A very cold and icy evening in Denver. One of my new data center customers, WBS Connect, was based in Denver under the technical leadership of Scott Charter. Scott gave me a call, and asked if I had the time to get together and meet, since I was in town for some business meetings and he had some ideas I might be interested in.
Several hours later, with staff at the Rialto Café getting annoyed, and my head hitting the data absorption and comprehension threshold all of us experience when talking with people a whole lot smarter than us, I knew I’d met a true visionary.
Ideas. Ideas about technology, about business, about people, and about the world we live in. Beyond the technology, Scott is a guy who genuinely cares about people – an excellent role model for young entrepreneurs.
Pacific-Tier: Today we are talking with Scott Charter, who is with GTT. Scott, how do you like Hawaii?
Scott Charter: Love it. I’ve been here a few times (Hawaii) before, but this is my first time on Oahu.
Pacific-Tier: We’re at the Pacific Telecommunications Council annual meeting. Scott agreed to sit down and talk with us a little bit. Scott, you’ve had some changes professionally – what’s going on?
Scott Charter: December 16th, WBS Connect, my company that I co-founded in 2002 was acquired by GTT. The deal had been brewing a couple months prior (to December), but we announced it December 16th and we’ll call it the end of January when the integration will be complete.
Pacific-Tier: So what does that bring to the business? Aside from obviously the acquisition and things, does that bring any benefits to WBS, your customers, or to the business that didn’t exist before?
Scott Charter: That’s two pointed questions. I’ll start with my customers at WBS Connect. They will continue to receive the same level of service they did from WBS Connect, and now from GTT, with an augmented NOC (Network Operations Center), we are a much larger entity as a publicly traded company. So from a financial perspective it is a much healthier organization that is continuing to grow.
We feel that what we brought to GTT was something they didn’t have, and that was a network. GTT was a switchless, global network integrator, and it was an easy add-on to give them a global Ethernet backbone.
Pacific-Tier: So how about the services WBS Connect was offering? Video services, and different types of value-added services to your network, where do they exist today?
Scott Charter: The growth on where we are on a commodity-based, circuit-based, will only continue to grow as we layer on. We have to be careful though, not to layer too much in at once. We don’t want to have too much culture shock.
So for example, I don’t really see us striking out immediately and driving more video. Conferencing services as a primary add-on for our business customers, as a business product, give till the second or third quarter and we’ll roll back into that.
Immediately we’re talking about going back to all of the GTT customers with more Ethernet. Going into the WBS customer with more off-net circuits that GTT had already done as well.
Slowly, when we get out of that, we’ll go more into managed services. I see us actually going more with other managed services in addition to video, such as managed security. Probably by Q2.
Pacific-Tier: How about WBS Connect, and I hate going back to that, but I will… You were a very open network. You would peer with other networks, you would peer with CDNs (Content Delivery Networks), do you feel that your ability to integrate or work with other companies would be changed by your acquisition (or merger) by GTT?
Scott Charter: I’m learning as we’re going, because I am now working with a publicly-traded company. Things are a little bit different than when you are with a privately held, entrepreneurial small organization that is quite dynamic.
We want to bring the dynamic nature of WBS Connect to GTT, however we also have to remember that we have certain parameters that go with a publicly-traded company.
On top of that you also have an organization that really focuses on ensuring they maintain good margin. Now what we’ve done in the past with WBS Connect was that at times we’d take a lower margin deal in order to expand our network, and ultimately grow our value in another way that was not standard “Hey I need to have this much margin.”
I don’t know how much of that we’ll continue to do, but if it doesn’t make sense financially we probably won’t do it moving forward.
Pacific-Tier: So you’ve always been a leader, a thought leader in the industry. There are things changing now such as carrier Ethernet exchanges, Internet exchange points, cloud computing and the integration of CDNs into the network itself. Tell me your visions. What’s happening now? Where will we go into the future that will either support, or change, or direct the future of our business?
