xconns.

Perhaps their investors should have looked closely at those figures
and priced according to risk.

> 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.

Tough, revenues can go down as well as up. If you gouge your customers
they will try harder to find ways not to give you money.

If I have to do an xcon I prefer to do it in Telehouse rather than
Telecity as Telecity is 100% more install and 32% more annually
(Telehouse also discount for extra cores). Some USA DC are way
more expensive than either of these UK DC (for now, UK DC only
moved to the recurring fee model after it'd been established
elsewhere)

They've probably been using xcon revenue to make it look like they are
still growing quickly to inflate share price. A few aquisitions can
hide reality for a bit longer. Capitalism is great but it does lead to
unreasonable expectations such as never ending growth

xcon revenue worked for Telecity to get a nice buyout, be interesting
to see how their new owners handle it.

brandon