Colo Agents Form Consortium

What happens in Vegas, stays in Vegas unless it happens to be the germ of a good idea. S. Chris Palermo, president of agency Global Communication Networks Inc., met with Michael Murphy, president of like-minded agency NEF Inc., Framingham, Mass., during the Channel Partners Conference & Expo, held in March at the Rio All-Suite Hotel and Casino. Both agencies have been seeing a marked increase in the amount of colocation they have been selling in the past few years and each has found wide variances in the terms and conditions from the providers. They decided it might make sense to form an alliance to share information about providers and work toward improving agency agreements with them.

That initial conversation was widened to include Aaron Loehr, president and CEO of Bandwidth Advisors Inc., a Seattle-based company that does 65 percent of its business in colocation; the rest is high-capacity circuits. By comparison, GCN does 30 percent and NEF does about 20 percent in colo. All expect those ratios to increase this year.

The three make up a “Colocation Consortium,” which presently is an informal information-sharing group, but is expected to become an incorporated entity with a charter and dues. It also might expand to include one or two other compatible agents with a similarly concerted focus on selling colocation.

Murphy said the goal of the group is “to share ideas and experiences that we have had independently and get together a collective knowledge base on things that seem to work well in the industry and things that don’t seem to work all that well for us as agents. And, then maybe to effectively look at those components and say, how do we use this group and our experience to leverage better relationships and to get better agreements.”

“Unlike all the telco circuits that are constantly going down in price, colocation is actually going up in price. If you do it right, it’s a more stable revenue stream,” Loehr said.

“Doing in right” means contractual protections. Palermo noted colo agency agreements today are anything but consistent, ranging from