Scott Charter: There are so many great things that I see on the horizon right now that all seem to layer back into one another. So when we talk about additional transport services that are required to talk about enhanced cloud. Machine-machine activity, and the way they are going to interact is the future of where hosting goes – for sure.
I mean just standard dedicated servers and things like that are… I don’t want to call them a typewriter of the future, but things are definitely going to evolve. I think that as a WAN operator as part of our business we definitely see the need to connect more and more data centers that have this idea of being able to understand the need for this cloud infrastructure.
And I think you are going to find that you are going to have a global consolidation in certain points around the world that are going to mirror this cloud that is going to happen in let’s call it 10 mega data centers, at least, for computing. And we want to be a part of that.
One of the things I’m really excited about though, is the game-changing effect that I believe that 4G will have on incumbent connectivity in our existing infrastructure. If you’re a LEC (Local Exchange Carrier) with DS3s, OC3s, out to an enterprise base, that’s going to compete in a way with 4G. Call it 18~24 months from now.
I see us steering GTT towards embracing 4G as a part of our WAN business.
Pacific-Tier: Are you going to get into the tower business yourself, or are you going to connect towers?
Scott Charter: Connect towers for sure. You know, continuing to talk about any type of carrier extensions or servicing that wholesale side. But in addition to that I see from a large enterprise side, really seeing us drive more and more into that (4G and connecting via the wholesale business).
Pacific-Tier: With 4G, and LTE – ultimately 4G, does GTT get into the wireless business yourself or are you going to stay in the terrestrial business?
Scott Charter: That’s to be seen. I’m cautious on what I say now on where we’ll be, depending on where we need to be then. When I look forward now - I’m only talking about LTE. No offense to WiMAX, but I feel the real play there is with LTE.
It’s not just North American LTE, it’s global LTE. So seeing the Vodafones, the China wirelesses, and how they’re going to drive global saturation of LTE, let’s call it over the next four years, five years possibly, we’ll want to play there one way or another. I’m not sure how we’ll do it.
Pacific-Tier: So in 18 months what is the difference between terrestrial cable, terrestrial services, and wireless? Is there a difference?
Scott Charter: I’m afraid that spectrum is going to be a too little, people are going to be so excited that we might almost have another iPhone paradox that we see now with AT&T – that their own success with their partnership with Apple has caused some people to believe that the AT&T 3G is completely saturated.
Now there are some people who have some data on it which says that’s not truly the case. But there is enough of a customer backlash that it’s a customer perception that the AT&T network, due to its own success, has lead to its current situation that people are accepting it.
Now, fast forward a couple years and say what happens if we actually eat through all that LTE spectrum that’s out there now that that Verizon and AT&T – let’s just talk that North America’s acquired, wouldn’t that be interesting if that too becomes so saturated that we’re now reverting back to just terrestrial, as we’ve eaten up all the wireless.
Pacific-Tier: Tell me something, domestic or international, where’s your focus?
Scott Charter: 50-50. Let me take that back. (the) Opportunity for growth, 80-20 international. Consistent with where we are today, 50-50. New growth, international.
Pacific-Tier: Why?
Scott Charter: Under-served markets with a much higher profitability margin. It’s much easier to go in and saturate MENA, or LATAM, or parts of Asia than it is to continue to try and compete against incumbents in major markets, Tier 1, Tier 2s, or for that matter try and compete against a Time Warner in a Tier 3.
Pacific-Tier: WBS Connect helped shake up the American Internet industry by bringing affordable bandwidth and high-performance services to people. How do you continue to disrupt Verizon and AT&T and people who would possibly like to hold back development of competitive services in the United States. How do you go about continuing to hit that “borg?”
Scott Charter: By coming to shows like this (PTC) and ITW. You continue to partner up with aggressive companies that are willing to shake up the status quo. If you are working within a fleet of speed boats, if you are not there you are probably in a super-tanker that is probably going to run aground at one point.
That’s a little too much of an analogy…
Pacific-Tier: Let’s talk about your effect on the social or the people part of this business. Do you feel that your new company (GTT) or your old company (WBS Connect), or yourself as an entrepreneur – do you feel you have a responsibility to contribute to the good of the community? Is there any inherent responsibility you have to the community?
Scott Charter: I believe we all do if we want to be good global citizens and good global businessmen. It’s in our best interest to make sure we are doing things more and more efficient.
Power (electricity) is probably a great analogy because we are all working towards a more efficient data center. It’s in our best interest to try and find a means to use off-peak power. We’re involved in something right now that I think is going to shake up data centers worldwide.
And when I talk to people about it I don’t want them to think I’m getting too…, what I really want to say is that I think I have a real opportunity to change what we’re doing in global computing with some colleagues that we’re involved with on power.
Pacific-Tier: Well we hope so, and whether it’s alternative energy using solar or wind, or whether it’s using innovative ideas like fuel cells or co-generation… All of those things are good for the environment and hopefully in the future we’ll be able to reduce our reliance on very energy-inefficient hardware.
Hopefully people like you will put in SSDs using 1% of the power draw as a spindle… But tell us, as we wind down the discussion to a close, again you’ve been a visionary ever since I’ve known you. For several years I’ve looked to you for ideas and thoughts on what’s going to happen to our industry in the future.
Shoot for the stars. Tell us something we don’t know that is going to excite us.
Scott Charter: Well let me follow up on this through energy consumption. To drive the existing grid to use it more efficiently so we don’t have to build new. If we can avoid building new coal-fired power plants in order to generate all this new data, because data centers are gobbling up more power per capita than any other sector in the world right now. I mean it’s amazing.
We’re not getting that many new aluminum smelters out there, but new data centers are coming up and just eating and eating more power.
What if? And we believe we’re on to something that will allow us to not have to go and just massively overbuild our electrical infrastructure in order to accommodate this data center growth. I can’t wait to see where we are in two years with this.
Pacific-Tier: I think it’s exciting too, as a former data center operator I saw the sins of inefficiency time and time again, and I applaud your efforts in trying to correct that problem in our industry.
Any final words for the readers?
Scott Charter: I’m excited where I am going with GTT. I’ve never been a chief marketing officer in a publicly-traded company before. Colleagues of mine have come up joked with me and said “Mr. CMO! What are you going to do?” I laugh. It’s so exciting. Coming here and just trying to drive brand.
Go meet 40 new companies out of Eastern Europe, or go meet Western Africa. Wow!
Pacific-Tier: The industry needs competent evangelists and we warmly welcome your entry into the marketing business. Thank you very much for the time!
You can download the audio/recording of Scott’s interview HERE
| Scott Charter has more than 16 years of data telecommunications experience, specializing in data networking. Prior to launching WBS Connect, Scott held management positions with Qwest Communications, Rhythms Netconnections, and Echostar Communications.GTT is Global telecom and Technology http://www.gt-t.net/ |
The message from the VC community is clear – “don’t waste our seed money on network and server equipment.” The message from the US Government CIO was clear – the US Government will consolidate data centers and start moving towards cloud computing. The message from the software and hardware vendors is clear – there is an enormous 
investment in cloud computing technologies and services.
If nothing else, the economic woes of the past two years have taught us we need to be a lot smarter on how we allocate limited CAPEX and OPEX budgets. Whether we choose to implement our IT architecture in a public cloud, enterprise cloud, or not at all – we still must consider the alternatives. Those alternatives must include careful consideration of cloud computing.
Cloud 101 teaches us that virtualization efficiently uses compute and storage resources in the enterprise. Cloud 201 teaches us that content networks facing the Internet can make use of on-demand compute and storage capacity in close proximity to networks. Cloud 301 tells us that a distributed cloud gives great flexibility to both enterprise and Internet-facing content. The lesson plan for Cloud 401 is still being drafted.
Data Center 2010
Data center operators traditionally sell space based on cabinets, partial cabinets, cages, private suites, and in the case of carrier hotels, space in the main distribution frame. In the old days revenue was based on space and cross connects, today it is based on power consumed by equipment.
If the intent of data center consolidation is to relieve the enterprise or content provider of unnecessary CAPEX and OPEX burden, then the data center sales teams should be gearing up for a feeding frenzy of opportunity. Every public cloud service provider from Amazon down to the smallest cloud startup will be looking for quality data center space, preferably close to network interconnection points.
In fact, in the long run, if the vision of cloud computing and virtualization is true, then the existing model of data center should be seen as a three-dimensional set of objects within a resource grid, not entirely dissimilar to the idea set forth by Nicholas Carr in his book the “Big Switch.”
Facilities will return to their roots of concrete, power, and air-conditioning, adding cloud resources (or attracting cloud service providers to provide those resources), and the cabinets, cages, and private suites will start being dismantled to allow better use of electrical and cooling resources within the data center.
Rethinking the Data Center
Looking at 3tera‘s AppLogic utility it brings a strange vision to mind. If I can build a router, switch, server, and firewall into my profile via a drag and drop utility, then why would I want to consider buying my own hardware?
If storage becomes part of the layer 2 switch, then why would I consider installing my own SAN, NAS, or fiber channel infrastructure? Why not find a cloud service provider with adequate resources to run my business within their infrastructure, particularly if their network proximity and capacity is adequate to meet any traffic requirement my business demands?
In this case, if the technology behind AppLogic and other similar Platform as a Service (PaaS) is true to the marketing hype, then we can start throwing value back to the application. The network, connectivity, and the compute/storage resource becomes an assumed commodity – much like the freeway system, water, or the electrical grid.
Flowing the Profile to the User
Us old guys used to watch a SciFi sitcom called “Max Headroom.” Max Headroom was a fictional character who lived within the “Ether,” being able to move around though computers, electrical grids – and pop up wherever in the network he desired. Max could also absorb any of the information within computer systems or other electronic intelligence sources, and
deliver his findings to news reporters who played the role of investigative journalists.
We are entering an electronic generation not too different from the world of Max Headroom. If we use social networking, or public utility applications such as Hotmail, Gmail, or Yahoo Mail, our profile flows to the network point closest to our last request for application access. There may be a permanent image of our data stored in a mother ship, but the most active part of our profile is parsed to a correlation database near our access point.
Thus, if I am a Gmail user, and live in Los Angeles, my correlated profile is available at the Google data cache with correlated Gmail someplace with proximity to Los Angeles. If I travel to HongKong, then Gmail thinks “Hmmm…, he is in HK, and we should parse his Gmail image to our HK cache, and hope he gets the best possible performance out of the Gmail product from that point.”
I, as the user, do not care which data center my Gmail profile is cached at, I only care that my end user experience is good and I can get my work done without unnecessary pain.
The data center becomes virtual. The application flows to the location needed to do the job and make me happy. XYZ.Com, who does my mail day-to-day, must understand their product will become less relevant and ineffective if their performance on a global scale does not meet international standards. Those standards are being set by companies who are using cloud computing on a global, distributed model, to do the job.
2010 is the Year Data Centers Evolve to Support the Cloud
The day of a 100sqft data center cage is rapidly becoming as senseless as buying a used DMS250. The cost in hardware, software, peopleware, and the operational expense of running a small data center presence simply does not make sense. Nearly everything that can be done in a 100sqft cage can be done in a cloud, forcing the services provider to concentrate on delivering end user value, and leaving the compute, storage, and network access to utility providers.
And when the 100sqft cage is absorbed into a more efficient resource, the cost – both in electrical/mechanical and cost (including environmental costs) will drop by a factor of nearly 50%, given the potential for better data center management using strict hot/cold aisle separation, hot or cold aisle containment, containers – all those things data center operators are scrambling to understand and implement.
Argue the point, but by the end of 2010, the ugly data center caterpillar will come out of its cocoon as a better, stronger, and very cloudy utility for the information technology and interconnected world to exploit.
